Boeing buys struggling supplier Spirit AeroSystems to shore up 737 production woes
WASHINGTON — Boeing has reached a deal to acquire Spirit AeroSystems, one of its key suppliers, reuniting the aerospace giant with the factory that makes the fuselage for the 737 Max jet in Wichita, Kan.
The agreement announced Monday marks a shift away from Boeing's two-decade strategy to outsource key parts of its production process. The troubled plane maker has struggled to rebuild trust with regulators, airlines and the flying public after a door-plug panel blew off an Alaska Airlines flight in midair 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), is intended to give Boeing greater oversight and control of manufacturing operations, which have been under a harsh spotlight 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 Boeing CEO Dave Calhoun in a statement announcing the deal. Calhoun is stepping down from the job at the end of year as part of a shakeup in the wake of the 737 production problems, and faced difficult questions from senators in a hearing on Capitol Hill.
No one was seriously injured during Alaska Airlines Flight 1282 in January, but the incident rekindled concerns about Boeing's quality control following the crashes of two 737 Max jets in 2018 and 2019 which killed 346 people.
“Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems,” said Spirit CEO Patrick Shanahan in a statement. A former executive at Boeing, Shanahan took the reins at Spirit late last year after a series of embarrassing and expensive quality problems.
Federal investigators believe the door plug panel that blew off a 737 Max 9 jet in January was originally installed at Spirit's factory in Wichita, Kan., and then shipped to Boeing's factory in Renton, Wash., for assembly. Once it arrived in Washington, investigators with the National Transportation Safety Board say damaged rivets were discovered on the fuselage that required the door plug to be opened for repairs.
After Spirit AeroSystems personnel completed that work at the Boeing plant, the bolts were not reinstalled, according to photo evidence provided to the NTSB by Boeing. In follow-up inspections, loose bolts were found on other 737 Max jets operated by Alaska and United.
The fallout from door plug incident has caused extra anxiety in Wichita, a city with deep ties to the aviation industry.
Boeing recently advanced Spirit $425 million in order to help stabilize the company's finances amid a slowdown in the plane maker's production of the popular 737 line. Federal regulators capped Boeing's production at 38 planes per month, and Boeing has been making even fewer than that as it attempts to impose tougher quality control standards.
In May, Boeing presented regulators at the Federal Aviation Administration with a detailed plan to fix its quality control problems. But not everyone is convinced that the union with Spirit will help, with whistleblowers warning that problems in the company's 737 factory run deep.
Boeing and Spirit had been in talks for months. But the deal was complicated because Spirit also supplies parts for Airbus, Boeing's major rival in commercial aviation. While Boeing and Spirit agreed to the deal, Spirit is still negotiating with Airbus. In a statement, Airbus said while there's no guarantee that a transaction will be concluded, "all parties are willing and interested to work in good faith to progress and complete this process as timely as possible."
After the Alaska Airlines accident, the FBI told passengers on the flight they may 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 off its Wichita division in 2005. Boeing had been making planes there since the 1940s, including the B-29 Superfortress and other military bombers during World War II.
