Boeing Buys Troubled Supplier Spirit AeroSystems: NPR

WASHINGTON — Boeing has reached an agreement to acquire Spirit AeroSystems, one of its top suppliers, reuniting the aerospace giant with the plant that makes the fuselage for the 737 Max jet in Wichita, Kansas.

The deal announced Monday marks a shift from Boeing’s two-decade strategy of outsourcing key parts of its production process. The troubled planemaker has struggled to rebuild trust with regulators, airlines and the traveling public after a door catch panel blew up an Alaska Airlines flight mid-air earlier this year.

The Spirit deal, an all-stock transaction valued at $4.7 billion (including Spirit’s debt, the total is $8.3 billion), aims to give Boeing better oversight and control manufacturing operations, which have been in the spotlight this year.

“We believe this agreement is in the best interest of the flying public, our airline customers, Spirit and Boeing employees, our shareholders and the country as a whole,” Boeing CEO Dave Calhoun said in a statement announcing the deal. Calhoun will leave his post at the end of the year as part of a shakeup over the 737’s production problems and faced tough questions from senators at a hearing on Capitol Hill.

No one was seriously injured on Alaska Airlines Flight 1282 in January, but the incident rekindled concerns about Boeing’s quality control after the crashes of two 737 Max planes in 2018 and 2019 that killed 346 people.

“The combination of Spirit and Boeing will enable greater integration of the two companies’ manufacturing and engineering capabilities, including safety and quality systems,” Spirit CEO Patrick Shanahan said in a statement. A former Boeing executive, Shanahan took over Spirit late last year after a series of embarrassing and costly quality issues.

A Boeing 737 fuselage built by Spirit AeroSystems sits outside a Boeing manufacturing plant in Renton, Washington, on February 5, 2024.

David Ryder/Bloomberg/Getty Images

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David Ryder/Bloomberg/Getty Images

A Boeing 737 fuselage built by Spirit AeroSystems sits outside a Boeing manufacturing plant in Renton, Washington, on February 5, 2024.

David Ryder/Bloomberg/Getty Images

Federal investigators believe the door protection panel that exploded on a 737 Max 9 in January was originally installed at Spirit’s factory in Wichita, Kansas, and then shipped to Boeing’s factory in Renton, Kansas. the State of Washington, to be assembled there. Once arriving in Washington, National Transportation Safety Board investigators say damaged rivets were discovered on the fuselage, requiring the door protection panel to be opened for repairs.

After Spirit AeroSystems personnel completed that work at the Boeing plant, the bolts were not reinstalled, according to photographic evidence provided to the NTSB by Boeing. During follow-up inspections, loose bolts were found on other 737 Max jets operated by Alaska and United.

The fallout from the door jam incident has caused additional anxiety in Wichita, a city with close ties to the aviation industry.

Boeing recently advanced Spirit $425 million to help stabilize the company’s finances amid a slowdown in the planemaker’s production of the popular 737 line. Federal regulators have capped Boeing’s output at 38 planes a month, and Boeing has been making even fewer than that as it tries to impose stricter quality control standards.

In May, Boeing presented regulators at the Federal Aviation Administration with a detailed plan to address its quality-control problems. But not everyone is convinced that the merger with Spirit will help, with whistleblowers warning that problems at the company’s 737 plant run deep.

Boeing and Spirit had been in talks for months. But the deal was complicated because Spirit also supplies parts to Airbus, Boeing’s main rival in commercial aviation. While Boeing and Spirit have agreed to the deal, Spirit is still negotiating with Airbus. In a statement, Airbus said that while there was no guarantee a transaction would be completed, “all parties are willing and interested in working in good faith to advance and complete this process as quickly as possible.”

After the Alaska Airlines crash, the FBI told passengers on the flight that they could be “a possible victim of a crime.” In March, Texas Attorney General Ken Paxton opened an investigation into Spirit to examine the company’s “organization, conduct and management.”

Spirit was created after Boeing sold its Wichita division in 2005. Boeing had been manufacturing aircraft there since the 1940s, including the B-29 Superfortress and other military bombers during World War II.