Two decades after , Boeing put its great aircraft subassembly plants in Wichita, Kansas, and Tulsa, Oklahoma, away for sale , and created what became Spirit AeroSystems, the company announced late Sunday it has reached an agreement to get those significant units of Spirit and bring that work again in- house
CEO Dave Calhoun wrote in a word to Boeing employees on Sunday day,” This is an opportunity to bring important airport developing work on Boeing airplanes back into our factories — where Boeing and Spirit world-class engineers and mechanics can work easily up.”
This is one of the most important steps we’re taking as a company, he continued,” and it shows how unwaveringly committed we are to improving excellent.”
Boeing said the merger is an all- stock transaction at an equity value of about$ 4.7 billion, or$ 37.25 per share.
Boeing will also take on Spirit’s last reported net debt of$ 3.6 billion, so the total transaction value is about$ 8.3 billion.
Depending on the Boeing share price at the closing of the bargain, Spirit shareholders will receive between 0.25 and 0.18 Boeing stock for each of their Sense stocks.
Since Boeing discontinued its operations, Spirit has expanded its product line to include sections for Western rivals Airbus and other aircraft manufacturers. Therefore, its sale required sophisticated three-party negotiations that may break Spirit away.
Last year, 70 % of Spirit’s income came from Boeing and 23 % from Airbus.
Airbus has also entered a legally binding contract to potentially get the Spirit units in the United States, France, and Morocco, which make up the bulk of Airbus ‘ A350 and A220 plane. The completion of the Airbus consolidation is a condition for the Boeing consolidation.
However, Airbus wo n’t pay for the acquisition of Spirit’s components.
The German aircraft- maker” may be compensated by transaction of$ 559 million from Spirit AeroSystems, for a minimum consideration of$ 1.00″, subject to changes when approved.
This makes it clear that the agreement was created to meet Boeing’s requirements, with Airbus willing to cooperate if it was paid to do so.
For Spirit, the facilities making A350 and A220 parts have been bleeding cash due to low pricing from Airbus, so it makes sense to pay to get rid of them.
Regulations must be carried out in order to approve the agreement. Boeing stated that it is anticipated to close in the middle of 2025.
In an effort to ensure the continued supply of major aircraft sections, Boeing announced in early March its intention to repurchase Spirit .
Boeing is unable to afford the failure of Spirit. The supplier manufactures the entire MAX fuselage and the forward fuselage of all Boeing commercial aircraft. It also makes wing components, engine nacelles and pylons for Boeing jets.
With this agreement, Boeing buys a troubled business that is running out of money. Spirit had$ 61 million in the first quarter, and at the end of March, it had$ 4.1 billion in debt with only$ 352 million in cash on hand.
In the last five years, Spirit’s finances deteriorated as delivery stops for the MAX and 787 programs and the COVID- 19 pandemic slashed its revenue. Additionally, it lost money as a result of the low pricing in its agreements with Boeing and Airbus.
In an effort to turn the fortunes of Spirit around, former top Boeing executive Pat Shanahan was appointed interim CEO in September.
Since then, the focus has changed from ensuring manufacturing quality to the fuselage panel blowout on Alaska Airlines Flight 1282.
Another motivation for Boeing to take over Spirit was having more control over the quality of the manufacturing process.
Major quality lapses in Spirit’s building of the 737 MAX fuselage in Wichita last year had cut MAX deliveries to airlines for some months , first in April , then , again in August.
The Alaska Airlines incident in January was caused by a constant flow of defect-ridden fuselages that required minor rework at the MAX final assembly plant in Renton this year.
” We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly”, said CEO Calhoun. ” By reintegrating Spirit, we can fully align our commercial production systems, including our Safety and Quality Management Systems, and our workforce to the same priorities, incentives and outcomes — centered on safety and quality”.
Three separate news releases Sunday night, from Airbus, Boeing and Spirit, laid out their agreement on how Spirit will be dissected.
Airbus will acquire critical Spirit manufacturing facilities that supply its aircraft, notably in Kinston, North Carolina, and St. Nazaire in France that build part of the A350 fuselage, in Belfast, Northern Ireland, and Casablanca, Morocco, that build the wings and midfuselage of the A220, and a facility in Wichita that builds the engine pylons for the A220.
With this agreement, Airbus aims to maintain stability of supply for its commercial aircraft programs by moving more sustainably both operationally and financially for the various Airbus work packages Spirit AeroSystems is currently in charge of, according to the company in a press release.
In addition, Spirit proposes to sell off three facilities:
—The portion of its Belfast operation that produces non-Airbus components for business jets
—A parts plant in Subang, Malaysia, which among other components builds the door plug for the 737 MAX, the part that blew off the Alaska Airlines jet in January
—A facility in Prestwick, Scotland, supplying smaller wing components for the A320 jet family.
Boeing will also build some additional defense equipment for Spirit’s military programs in addition to the main commercial jets built for them.
With those, Boeing becomes a supplier to Northrop Grumman on the Air Force B- 21 bomber, to Sikorsky, now part of Lockheed Martin, on the Army’s CH- 3 heavy lift helicopter, and to Bell Helicopter on the Army’s new V- 280 tilt- rotor.
Boeing stated that it” will work with Spirit to ensure the continuity of operations supporting Spirit’s customers and programs it acquires, including working with the United States Department of Defense and Spirit defense customers.”
With this deal, Boeing adds just under 14, 000 employees, out of a total Spirit workforce of nearly 20, 700.
About 12, 600 are in Wichita, 1, 100 in Tulsa and another 100 in Dallas.
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