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 years-long strategy by Boeing to outsource key work on passenger planes. That approach has been criticized because problems at Spirit disrupted production and delivery of popular Boeing jetliners, including the 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 a panel on an Alaska Airlines 737 Max 9 exploded Jan. 5 at 16,000 feet (4,876 meters) above Oregon. The Federal Aviation Administration soon after announced increased scrutiny of Boeing and Spirit, which supplied the plane’s fuselage.
No one was seriously injured in the Alaska Airlines door incident that terrified passengers. But Boeing is under pressure from the U.S. Justice Department to plead guilty to criminal fraud in connection with two fatal crashes involving 737 Max planes more than five years ago.
Boeing has until the end of the week to accept or reject the offer. This includes the major aerospace company agreeing to an independent regulator to monitor compliance with anti-fraud laws, according to several people who heard federal prosecutors explain a proposed offer on Sunday.
The Justice Department said in a court document in May 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 that killed 346 people.
Those crashes have been attributed to a faulty sensor in a flight control system and the investigation is separate from 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 fired its CEO in October and replaced him with Patrick Shanahan, a former Boeing executive who served as acting defense secretary in the Trump administration.
Until the Alaska Airlines incident, things seemed to be going more smoothly. Investigators said a panel used in place of an additional emergency door was removed at a Boeing factory so Spirit workers could repair damaged rivets, and that bolts holding the panel in place were missing after the repair job. It is not clear who removed the bolts and forgot to replace them.
Spirit said in May it had laid off about 450 workers at its Wichita plant due to production slowdowns since the January incident. Its total workforce was just over 13,000.
“Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems,” Shanahan said.
The equity value of the $4.7 billion acquisition is $37.25 per share, while the total value of the deal is approximately $8.3 billion, including Spirit’s last reported net debt, the aerospace company said.
Boeing said it will exchange Boeing common stock for Spirit shares based on a variable formula based on a weighted average of the stock price over a 15-trading day period ending on the second day before the deal closes.
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 agreement will take effect when Boeing’s acquisition of Spirit is completed, the two U.S. companies said.
