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Under order from federal regulators to improve its airplane manufacturing processes, The Boeing Co. (NYSE: BA) is in talks to reacquire the supplier that makes many of the parts for its popular 737 Max jets, including door panels like the one that blew out in midair earlier this year.
Arlington-based Boeing said in a brief statement Friday that it has held “preliminary discussions” to buy Spirit AeroSystems Holdings Inc. (NYSE: SPR) nearly 20 years after spinning it off into its own company. Spirit, based in Wichita, Kansas, manufactures about 70% of each Max 737 jet before parts are delivered to Boeing’s Renton, Washington, facility for final assembly.
“We believe the reintegration of Boeing and Spirit AeroSystems’ manufacturing operations would further strengthen aviation safety, improve quality and serve the interests of our customers, employees and shareholders,” the statement said. “Although there can be no assurances that we will be able to reach an agreement, we are committed to finding ways to improve the safety and quality of the airplanes on which millions of people depend every day.”
Both Boeing and Spirit have come under fire for manufacturing lapses since a door panel on a 737 Max 9 jet tore off at 16,000 feet during an Alaska Airlines flight from Portland International Airport in Oregon on Jan. 5, leaving a hole in the plane and forcing the pilot to return to the airport for an emergency landing.
The next day, the Federal Aviation Administration grounded nearly 200 Max 737 9 planes to undergo emergency inspections and though most of the planes have since been returned to service, the FAA has ordered Boeing to scale back production of its Max 737 planes until it is satisfied with the quality of its manufacturing process. Last week FAA Administrator Michael Whitaker turned up the heat on Boeing, giving it 90 days to come up with a comprehensive plan to “make real and profound improvements.”
"Making foundational change will require a sustained effort from Boeing leadership,” Whitaker said in a Feb. 29 statement following meetings with Boeing officials. “We are going to hold them accountable every step of the way, with mutually understood milestones and expectations.”
Boeing has periodically considered reacquiring Spirit over the years but found the price tag to be too high, according to news reports. But Spirit has struggled in recent years with ballooning costs and repeated production delays, contributing to a 70% decline in its share price over the last five years. Last year, the company brought in Pat Shanahan, a former Boeing executive who briefly served as acting defense secretary under President Donald Trump, as its president and CEO.
Spirit’s shares rose sharply on news of a potential merger with Boeing, which was first reported by the Wall Street Journal. Its shares closed at $32.98 Friday, up 15.3% from the previous day’s close, and were up another 3% in premarket trading Monday.
Boeing’s shares fell 1.8% Friday to close at $200. They are down 21% since the start of the year.
