Boeing and Airbus have reached an agreement whereby Boeing will reacquire Spirit AeroSystems for $4.7 billion in stock. Simultaneously, Airbus will assume Spirit’s European operations, which have been experiencing financial difficulties, in exchange for substantial compensation. This coordinated move represents a rare instance of collaboration between the two aerospace giants.
The two-decade independence of the world’s largest
standalone aerostructures company concluded in a division between its largest
customers after the Boeing 737 MAX crisis, initiated by a mid-air door plug
blowout in January, culminated in concerns regarding the durability of fuselage
manufacturing.
Boeing, which spun off Spirit in 2005, said it would buy its
former subsidiary for about $37.25 per share, as reported by Reuters on Sunday,
giving it an enterprise value of $8.3 billion including debt.
"Bringing Spirit and Boeing together will enable
greater integration of both companies' manufacturing and engineering
capabilities, including safety and quality systems," Spirit CEO Pat
Shanahan said in a statement.
Spirit's shares closed at $32.87 on Friday. The Wichita,
Kansas-based company said the deal value offered a 30% premium since the day
before Boeing and Spirit announced merger talks on March 1.
Boeing has long pondered buying back its former subsidiary,
which analysts say has struggled to thrive independently despite diversifying
into work for Europe's Airbus and others.
But the decision to go ahead comes as Boeing tries to
resolve a sprawling corporate and industrial crisis that has engulfed one of
the industry's key suppliers.
Boeing is trying to move past months of difficulties sparked
by the Jan. 5 blowout of a door plug on a virtually new Alaska Airlines 737 MAX
9 jet that exposed industrial quality problems.
Those issues have led to a substantial slowdown in output at
Boeing, rippling across the global commercial aviation industry.
The U.S. planemaker has announced the planned departure of
its CEO, Dave Calhoun in the wake of the crisis, with industry executives and
analysts pointing to Spirit's Shanahan, a former Boeing executive, as one of
the possible replacements.
It was not immediately clear how long he might be tied to
Spirit, with the Boeing deal not due to close until mid-2025.
AIRBUS DEAL
Spirit, the manufacturer of the door plug, had been spun off
from Boeing in one of a series of moves that critics say were emblematic of a
focus on cost-cutting over quality.
Boeing made the decision to buy back Spirit in the aftermath
of the door plug blowout, in what it described as an effort to address its
safety problems and shore up its production line.
Separately, Airbus, also a Spirit customer, confirmed it
would take over core activities at four of the supplier's plants in the United
States, Northern Ireland, France and Morocco as reported by Reuters last week.
It will also take over minor work currently carried out in
Wichita. The separate Airbus deal was triggered by talks between Boeing and
Spirit and was loosely coordinated between the three companies, sources said.
It is subject to due diligence.
Airbus shares opened 2.4% higher on Monday.
Because the Airbus-related activities lose money, industry
sources had said the European planemaker was pressing for up to $1 billion in
compensation in return for taking over the plants, which make strategic parts
for the A350 and A220 jets.
Airbus said it would receive $559 million in compensation
from Spirit, depending on the final outlines of the deal, while it would pay
the supplier a symbolic $1 for the assets.
That echoes its decision to buy the Canadian-designed
CSeries small jetliner program for just $1 from Bombardier in 2018. It later
renamed the jet the A220.
Until the latest shake-up, Airbus had not proposed to take
control of the high-tech but loss-making A220 wings manufacturing carried out
in a historic plant in Belfast, which Spirit bought from Bombardier in 2019.
The recent agreement reached on Monday has successfully
dispelled the uncertainties surrounding the future of Northern Ireland’s
prominent industrial employer for the second time in the past five years.
However, it is important to note that sources have indicated the potential need
for Airbus to invest a substantial amount, ranging from $1 billion to $2
billion, in redesigning the wings to ensure their cost-effective production.
Spirit also intends to divest businesses and operations in
Prestwick, Scotland; Subang, Malaysia (which support Airbus programs); and
Belfast (which do not support Airbus programs).
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