Boeing said Monday that it had agreed to buy a major supplier, Spirit AeroSystems, ending a nearly two-decade experiment in outsourcing production of key components of its commercial jetliners, including the body of the 737 Max and parts of the 767, 777 and 787.
By purchasing Spirit, Boeing hopes to curb quality problems that have plagued the supplier in recent years. While Boeing already has significant influence over Spirit, acquiring the company alone will make it easier to monitor and change production practices. Boeing has also taken internal steps to improve quality after a shocking incident in January in which a panel popped out during a flight on one of its planes.
“By reintegrating Spirit,” Boeing CEO Dave Calhoun said in a statement, the company can “fully align” its production and safety systems with its workforce.
The widely expected deal was worth $4.7 billion in stock, or $8.3 billion including Spirit’s debt. To be completed, it must be approved by regulators and Spirit shareholders. Boeing will also spin off parts of Spirit to Airbus, its European competitor, as part of the deal. Boeing said the acquisition of Spirit is expected to close by the middle of next year.
The purchase marks a strategic turnaround for Boeing, which began relying more heavily on independent suppliers in the 2000s to cut costs and boost profits. Spirit was formed during this outsourcing exercise in 2005, when Boeing sold a division in Wichita, Kansas, and operations in Oklahoma.
In addition to its work for Boeing, Spirit makes components for aerospace companies including Airbus, Bombardier, Lockheed Martin, Northrop Grumman and Rolls-Royce. Boeing accounted for 64 percent of Spirit’s net sales last year, while Airbus accounted for 19 percent. Boeing offered to buy Spirit for $37.25 per share, a 30 percent premium to Spirit’s stock price in late February, before the two companies announced they were in talks.
Spirit’s quality problems led to a leadership change last fall in which Patrick Shanahan, a former Boeing executive and former senior Defense Department official, became chief executive. At Boeing, Mr. Shanahan was considered an accomplished executive who could quickly turn around troubled programs or units. He is now a leading candidate to succeed Mr. Calhoun, who plans to step down by the end of this year.
But Boeing has its own quality problems. The company has been under intense scrutiny since the Jan. 5 incident in which a panel on a 737 Max 9 exploded during an Alaska Airlines flight shortly after takeoff. The panel, called a door plug, covers the gap created by an unneeded emergency exit.
News of the Spirit agreement came hours after a report that federal officials planned to offer Boeing a deal in a fraud case related to two deadly accidents more than five years ago that killed 346 people.
While no serious injuries were reported in the January incident, the consequences could have been far more serious if the panel had exploded at a higher altitude than passengers might have been moving around in the cabin. The National Transportation Safety Board said the plane appeared to have left a Boeing factory without the screws needed to secure the connector, and the company said it could not find documentation of that work. The plug had been removed so Spirit workers could make repairs nearby.
In response, Boeing has made several changes in recent months. The company expanded training, simplified plans and processes and increased inspections at its 737 plant in Renton, Washington, and at Spirit. Since March, Spirit has also stopped accepting 737 fuselages that do not fully meet Boeing standards. In order to keep production running, some deficiencies had previously been accepted, which were later remedied.
That change has brought significant benefits, Elizabeth Lund, a top quality manager at Boeing, told reporters at the factory last week. Now there are far fewer major defects Boeing needs to fix, she said, and the company will be able to assemble the Max much more quickly once the bodies arrive in Renton.
Boeing also announced it will reduce the practice of performing manufacturing tasks out of sequence, also known as “traveling work.” Some work is deemed necessary, but too much work can disrupt the complicated aircraft manufacturing process, potentially leading to defects and poor workmanship.
At the briefing with reporters, Ms. Lund also shared new details about how the aircraft involved in the January flight left the factory without the door plug fully secured. After removing the plug to make repairs nearby, a team prepared the plane for transport outside and put the plug back in place without its screws, which was not that team’s responsibility, she said.
Ms. Lund’s disclosure of new information, along with other comments in that briefing, sparked the ire of the NTSB, which sharply rebuked Boeing for breaking rules to talk about an ongoing investigation.
Boeing apologized to the safety board and acknowledged that it had “overstepped the NTSB’s role as a source of investigative information.”
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2024-07-01 04:53:32
www.nytimes.com
