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Boeing to Tighten Supply Chain Quality With the Acquisition of Spirit AeroSystems, Airbus Agrees

Boeing has announced the acquisition of supply chain partner Spirit AeroSystems in an effort to improve the quality of Boeing Commercial Airplanes.  This follows a series of high profile missteps, most recently, the inflight blowout of a door plug on an Alaska Airlines 737-9 MAX.


Boeing to Acquire Spirit AeroSystems - Courtesy Boeing/Airbus/Spirit AeroSystems

On Monday (July 1, 2024) Boeing announced their attention to re-acquire Spirit AeroSystems, originally spun-off in 2005.  This follows a series of high-profile missteps by the U.S. aerospace giant, including the inflight blowout of an Alaska Airlines Boeing 737-9 MAX jet door plug earlier this year.  The move is an effort to tighten supply chain quality control for the company’s beleaguered Boeing Commercial Airplanes division.  The proposed merger will be an all-stock transaction with an equity value of approximately $4.7 billion or $37.25 per share, or $8.3 billion, including Spirit AeroSystems’ last reported net debt.


In Monday’s announcement, Boeing’s President and CEO, Dave Calhoun, said,


“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.  By reintegrating Spirit, we can fully align our commercial production systems, including our Safety and Quality Management Systems, and our workforce to the same priorities, incentives and outcomes – centered on safety and quality.  We are proud of the role Boeing plays in supporting our men and women in uniform and are committed to ensuring continuity for Spirit’s defense programs.”


Under the proposed transaction, Spirit AeroSystems’ stock will be exchanged for Boeing common shares equal to an exchange ratio of $0.18 and $0.25, calculated as $37.25 divided by the volume weighted average Boeing share price over the 15 trading-day period ending on the second day prior to transaction closing.


In a separate press release regarding the proposed transaction, Airbus, also a Spirit AeroSystems’ customer, affirmed their support.  The company has entered into a binding term sheet agreement with Spirit AeroSystems in relation to their acquisition of activities related to Airbus' business with the supplier.  This includes the production of A350 fuselage sections in Kinston, North Carolina and St, Nazaire, France, as well as A220 wings and mid-fuselage sections in Belfast, Northern Ireland and Casablanca, Morocco, as well as A220 pylons in Wichita, Kansas.   


In the July 1st, 2024 press release, Airbus stated in part,


“...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.  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...”


The proposed transaction is expected to close in mid-2025 and remains subject to the sale of Spirit AeroSystems’ operations related to certain Airbus commercial work packages, as well as customary closing conditions, including regulatory and Spirit AeroSystems’ shareholder approvals.


 

Source(s): Boeing, Airbus

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