Boeing Buys Troubled Supplier Mind Amid Aircraft Safety Pressure

ARLINGTON, Va. (AP) — Boeing has announced plans to acquire key supplier Spirit AeroSystems for $4.7 billion, a move it says will improve aircraft quality and safety amid increasing scrutiny from Congress, airlines and the Ministry of Justice.

Boeing previously owned Spirit, and the purchase would reverse a long-standing Boeing strategy of outsourcing key work on its passenger jets. That approach has been criticized as problems at Spirit disrupted production and supply of popular Boeing jets, including 737s and 787s.

“We believe this deal is in the best interests of the flying public, our airline customers, Spirit and Boeing employees, our shareholders and the nation more broadly,” Boeing President and CEO Dave Calhoun said in a statement late Sunday.

Safety concerns came to a head after the Jan. 5 eruption of an Alaska Airlines 737 Max 9 panel at 15,000 feet (4,876 meters) above Oregon. The Federal Aviation Administration announced this shortly afterwards more supervision from Boeing and Spirit, who supplied the aircraft’s fuselage.

No one was seriously injured in the Alaska Airlines door incident that scared passengers, but Boeing is under pressure from the US Department of Justice plead guilty to criminal fraud in connection with two fatal plane crashes involving 737 Max jets more than five years ago.

Boeing has until the end of the week to accept or reject the offer, with the giant aerospace company agreeing to an independent regulator that would oversee its compliance with anti-fraud laws, according to several people who heard federal prosecutors present a proposed offer on Sunday.

The Ministry of Justice said this in a statement Can file a lawsuit that Boeing violated the terms of a 2021 settlement that allowed the company to avoid prosecution for actions that led to the crashes in Ethiopia and Indonesia, which killed 346 people.

These crashes were blamed on a faulty sensor in a flight control system and the investigation is separate from the investigation into the more recent Alaska Airlines blowout involving Spirit.

Boeing spun off Spirit in 2005, which is based in Wichita, Kansas and has no ties to Spirit Airlines. Quality problems have increased in recent years, including hull panels that did not fit together precisely enough and holes that were not drilled properly.

Spirit removed its CEO in October and replaced him with Patrick Shanahan, a former Boeing executive who served as acting defense secretary in the Trump administration.

Everything seemed to be going more smoothly until the Alaska Airlines incident. Investigators said a panel used in place of an auxiliary emergency door at a Boeing factory was removed to allow Spirit workers to repair damaged rivets and bolts that help hold the panel in place were missing after the repair. It is not clear who removed the bolts and did not replace them.

Spirit said yes in May approximately 450 redundancies workers at the Wichita plant due to a production slowdown since the January incident. The total workforce was just over 13,000 people.

“Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems,” Shanahan said.

The stock value of the $4.7 billion acquisition is $37.25 per share, while the total value of the deal is about $8.3 billion, including Spirit’s last reported net debt, the aerospace company said.

Boeing’s common stock will be exchanged for Spirit shares according to a variable formula that depends on a weighted average of the stock price over a 15 trading day period ending on the second day before the deal closes, Boeing said.

The companies also announced an agreement with Airbus to negotiate the purchase of Spirit assets involved in the European aerospace company’s programs. The Airbus deal will take effect when Boeing’s acquisition of Spirit is completed, the two US companies said.