by Boeing said Friday it was in talks to acquire Spirit AeroSystems, a struggling supplier the manufacturer spun off nearly two decades ago that makes bodies for the 737 Max plane.
By reabsorbing Spirit, Boeing would seek to rescue and restructure a troubled but important partner that has been hit by years of losses and quality control problems. Spirit’s problems have also at times limited how quickly Boeing can produce Max planes, its most popular airliner.
Bringing back Spirit, one of the company’s key suppliers, would be a significant strategic shift for Boeing, which has long relied on outsourcing to manufacture its planes. That strategy has come under increasing scrutiny amid concerns about Boeing’s quality problems.
Both companies have faced intense scrutiny since Jan. 5, when a panel on a 737 Max 9 exploded during an Alaska Airlines flight shortly after takeoff, exposing passengers to deafening wind at 16,000 feet. The pilots operating the plane landed it safely and no serious injuries were reported. Experts say the episode could have been catastrophic if it had occurred at a higher altitude with passengers moving around the cabin.
The National Transportation Safety Board said in a report last month that the plane appeared to have left a Boeing factory without the necessary bolts to hold the panel, known as a door plug, in place. Door plugs are used to cover gaps in the body of an aircraft where an emergency exit would have been installed if the aircraft had the maximum number of seats.
The incident followed two Max 8 plane crashes in 2018 and 2019 that together killed nearly 350 people. Aviation regulators grounded the Max planes for nearly two years after those crashes. That crisis cost Boeing around $20 billion.
The acquisition of Spirit could allow Boeing to more easily change the supplier’s production policies and practices, something it has been seeking for some years from abroad. Problems with quality and operations led to a leadership shakeup at Spirit last fall. Patrick Shanahan, a former Boeing employee and senior Defense Department official, took over as CEO of Spirit.
“We believe that reintegrating Boeing and Spirit AeroSystems manufacturing operations would further strengthen aviation safety, improve quality and serve the interests of our customers, employees and shareholders,” Boeing said in a statement.
“While we cannot guarantee that we will be able to reach an agreement,” the company added, “we are committed to finding ways to continue improving the safety and quality of the airplanes that millions of people depend on every day.” .”
But buying Spirit could also saddle Boeing with more problems at more factories as regulators require it to improve quality control at its own plants. This week, the Federal Aviation Administration gave the company 90 days to come up with a plan to address its quality control problems.
Spirit and other companies that make airplane body and wing components have faced significant challenges in recent years, said Kevin Michaels, CEO of AeroDynamic Advisory, a consulting firm.
“It’s kind of a failed market,” he said. “The biggest aerostructures companies are losing huge amounts of money.”
Boeing sold Spirit to an investment firm in 2005 as part of a drive to cut costs and focus more on final assembly of the planes. That investment company, Toronto-based Onex, later listed Spirit on the stock exchange. Spirit soon began making steady annual profits in the hundreds of millions of dollars.
But the company suffered a setback in the early 2010s, following the financial crisis. Its fortunes improved in the middle of the decade, but Spirit and its peers have suffered more recently in part because plane makers like Boeing and Airbus have pressured suppliers to cut costs even as planes have become more complicated, Michaels said.
Spirit also took a big hit when regulators grounded Boeing 737 Max planes after the two crashes. Then, in early 2020, the pandemic disrupted supply chains, contributing to rising materials costs. Over the past four years, Spirit has lost $2.5 billion.
Any deal between Boeing and Spirit will have ramifications for Airbus, Boeing’s biggest competitor in the commercial airplane business, because Spirit also makes parts for Airbus planes. Airbus, based in Toulouse, France, declined to comment Friday on whether it would seek to acquire Spirit parts that supply it with parts.
Spirit shares closed up about 15 percent on Friday after The Wall Street Journal and other news organizations reported that Boeing was in talks to acquire the supplier. Boeing shares fell about 2 percent.
Liz Alderman contributed reports.
