By Tim Hepher, Shivani Tanna and Mike Stone
(Reuters) – Boeing agreed to buy back Spirit AeroSystems for $4.7 billion in stock and Airbus moved to take over the supplier’s losing operations focused on Europe, sending shares in the top three companies to a split of rarely transatlantic.
The nearly two-decade independence of the world’s largest independent aerostructures company ended in a split among its biggest customers after the latest Boeing 737 MAX crisis, caused by a mid-air door plug explosion in January , which raised doubts about the resilience of the aircraft’s production.
Boeing, which spun off Spirit’s core plants in Wichita and Oklahoma in 2005, said it would buy back its former subsidiary for about $37.25 a share, as reported by Reuters on Sunday, giving it an enterprise value of $8.3 billion. dollars including debt.
“Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems,” Spirit CEO Pat Shanahan said in a statement.
Spirit shares rose 3.6% in early US trade, while Boeing gained 2%
The Wichita, Kansas-based company said the deal offered a 30% premium over a day before Boeing and Spirit announced talks to bring the struggling supplier home on March 1.
Boeing has long considered buying its former subsidiary, which analysts say has struggled to thrive independently despite diversifying into work for Europe’s Airbus and others.
The decision to move forward comes as Boeing tries to resolve a major corporate and industrial crisis that has engulfed one of the industry’s key suppliers.
Boeing is trying to overcome the last few months of difficulties caused by the Jan. 5 explosion of a door plug on a virtually new Alaska Airlines 737 MAX 9 plane that exposed quality problems.
These issues have led to a significant production slowdown at Boeing, spilling over into the global commercial aviation industry.
Ratings agency Fitch said the deal should be “operationally beneficial” for Boeing, allowing it to better plan and control future production of the 737 MAX.
The US planemaker has announced the planned departure of CEO Dave Calhoun in the wake of the crisis, with industry executives and analysts pointing to Spirit’s Shanahan, a former senior Boeing executive, as one of the possible replacements.
It was not immediately clear how long he might be tied to Spirit, with the Boeing deal not set to close until mid-2025.
In a note to investors, Bernstein analyst Douglas Harned said the deal “should add clarity … potentially to the Boeing board’s focus on deciding on the next CEO.”
AIRBUS DEAL
Spirit was spun off from Boeing in one of a series of moves that critics say were emblematic of a focus on cost-cutting over quality.
Boeing made the decision to buy it back after the door plug explosion, in what it described as an effort to address its safety concerns and shore up its production line.
That raised questions over the future of the work Spirit does for Boeing’s arch-rival Airbus, prompting the European giant’s CEO to warn in April that he was ready to veto changes in control of Airbus-related plants.
On Monday, Airbus said it would take over core activities at four of the supplier’s factories in the United States, Northern Ireland, France and Morocco, as reported by Reuters last week.
It will also take over small jobs currently performed in Wichita. The separate Airbus deal was triggered by talks between Boeing and Spirit and was loosely coordinated between the three companies, the sources said. He is subject to due care.
Airbus shares rose about 3.3% on Monday.
With Spirit’s Airbus-related operations in the red, industry sources had said the planemaker was seeking up to $1 billion in compensation in exchange for taking over the plants, which make strategic parts for its A350 and A220.
Airbus said it would receive $559 million in compensation from Spirit, depending on the final outlines of the deal, while paying the supplier a token dollar for the assets.
This echoes its decision to buy the Canadian-designed CSeries small jet program for just $1 from Bombardier in 2018. It later named the plane the A220.
Until the latest change, Airbus had not envisaged taking control of loss-making A220 wing production in Belfast, which Spirit bought from Bombardier in 2019.
Monday’s deal removes doubt over the future of part of Northern Ireland’s main industrial employer, although sources said Airbus may need to invest significantly to ramp up production and make the wings more affordable. to be produced.
Spirit said it planned to sell operations in Prestwick, Scotland and Subang, Malaysia that support Airbus programs and those in Belfast that do not support Airbus programs.
(Reporting by Mike Stone and David Shepardson in Washington, Allison Lampert in Montreal, Tim Hepher in Paris and Shivansh Tiwary, Abhijith Ganapavaram and Shivani Tanna in Bengaluru; Editing by David Gaffen, Shubham Kalia, Jamie Freed and Jason Neely)