Boeing agrees to acquire Spirit AeroSystems in $8.3 billion strategic reversal

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Boeing has agreed to acquire its largest supplier, Spirit AeroSystems, in a bid to regain its industrial stability 19 years after the aerostructures manufacturer was created through a fraught strategy of divestiture and outsourcing that cost Boeing billions of dollars and far outstripped any benefit it aimed to gain from the breakup.

The $8.3 billion transaction, including Spirit’s last reported net debt, caps months of talks between Boeing and Spirit, which was created in 2005 from Boeing’s Wichita, Kansas and Tulsa, Oklahoma divisions responsible for the aerostructures for all of its commercial aircraft. Boeing said the merger is an all-stock transaction at an equity value of approximately $4.7 billion, or $37.25 per share.

Related: Inside the strained union of Boeing and Spirit AeroSystems

Spirit provides 70% of the 737, which has been at the center of Boeing’s turmoil in the last six years. Following two fatal crashes in 2018 and 2019 with Lion Air and Ethiopian Airlines, Boeing eventually was forced to halt production, causing an industrial pileup for its supply chain heading into the COVID-19 pandemic. Spirit had been financially struggling heading into that sharp production downturn after years of strategic turmoil with Boeing that hindered its ability to invest in quality systems, reporting from The Air Current detailed in May 2023.

“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly,” said Boeing CEO Dave Calhoun in a statement. “By reintegrating Spirit, we can fully align our commercial production systems, including our Safety and Quality Management Systems, and our workforce to the same priorities, incentives and outcomes – centered on safety and quality.”

Calhoun a year ago dismissed any possibility of reacquiring Spirit, but the company was forced to revisit its assumptions following the accident aboard Alaska Airlines 1282, which violently lost a plug door in flight on Jan. 5. While Spirit was not responsible for the bolts that were apparently not re-installed on the plug exit, Boeing executives contend that incomplete and discrepant work performed by the aerostructures provider on the fuselages it supplies Boeing created the conditions for the accident.

Spirit is considerably larger in 2024 than it was when it was created in a sale to Canadian private equity firm Onex on June 17, 2005 for $1.2 billion ($1.87 billion in 2024 dollars), including $300 million in liabilities. Spirit then had 8,500 employees; today it has around 21,000 as it has pursued other work from Airbus, business jets and defense customers. Today, 2,030 of the original “Day One” Boeing veteran employees remain at Spirit, according to the company.

Related: Boeing wants Spirit AeroSystems before it picks a new CEO

Spirit’s primary bases in Kansas and Oklahoma are of principal interest to Boeing. The deal is expected to close in mid-2025 subject to regulatory agreements and the divestment of major activities related to Airbus, including the production of the A220’s wings and mid-fuselage in Belfast, Northern Ireland and Casablanca, Morocco; A350 fuselage sections in Kinston, North Carolina and Saint Nazaire, France; and A220 pylons in Wichita. Concurrent with Boeing’s announcement, Airbus said it has entered into a binding term sheet agreement with Spirit that would see Airbus compensated by a payment of $559 million from Spirit for the acquisition of these activities.

“With this agreement, Airbus aims to ensure stability of supply for its commercial aircraft programs through a more sustainable way forward, both operationally and financially, for the various Airbus work packages that Spirit AeroSystems is responsible for today,” the company said in a statement.

Boeing’s acquisition of Spirit marks another in a series of stunning strategic reversals from the U.S. plane maker over the last decade and a half. The company acquired Vought Aircraft Industries and its Global Aeronautica joint venture with (now) Leonardo in 2008 and 2009 to stabilize its 787 supply chain and give it an industrial base in South Carolina after handing major structural work to the suppliers. It decided to bring back carbon fiber composite wing production for the 777X in 2014 after Mitsubishi Heavy Industries performed the work on its 787, the program which pioneered its chaotic global partner strategy. And in 2020, Boeing and Embraer terminated plans for the 80% acquisition of the Brazilian plane maker’s commercial aircraft unit.