July 13, 2024

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Boeing Considers Acquisition of Spirit Aerosystems Amid Manufacturing Woes

Boeing is exploring the possibility of acquiring Spirit Aerosystems, its key supplier entangled in numerous manufacturing challenges. Once a part of Boeing’s operations until its spin-off in 2005, Spirit continues to heavily rely on Boeing for the majority of its business.

The aerospace giant has faced mounting scrutiny following an incident in January when a component of one of its aircraft broke off mid-flight. A subsequent investigation by the US government revealed that bolts crucial for securing the panel were removed at Boeing’s Washington factory, a move purportedly to address damaged rivets, but were never reinstalled. The compromised component was manufactured by Spirit before undergoing final assembly at Boeing.

In response to the incident, the Federal Aviation Administration (FAA) has mandated Boeing to devise a comprehensive plan within 90 days to enhance its safety protocols.

Boeing and Spirit have been collaborating closely to rectify a series of quality issues that have disrupted plane deliveries, prompting Spirit to appoint a new CEO last year. Boeing views the potential reintegration of its manufacturing operations with Spirit as a strategic move to fortify aviation safety and improve overall quality.

Reports of acquisition discussions propelled Spirit’s stock by over 10%, with its market valuation surpassing $3.7 billion. Conversely, Boeing’s shares experienced a slight decline following the news. Additionally, Spirit is contemplating the sale of its Northern Irish unit to Airbus.

Spirit, boasting a workforce of over 20,600 employees globally, including 3,400 in Belfast and 1,120 in Prestwick, remains a crucial player in the aviation supply chain. The potential acquisition signals a pivotal moment for both companies amid ongoing efforts to address manufacturing deficiencies and bolster industry resilience.