Boeing, the aerospace giant, is engaged in discussions to repurchase Spirit Aerosystems, the manufacturer of aircraft fuselages. This move comes in the wake of recent quality defects that have plagued Boeing’s 737 Max jets, causing significant concerns over the safety and reliability of the aircraft.
According to sources familiar with the matter, Boeing is in talks to buy back Spirit Aerosystems as both companies work diligently to address the manufacturing flaws on the best-selling 737 Max jet. The talks have caused a surge in Spirit’s shares, which were up 13% at the time of reporting, while Boeing’s shares experienced a slight decline of about 1%.
Spirit Aerosystems, which had a market capitalization of $3.3 billion as of Thursday’s close, is a crucial supplier for Boeing. Last year, approximately 70% of Spirit’s revenue came from Boeing, with the remaining quarter being generated from parts production for Boeing’s main competitor, Airbus.
The repurchase discussions were initially reported by the Wall Street Journal and have raised questions about the future relationship between Boeing and Spirit Aerosystems. Boeing spun off operations in Kansas and Oklahoma in 2005, which eventually became Spirit Aerosystems. This potential repurchase could bring these operations back under Boeing’s control.
The urgency for Boeing to address manufacturing flaws and quality defects has been highlighted by a recent incident involving a Boeing 737 Max 9 plane during an Alaska Airlines flight. A section of the aircraft blew out, leading to the temporary grounding of all 737 Max planes by the Federal Aviation Administration in January. This incident triggered investigations into both the accident itself and the production lines at Boeing.
The National Transportation Safety Board’s preliminary report on the accident revealed that the bolts on the door plug of the Max involved in the incident had not been properly attached when it left Boeing’s factory in Renton, Washington. This revelation is just one of many flaws that have been discovered on the 737 Max, which has raised serious concerns about the overall quality and safety of Boeing’s best-selling jet.
In addition to the door plug issue, Boeing has disclosed several other production problems and quality flaws on the fuselages manufactured by Spirit Aerosystems. These include incorrectly drilled holes and incorrect spacing on fuselage components, which have resulted in delays in delivering new jets to airlines.
The potential repurchase of Spirit Aerosystems by Boeing signifies a significant step towards resolving the ongoing manufacturing flaws affecting the 737 Max jets. By bringing Spirit Aerosystems back under its control, Boeing aims to have greater oversight and control over the production process, ensuring higher standards of quality and safety.
While both Boeing and Spirit Aerosystems have declined to comment on the repurchase talks, the market reaction indicates that investors see this as a positive move for Spirit. The surge in Spirit’s shares suggests that investors have confidence in Boeing’s ability to rectify the manufacturing flaws and improve the overall performance of the 737 Max jets.
In conclusion, Boeing’s engagement in discussions to repurchase Spirit Aerosystems reflects the urgency with which the company is addressing the recent quality defects on its 737 Max jets. By regaining control over the manufacturer of aircraft fuselages, Boeing aims to tackle the manufacturing flaws head-on and restore confidence in the safety and reliability of its best-selling jet. The potential repurchase signifies a crucial step forward for both companies in their efforts to overcome this challenging period and ensure a brighter future for Boeing’s 737 Max jets.
