Boeing Acquires Spirit AeroSystems in $4.7 Billion All-Stock Deal Amid Supply Chain Challenges

Boeing Co. has entered into an agreement to acquire Spirit AeroSystems Holdings Inc. in an all-stock transaction valued at $4.7 billion, marking a significant consolidation in the aerospace sector. The deal, set at $37.25 per share, also includes Boeing assuming approximately $3.5 billion of Spirit’s debt. The acquisition, which is expected to be formally announced on Monday, will allow Boeing to take control of Spirit’s manufacturing operations essential to its commercial jet lineup, particularly the 737 Max frames, alongside a portion of Spirit’s defense contracts.

In a parallel development, Airbus SE is reportedly poised to take over certain Spirit factories that produce structures and components for its aircraft, although the specifics of this deal remain undisclosed.

This strategic move by Boeing appears to be a response to recent operational challenges. A notable incident in January involving a 737 Max-9 airliner highlighted significant quality and manufacturing issues at both Boeing and Spirit, its principal supplier, prompting a reevaluation of their partnership. The mishap, which involved a door-shaped panel blowing out shortly after takeoff, underscored the vulnerabilities in Boeing’s supply chain and manufacturing standards, leading to heightened scrutiny and a reduction in 737 fuselage shipments.

Reintegrating Spirit into Boeing’s operations is expected to enhance control over the manufacturing process and stabilize the supply chain, especially in light of post-Covid workforce challenges at Spirit’s Wichita campus, a critical hub for the 737 and 787 Dreamliner components. The deal not only strengthens Boeing’s hold on crucial aircraft production capabilities but also comes at a time when the company is navigating financial turbulence, with approximately $4 billion in cash losses recorded in the first quarter and similar figures anticipated for the current quarter.

The acquisition could be pivotal for Boeing as it strives to maintain its credit rating above speculative grade amidst ongoing financial pressures and seeks to fortify its production capacity and operational resilience in the competitive aerospace industry.

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