A “definitive deal” was struck by US aircraft manufacturer Boeing to acquire its subcontractor Spirit, which has been under fire recently for production quality control issues. Boeing announced this on Monday.
The firm released a statement saying, “The merger is an all-stock transaction at an equity value of approximately $4.7 billion, or $37.25 per share.”
Spirit was spun out by Boeing in 2005 in an effort to cut expenses, and the company revealed in March that it was in talks to possibly reacquire Spirit.
“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,” said Dave Calhoun, president and CEO of Boeing.
He claimed that with reintegrating Spirit, “we can fully align our workforce to the same priorities, incentives, and outcomes — centered on safety and quality” as well as “our commercial production systems,” which include safety and quality management systems.
Spirit AeroSystems manufactures important components, including fuselages, for Boeing and Airbus.
Separately, Airbus announced that it would pay a minimal $1 for the Spirit AeroSystems facilities that manufacture parts for its aircraft, with Spirit AeroSystems providing $559 million in compensation.
This includes the A350 production facilities located in North Carolina and France, as well as the Belfast and Casablanca, Morocco, locations where the wings and mid-fuselage of the A220 are produced.
It would also include the A220 pylons, which are produced in Kansas, USA.
The agreement between Airbus and Boeing “aims to ensure stability of supply for its commercial aircraft programmes through a more sustainable way forward, both operationally and financially.”
– Safety issues
By far Spirit’s largest client, accounting for about 70% of its sales in 2023, is the American aircraft manufacturer Boeing.
Following a near-catastrophic event in January in which a fuselage panel of an Alaska Airlines 737 MAX blew off mid-flight, the two firms have been under severe scrutiny.
The door plug’s missing bolts have been the main focus of the Alaska Airlines inquiry. Spirit AeroSystems produced the fuselage.
Federal Aviation Administration officials have been closely monitoring Boeing, forcing the corporation to resolve safety concerns, including Spirit AeroSystems’ oversight.
On March 1, Boeing disclosed modifications to its operations aimed at enhancing its communication with Spirit AeroSystems.
Boeing’s claim that it has completely turned around its operations following two catastrophic 737 MAX disasters on Lion Air and Ethiopian Airlines in 2018 and 2019 was challenged by the Alaska Airlines incident.
In connection with those two crashes, which resulted in 346 fatalities, Boeing may still have legal issues.
Following two fatal 737 MAX crashes in 2018 and 2019, the US Department of Justice (DOJ) ruled in May that Boeing could face criminal charges for breaking a deferred prosecution agreement.
The DOJ is reportedly giving Boeing a plea agreement that would spare it from going to trial for two crashes, according to a lawyer representing the relatives of the victims on Sunday.
Paul Cassell, a law professor at the University of Utah who represents the families, claimed that the DOJ presented the families with the terms of the agreement, which calls for Boeing to pay a fine and submit to an independent supervisor, in a two-hour presentation on Sunday.
In 2021, Boeing reached a three-year deferred prosecution agreement and agreed to pay $2.5 billion to settle fraud accusations pertaining to the 737 MAX’s certification.
Along with the monetary fines, the deal mandated that Boeing improve its compliance program, have frequent meetings with US anti-fraud regulators, and provide yearly reports detailing its advancements.
In May, the Department of Justice (DOJ) announced that Boeing could face legal action for breaking multiple terms of the original agreement, such as the need to strengthen internal controls to identify and prevent fraud.
Although Boeing disagreed with the DOJ’s findings in the middle of June, it has acknowledged the seriousness of the safety issue.
The families of the victims are requesting a fine of about $25 billion and have demanded that Boeing and its officials face criminal charges.
Following the January Alaska Airlines incident, Boeing addressed quality control difficulties by slowing down 737 program production, which resulted in further loss-making.
The business, a significant supplier to the US military aerospace program, could experience severe financial difficulties as a result of criminal prosecution.
