Spirit AeroSystems settles back into Boeing’s orbit

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So much of Spirit AeroSystems’s existence has been spent trying to break away from Boeing — the super massive star at the center of its universe.

Spirit’s original and largest customer has always been Boeing, from which it was spun off in 2005. The company’s attempts to reduce its reliance on the plane maker have met varying degrees of success. It bought and built factories doing work for Airbus. It also pursued work with Gulfstream, Northrop Grumman and Sikorsky while aggressively expanding its non-Boeing aftermarket business.

Over the last five years, in the midst of bruising negotiations with Boeing and deteriorating financial performance, Spirit massively accelerated that effort. In 2018, it announced it was buying high-lift wing component manufacturer Asco Industries of Belgium for $650 million. That deal fell apart in 2020, but that same year it acquired Bombardier’s factories in Northern Ireland and Morocco to build wings and fuselage sections for the Airbus A220.

“We were too concentrated,” said Spirit’s now-departed CEO, Tom Gentile, on his final earnings call in August, noting that 95% of its work was tied to commercial aviation, 75% of its revenue came from Boeing and 50% from just a single program, the 737 Max. Gentile touted its diversification strategy as poised to “fundamentally change Spirit.”

Related: Inside the strained union of Boeing and Spirit AeroSystems

Though on Wednesday, newly-appointed interim chief executive officer, Pat Shanahan, a multi-decade Boeing executive, put that strategy on ice. “To the degree that Spirit has approached that in the past, I would say ‘no’ diversification doesn’t make sense at this time,” said Shanahan, a board member since 2021. “I do not intend to wait for my replacement before moving forward” with strategic changes to the company. “I will narrow the aperture.”

“When you look at the demand for commercial airplanes, having two of the biggest customers in the world and not being able to satisfy the demand, it should command our full attention,” said Shanahan during the company’s third quarter earnings call on November 1, when it announced a $204 million loss and $136 million in free cash burn during the quarter.

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