The Boeing Company Is Considering Purchasing Spirit AeroSystems

(CTN News) – An industry source familiar with the matter said Boeing is considering the purchase of its struggling former subsidiary Spirit AeroSystems to resolve quality issues and contain costs associated with the production of the Boeing 737 MAX aircraft.

Combined with Boeing,

Spirit would return to the fold after being spun off in 2005. Recently, Spirit has faced cost pressures and problems that have slowed aircraft deliveries and thinned the company’s balance sheet.

There have been preliminary discussions between Spirit and Boeing, according to the Journal earlier on Friday, citing people familiar with the matter. Spirit has hired bankers to analyze strategic options. Spirit and did not respond to requests for comment.

According to Reuters, a industry source confirmed the move.

According to another industry source, Boeing considered the possibility of acquiring Spirit AeroSystems again after divesting it, but the optics of buying at a higher price discouraged such a move.

On Friday, Spirit’s stock price increased by more than 13%, while shares declined by more than 1%.

As a result of a 737 MAX plane door plug blowing off in mid-flight on Jan. 5, both and Spirit are under fire.

Reuters reported last month that quality has been impacted by years of decentralization. In addition, there has been an exodus of experienced workers and aggressive cost-cutting.

Economies of scale would also help reduce Spirit production costs, according to a second industry source.

The ongoing regulatory risk on Spirit’s largest program – the 737 – only complicates matters further, said Vertical Research Partners analyst Robert Stallard.

For Boeing, this gives them the opportunity to bring Spirit in-house and fix its issues. However, Boeing has its own challenges and has not showcased its execution in recent times.”

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