Some big news broke last night, with The Boeing Company agreeing to purchase Spirit AeroSystems in an all-stock deal.
Boeing 737-7 in house livery – Image, The Boeing Company
The merger is an all-stock transaction at an equity value of approximately $4.7 billion, or $37.25 per share. The total transaction value is approximately $8.3 billion, including Spirit’s last reported net debt.
Boeing’s acquisition of Spirit will include all Boeing-related commercial operations, as well as additional commercial, defence and aftermarket operations.
As part of the transaction, Boeing will work with Spirit to ensure the continuity of operations supporting Spirit’s customers and programs it acquires, including working with the U.S. Department of Defense and Spirit Defence customers regarding defence and security missions.
In addition, Airbus is involved, with them entering a binding term sheet where Airbus will acquire capacity and plant. These cover 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.
Notably, Airbus will not pay for this, with the company being compensated by payment of $559 million from Spirit AeroSystems, for a nominal consideration of $1.00.
Spirit AeroSystems is proposing to sell certain of its operations, including those in Belfast, Northern Ireland (non-Airbus operations), Prestwick, Scotland, and Subang, Malaysia.
In Quotes
Boeing 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,”
He also posted the following message to his staff, which was published for wider consumption
I’m pleased to announce that we’ve reached a definitive agreement to acquire Spirit AeroSystems. We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, and the country more broadly.
By once again combining our companies, 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. This is an opportunity to bring back critical airplane manufacturing work on Boeing airplanes into our factories – where Boeing and Spirit world-class engineers and mechanics can work seamlessly together, focused on a common mission to build safe and quality airplanes for our customers.
Among the many actions we’re taking as a company, this is one of the most significant in demonstrating our unwavering commitment to strengthen quality and make certain that Boeing is the company the world needs it to be.
Our acquisition of Spirit will include substantially all Boeing-related commercial operations, as well as additional commercial, defense and aftermarket operations. As part of the transaction, Boeing will work with Spirit to ensure the continuity of operations supporting Spirit’s customers and programs we acquire, including working with the U.S. Department of Defense and Spirit defense customers regarding defense and security missions.
As we work to secure the necessary regulatory approvals, Boeing and Spirit will remain independent companies, but we will continue to work collaboratively with Spirit and its leadership to strengthen the quality and safety of Boeing’s commercial airplanes.
The transaction is expected to close mid-2025 and is subject to the sale of the Spirit operations related to certain Airbus commercial work packages and the satisfaction of customary closing conditions, including regulatory and Spirit shareholder approvals.
As I’ve said before, we will be measured one airplane at a time. This agreement marks an important step in demonstrating Boeing’s commitment to aviation safety.
Thank you for your hard work and dedication.
Dave
Bringing Spirit AeroSystems in-house
It’s important to remember that Spirit Aerosystems was spun out of Boeing in 2005 when it sold its Wichita to an investment firm. Since then it has gone on to deliver products not just for Boeing, but also its competitor, Airbus.
By the time it is folded back in, it would have been 20 years.
The move has come after some serious quality control problems (as well as losses) at Spirit Aerosystems- crystalised when a door fell off from Alaska Airlines Flight 1282, which has pushed this to the forefront, action finally taken by Boeing.
Background Videos
If you have the time, there are two excellent videos that explain how Boeing got here.
The first is by Wendover Productions – How Boeing Lost its Way
The second is from “Last Week Tonight with John Oliver”.
Both have source material provided by The Air Current, which I highly recommend for the analytical work they do.
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