Back to being Boeing: $8.3 billion deal to buy back Spirit AeroSystems confirmed

Pressed to get a handle on persistent quality control issues, The Boeing Co. has reached agreement on a $8.3 billion deal to reacquire Spirit AeroSystems, 19 years after selling its sprawling Wichita plant in a cost-cutting move.

The deal was officially announced in a written statement issued by Spirit late Sunday night.

Spirit confirmed it “has entered into a definitive merger agreement under which The Boeing Company . . . will acquire Spirit for $37.25 per share in Boeing common stock.”

“Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems,” Patrick M. Shanahan, president and CEO of Spirit, said in the release.

The deal has been in the works since February.

Spirit, the largest employer in Wichita, also said it will divest its operations that serve Boeing’s chief rival in manufacturing airliners, the European company Airbus.

“The parties will continue to negotiate in good faith to enter into definitive agreements for Airbus to acquire certain Spirit assets that serve Airbus programs, concurrently with the closing of Spirit’s acquisition by Boeing,” the Spirit statement said.

The statement confirmed reports earlier Sunday from the Reuters news agency that the two companies’ boards had voted Sunday and reached accord to bring Spirit’s operations back under Boeing’s wing.

Reuters initially calculated the value of the transaction at $4.34 billion in stock swaps, based on Spirit’s current share price of $37.25 per share.

Spirit announced that part of the deal is worth $4.7 billion, with a total transaction value of approximately $8.3 billion, including the acquisition of Spirit’s outstanding debts.

“The price of $37.25 per share represents a 30% premium to Spirit’s closing stock price of $28.60 on February 29, 2024, the day before Spirit and Boeing issued press releases confirming they were in discussions regarding a potential transaction,” Spirit said.

The complex transactions involved will require approval from Spirit shareholders and approval from regulators. The transactions are expected to close in mid-2025, Spirit said.

Although it became a separate company after the 2005 sale, Spirit remained a primary supplier of Boeing fuselages, which are assembled into completed aircraft at Boeing plants in the Seattle area.

Boeing is under pressure to take back and improve its quality control after a series of errors cost lives and twice grounded 737 Max jets, a staple product in the Boeing lineup.

The Max was grounded for months in 2019 and 2020 after two overseas airlines suffered a control malfunction which crashed two airliners and killed 346 people.

The planes were grounded again early this year after a door plug that was incorrectly installed in a Spirit-manufactured fuselage blew out during an Alaska Airlines flight in January. The plug was used to fill the hole where an optional emergency door is installed in some configurations of the plane.

No one was killed in that incident, but it triggered intense review by the Federal Aviation Administration. The FAA reported in March that the agency “found multiple instances where the companies (Boeing and Spirit) allegedly failed to comply with manufacturing quality control requirements.”

The FAA said it has “identified non-compliance issues in Boeing’s manufacturing process control, parts handling and storage, and product control.”

The reported sale of Spirit back to Boeing would bring Wichita full-circle.

In 2005, the community was devastated when Boeing, the No. 1 employer in a city that bills itself the Air Capital of The World, sold its mammoth plant to the investment firm that formed Spirit.

The sale involved abrogation of labor contracts and massive layoffs. Especially hard-hit were older, more experienced and higher-paid employees who had thought themselves secure, because of Boeing’s long track record in Wichita and reputation for taking care of its people.

Spirit took over as the city’s No. 1 employer, and recently was reported to have about 12,000 employees.

The Machinists Union that represents Spirit’s Wichita line workers reported about a week ago that approximately 310 workers have been laid off due to slowdowns in Boeing production caused by the quality-control controversy.