Boeing in talks to acquire fuselage supplier Spirit AeroSystems

Boeing is in talks to acquire Spirit AeroSystems, the troubled fuselage supplier it spun off nearly 20 years ago, as the plane maker faces pressure to improve its safety record.

The Virginia-based group confirmed the “preliminary” discussions on Friday afternoon, saying it believed that the “reintegration” of Spirit “would further strengthen aviation safety, improve quality and serve the interests of our customers, employees, and shareholders”.

The confirmation came after reports of the talks prompted sharp moves in both companies’ shares on Friday. Boeing’s stock fell 1.8 per cent to $200, putting them down 20 per cent since the start of the year, while Spirit’s shares closed 15.4 per cent higher at $32.98, valuing it at almost $4bn.

Spirit, based in Wichita, Kansas, also confirmed the talks while cautioning that it could give no assurances that the two groups would reach an agreement, or on what terms.

The news, which was first reported by The Wall Street Journal, came as both companies are undergoing an audit by the US Federal Aviation Administration, following a mid-air blowout of a door panel on a 737 Max flown by Alaska Airlines in January.

Spirit supplies Boeing with the fuselage to the 737 Max, and Boeing comprises nearly two-thirds of its business. The operation used to be Boeing Wichita until the plane maker spun it off as a public company in 2005.

But Spirit has suffered from lopsided contracts with Boeing, and Boeing had to renegotiate its agreements with Spirit this past autumn to forestall a looming cash crunch at the supplier.

Spirit separately caused two notable quality lapses on the Max in 2023, though neither incident endangered public safety. It shipped Maxes with first improperly installed fittings on the vertical stabiliser, then four months later incorrectly drilled holes in the rear pressure bulkhead.

The door panel blowout in January was caused by missing bolts, according to a preliminary report by the National Transportation Safety Board. The door panel arrived at Boeing’s factory in Washington with damaged adjacent rivets, forcing workers to open it for repairs by a team from Spirit. The bolts required to hold the door panel in place were never added back.

In its statement on Friday Boeing said it was “committed to finding ways to continue to improve the safety and quality of the airplanes on which millions of people depend each and every day”.

Investors have speculated in recent months that Boeing might move to reacquire Spirit. The plane maker needs a healthy operation there to ensure smooth final assembly for the 737, as well as other programmes Spirit supplies, including the 787 Dreamliner and KC-46 refuelling tanker.

Former chief executive Tom Gentile was replaced as head of Spirit in October by Patrick Shanahan, who worked at Boeing for three decades before his turn as acting US Secretary of Defence.

Robert Stallard, analyst at Vertical Research Partners, said bringing Spirit back in-house would be “great for Spirit, not so great for Boeing”.

“As the relative share price moves suggest, if Spirit were able to sell its Wichita operations to Boeing this would be a coup. Clearly Spirit is in a world of pain at the moment, and the ongoing regulatory risk on its largest programme — the 737 — makes things worse,” Stallard wrote in a note.

While the deal would give Boeing the opportunity to fix Spirit’s problems, he added the US aerospace giant “has its own issues and has hardly covered itself with glory when it comes to execution of late”. Integrating Spirit would put further pressure on Boeing’s commercial aircraft team, while Boeing’s balance sheet could do “without the cost acquiring Spirit”, Stallard said.

Spirit is also exploring whether to sell its operations in Belfast, in Northern Ireland, The Wall Street Journal reported. Although Boeing is Spirit’s biggest customer, the company is also an important supplier to European rival Airbus. It builds wings for Airbus A220 jets in Belfast and also makes parts for the A350 and A320.

The European group had been discussing the future of the operations after the Alaska Airlines incident, according to two people familiar with the situation. Airbus declined to comment on Friday.