Aircraft fuselages destined for Boeing’s 737 Max production facility are stored at their top supplier Spirit AeroSystems Holdings Inc. in Wichita, Kansas, USA, on December 17, 2019.
Nick Oxford | Reuters
Boeing is in discussions about a buyback Spirit AeroSystemswhich makes fuselages for Boeing’s 737 Max jets, the companies said Friday, as manufacturers scramble to address production deficiencies in the best-selling plane.
Spirit shares rose 15% on Friday, while Boeing shares fell nearly 2%. Spirit AeroSystems had a market cap of $3.8 billion as of Friday’s close.
In 2005, Boeing spun off its operations in Kansas and Oklahoma, forming what is now Spirit AeroSystems. About 70% of Spirit’s sales last year came from Boeing, and about a quarter came from making parts for Boeing’s main rival Airbus, according to a securities filing. Airbus declined to comment on the deal talks.
“We believe that the reintegration of Boeing and Spirit AeroSystems’ manufacturing operations would further strengthen aviation safety, improve quality and serve the interests of our customers, employees and shareholders,” Boeing said in a statement Friday. “While there is no guarantee that we can reach an agreement, we are committed to finding ways to further improve the safety and quality of the aircraft that millions of people rely on every day.”
Spirit also confirmed the talks.
When asked about outsourcing production of parts of its planes, Boeing CEO Dave Calhoun told CNBC in January, “Has it gone too far?” Yeah…probably so, but now it’s here and now I have to take care of it.”
Spirit has struggled financially and was last profitable in 2019, before the pandemic. In October, Spirit named Pat Shanahan, who spent about three decades at Boeing, as its new interim CEO.
The contract negotiations come less than two months after part of a Boeing 737 Max 9 exploded during an Alaska Airlines flight. The Federal Aviation Administration temporarily grounded all planes in January, prompting investigations into the accident and Boeing’s production lines.
It was the latest and most serious of many flaws with the Boeing 737 Max, the company’s best-selling jet.
According to a preliminary report from the National Transportation Safety Board, the screws on the door plug of the Max involved in the January accident appeared to be missing as it left the Boeing factory in Renton, Washington.
Boeing has disclosed several production problems and quality defects with the fuselages manufactured by Spirit, including incorrectly drilled holes and incorrect clearances in some fuselage components, problems that have slowed deliveries of new jets to airlines.
The FAA, which oversees Boeing and certifies its planes, has promised to take a closer look at the company’s production lines since the Jan. 5 accident. Earlier this week, after meeting with Calhoun, FAA Administrator Mike Whitaker said the agency was giving the company 90 days to develop a plan to improve its quality control and safety systems.
The Wall Street Journal previously reported on the deal talks between Boeing and Spirit.
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2024-03-01 22:33:59
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