Boeing has confirmed its plans to acquire Spirit AeroSystems in an all-stock deal valued at over $4 billion, which concludes months of negotiations, is part of Boeing's strategy to tackle its ongoing safety crisis.The boards of both companies met on Sunday and agreed on the terms, with an official announcement expected later today.
In another development, Airbus SE has entered into a binding term sheet agreement with Spirit AeroSystems in relation to a potential acquisition of major activities related to Airbus, notably the production of A350 fuselage sections in Kinston, North Carolina, U.S., and St. Nazaire, France; of the A220’s wings and mid-fuselage in Belfast, Northern Ireland, and Casablanca, Morocco; as well as of the A220 pylons in Wichita, Kansas, U.S.
The acquisition follows a safety crisis triggered by a mid-air blowout of a door plug on a new 737 MAX 9 jet on January 5.This incident revealed numerous safety and quality issues at Boeing, leading to a significant slowdown in production that impacted the global commercial aviation industry.
Spirit AeroSystems, the manufacturer of the door plug, was originally spun off from Boeing in 2005. The twin moves will split the world's largest independent aerostructures maker, which has branched out to make parts for Airbus and others since being spun off by Boeing nearly two decades ago.
With this agreement, Airbus aims to ensure stability of supply for its commercial aircraft programmes through a more sustainable way forward, both operationally and financially, for the various Airbus work packages that Spirit AeroSystems is responsible for today.
Boeing's decision to reacquire Spirit is part of an effort to address its safety issues and bolster its production line.However, the acquisition may not immediately resolve Boeing's problems.
The company has been losing market share to rival Airbus for years and continues dealing with the aftermath of twin crashes that resulted in nearly 350 fatalities and led to the grounding of the 737 MAX.
For Airbus, the transaction would cover the acquisition of these activities. Airbus will be compensated by payment of $559 million from Spirit AeroSystems, for a nominal consideration of $1.00, subject to adjustments including based on the final transaction perimeter. Airbus said,
Entering into definitive agreements remains subject to an ensuing due diligence process. Whilst there is 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.
The twin accidents led to the appointment of current CEO Dave Calhoun, who was roped in to resolve problems at the manufacturer.
However, Calhoun will leave later this year with the company facing increased regulatory scrutiny and a damaged reputation.Recently, Boeing submitted a comprehensive plan to the FAA addressing "systemic quality-control issues" at the company.
Not only the January mid-air door plug incident, following which the Federal Aviation Administration imposed a cap on production of Boeing's MAX planes, and U.S. Department of Justice officials are also threatening criminal prosecution if they determine the planemaker violated an agreement following the fatal MAX crashes in 2018 and 2019.
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