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Boeing and Spirit AeroSystems confirmed discussions of an acquisition are ongoing. The companies confirmed the ongoing discussions to make Spirit a part of Boeing again.
Spirit AeroSystems has a history dating back to 1927 when Lloyd Stearman moved his company from California to Wichita, Kansas, but the history with Boeing begins two years later. In 1929 Boeing, then known as the United Aircraft and Transport Corporation, purchased Stearman Aircraft Company. The Wichita site produced iconic aircraft like the B-29 Superfortress Bomber and B-52 Stratofortress. In 2005 Boeing sold the Wichita division, along with Oklahoma operations purchased in 1996, and the new company Spirit AeroSystems transformed into a global supplier with many customers and platforms. Spirit supplies parts and components to major companies like Boeing, Airbus, Bombardier, Rolls-Royce and Sikorsky. Spirit has been in the public eye after a plug door manufactured by Spirit AeroSystems Malaysia was blown off of a 737 MAX 9 at 16,000 feet.
On Friday Spirit confirmed that it was engaged in discussions with Boeing about a possible acquisition. This transaction would bring Spirit back under the Boeing umbrella for the first time since it split in 2005. Both Spirit and Boeing released statements about the discussions, confirming the possibility of an acquisition but stating there can be no assurance until an agreement is reached.
"No assurances can be given that a definitive agreement will be entered into that any transaction will be consummated, or the timing terms or conditions of such transaction," Spirit said. "The Spirit Board of Directors and management team are committed to enhancing shareholder value and regularly review the Company's opportunities to further this objective. Spirit does not intend to comment further on market speculation or disclose any developments unless and until it otherwise deems further disclosure is appropriate or required."RELATED STORY:Spirit Aerosystems strike could impact Boeing, Airbus, Bombardier
Spirit has dealt with instability over the last few years, including a strike and plummeting stock. According to Reuters Spirit shares have lost over 70 percent of their value in the last five years. CNBC reports that the last time Spirit was profitable was in 2019, before the pandemic. Spirit has also reportedly explored selling its operations in Ireland, which makes parts for Airbus. Despite splitting from Boeing in 2005, the two companies have continued to work closely. In October 2023 Spirit announced that former Pentagon official and board member Patrick Shanahan would replace Thomas Gentile III as President and CEO. Shanahan also spent 31 years working with Boeing and has served on the Spirit AeroSystems Board since 2021. Shortly after the leadership transition, Spirit announced it had entered into a Memorandum of Agreement with Boeing to enable greater collaboration, improve quality and increase the number of future deliveries.
According to CNBC, about 70 percent of Spirit's revenue last year came from Boeing, and roughly a quarter came from its competitor, Airbus. Despite working independently from Boeing for nearly 20 years, the company has held onto its strong ties with the commercial giant. Boeing also confirmed the discussions with a statement on Friday.
"We have been working closely with Spirit AeroSystems and its leadership to strengthen the quality of the commercial airplanes that we build together," Boeing said in a statement. "We confirm that our collaboration has resulted in preliminary discussions about making Spirit AeroSystems a part of Boeing again. We believe that the reintegration of Boeing and Spirit AeroSystems' manufacturing operations would further strengthen aviation safety, improve quality and serve the interests of our customers, employees, and shareholders. Although there can be no assurance that we will be able to reach an agreement, we are committed to finding ways to continue to improve the safety and quality of the airplanes on which millions of people depend each and every day."RELATED STORIES:Boeing 737 MAX 9 was missing bolts before depressurization eventSpirit AeroSystems, Boeing reach agreement to support production stabilityAs a main supplier for Boeing, Spirit has been brought up in the discussions over several notable crashes and incidents on Boeing planes. This included the two 737 MAX crashes that killed over 300 people and the depressurization incident on Jan. 5. The NTSB released its prelim on the door plug incident in early February, revealing more insight into how the plug was blown off of the plane midflight. Investigators said the plug was missing the bolts required to keep the plug in place before the depressurization incident. The NTSB found that the MED plug was manufactured by Spirit AeroSystems Malaysia on March 24, 2023 and received in Wichita on May 10. The MED plug was installed and rigged on the fuselage and shipped to Boeing on Aug. 20, arriving at its facility on Aug. 31. A Non-Conformance Record was created on Sept. 1 noting five damaged rivets, which required the removal of the plug to fix. The rivets were replaced and the work was completed by Sept. 19 by Spirit AeroSystems personnel. Boeing photo documentation showed the MED plug closed with bolts missing and investigators found no evidence the plug was opened after leaving Boeing's facility.
"Whatever final conclusions are reached, Boeing is accountable for what happened," Boeing President and CEO Dave Calhoun said. "An event like this must not happen on an airplane that leaves our factory. We simply must do better for our customers and their passengers. We are implementing a comprehensive plan to strengthen quality and the confidence of our stakeholders. It will take significant, demonstrated action and transparency at every turn - and that is where we are squarely focused."Boeing quality stand down
The investigation is ongoing and the NTSB will not issue a probable cause until the final report is released, which could take one to two years. Since the incident and the subsequent grounding of all 737 MAX 9 planes pending an inspection of the MED plugs, Boeing has been transparent in its process to improve safety and compliance. Boeing and Spirit have continued to update the public about the ongoing findings and widespread changes to prevent another similar occurrence. Boeing held a company-wide safety webcast on Jan. 9 and a quality stand down on Jan. 25, pausing production and hosting a full-day working session focused on first-time quality and safety. In late February, news broke that the head of the 737 MAX program was leaving the company after 18 years.RELATED STORY:FAA panel calls Boeing safety culture 'inadequate and confusing'
On Feb. 26 the FAA released its final report on findings and recommendations from an expert safety panel on Boeing's safety culture, claiming there was a disconnect between senior management and other members of the organization on safety culture, with many interviewees and Organization Designation Authorization Unit Members questioning whether Boeing safety culture reporting systems would work to enable open communication and non-retaliation. The ODA Expert Review Panel convened on March 1, 2023 and was formed under the Aircraft Certification, Safety and Accountability Act, passed in 2020 to propose changes to FAA airplane certification after the two deadly 737 MAX crashes in 2018 and 2019. The panel was not directed to investigate specific crashes or incidents, like the two crashes that killed 346 individuals or the January depressurization incident. The report did not that while the review was ongoing there were several occasions where serious quality issues with Boeing products became public and amplified concerns that safety-related messages or behaviors were not being implemented across the entire Boeing population.
The acquisition discussion is ongoing and more details will be released once a deal has been finalized.