Fuselages bound for Boeing's 737 MAX production facility are stored at its largest supplier, Spirit AeroSystems Holdings Inc, in Wichita, Kansas, US on December 17, 2019.
Nick Oxford | Reuters
Boeing Talks are underway to buy back Air spirit systemsThe companies that make fuselages for Boeing's 737 MAX planes said Friday, as manufacturers seek to eliminate production defects in the best-selling plane.
Spirit shares rose 15% on Friday, while Boeing stock fell nearly 2%. Spirit AeroSystems had a market cap of $3.8 billion as of Friday's close.
In 2005, Boeing spun off its Kansas and Oklahoma operations, which today become Spirit AeroSystems. About 70% of Spirit's revenue last year came from Boeing, and about a quarter came from manufacturing parts for Airbus, Boeing's main competitor, according to a securities filing. Airbus declined to comment on the deal talks.
“We believe the re-integration of Boeing and Spirit AeroSystems’ manufacturing operations will further enhance aviation safety, improve quality, and serve the interests of our customers, employees and shareholders,” Boeing said in a statement on Friday. He added: “Although there is no guarantee that we will be able to reach an agreement, we are committed to finding ways to continue to improve the safety and quality of the aircraft that millions of people rely on every day.”
Spirit also confirmed the talks.
Boeing CEO Dave Calhoun, when asked about outsourcing production of parts for its planes, told CNBC in January: “Has it gone further than that? Yes…it may have, but now it's here and now it has to go further.” “I deal with him.”
Spirit has struggled financially, and was last profitable in 2019, before the pandemic. In October, Spirit appointed Pat Shanahan, who spent nearly three decades at Boeing, as its new interim CEO.
The deal talks come less than two months after part of a Boeing 737 MAX 9 exploded during an Alaska Airlines flight. The Federal Aviation Administration temporarily grounded all planes in January, prompting investigations into the crash and Boeing's production lines.
It was the latest and most serious in a series of defects in the Boeing 737 MAX, the company's best-selling plane.
The bolts on the door seal of the Max plane involved in the January accident appear to have been loose when it left Boeing's factory in Renton, Washington, according to a preliminary report from the National Transportation Safety Board.
Boeing has disclosed numerous production problems and quality defects in fuselages manufactured by Spirit, including improperly drilled holes and wrong spacing in some fuselage components, problems that have slowed deliveries of new planes to airlines.
The Federal Aviation Administration, which oversees Boeing and certifies its planes, has pledged to conduct a deeper audit of the company's production lines since the Jan. 5 accident. Earlier this week, after a meeting with Calhoun, FAA Administrator Mike Whitaker said the agency had given the company 90 days to come up with a plan to improve its quality control and safety systems.
The Wall Street Journal had previously published news about the Boeing and Spirit deal talks.
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