Boeing Acquires Spirit AeroSystems

Boeing announced on Monday its decision to purchase Spirit AeroSystems, a key supplier, marking the end of a nearly two-decade outsourcing strategy in the production of major components for its commercial aircraft. This includes the body of the 737 Max and parts of the 767, 777, and 787 models.

By acquiring Spirit, Boeing aims to address quality issues that have affected the supplier in recent years. With full ownership, Boeing will have greater control over monitoring and improving production practices to enhance product quality. Following a safety incident earlier this year, Boeing has already initiated internal quality improvement measures.

Boeing’s CEO, Dave Calhoun, stated that reintegrating Spirit will allow the company to align production and safety systems more effectively with its workforce. The deal, valued at $4.7 billion in stock or $8.3 billion including debt, is subject to regulatory and shareholder approval and is expected to be finalized by the middle of next year.

Boeing will also divest parts of Spirit to Airbus as part of the transaction, marking a strategic shift for Boeing, which had increasingly relied on external suppliers since the 2000s to reduce costs. Spirit was established in 2005 during Boeing’s outsourcing initiative when it sold a division in Wichita, Kansas, and operations in Oklahoma.

In addition to its collaboration with Boeing, Spirit provides components to other aerospace companies such as Airbus, Bombardier, Lockheed Martin, Northrop Grumman, and Rolls-Royce. Boeing and Airbus accounted for 64% and 19% of Spirit’s net revenue last year, respectively.

Boeing’s offer to acquire Spirit at $37.25 per share represented a 30% premium over Spirit’s stock price at the end of February when initial talks between the two companies were announced.