Why Boeing needs Spirit AeroSystems
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Illustration: Maura Losch/Axios
Boeing is bringing key supplier Spirit AeroSystems back under its wing.
Why it matters: Moving the fuselage maker in-house — Boeing sold the business nearly two decades ago — is seen as a necessary step to correct quality-control issues that have plagued both companies.
Driving the news: The definitive agreement announced Monday, an all-stock deal valued around $8.3 billion including debt, has been in the works for months.
The big picture: Reunifying key parts of Boeing's manufacturing process could improve quality control issues fueled by any disconnects in the two-tier installation process of Spirit's fuselages, such as those that led to a door plug panel blowing out mid-flight in January.
- Boeing CEO Dave Calhoun said the acquisition will allow the companies — both of which are under pressure from federal regulators — to align their respective workforces "to the same priorities, incentives and outcomes."
What they're saying: Boeing's sale of what would become Spirit in 2005 was a deal that never should have happened in the first place, Ron Epstein, senior aerospace and defense analyst at BofA Securities, wrote in a note Monday.
- Spirit's quality control issues in recent years had become serious enough that Boeing has had to step in to help, CNN notes.
- "The decision haunted both companies time and time again," says Epstein.
Zoom in: Completing the deal now would "be critically important to ensure smoother production for the 737 and safeguard the 787-ramp up," he continues.
What we're watching: The deal is subject to customary closing conditions, including regulatory approvals. That will include an antitrust review, which will likely look at the deal's potential impact on an already concentrated aerospace industry.
- The deal is expected to close mid next year and is conditioned upon Airbus acquiring certain loss-making Spirit plants that make major sections of the European jet maker's A350 and A220 planes, The Seattle Times notes. Airbus would be paid $559 million to complete the deal.
