BOEING’S plan to buy back supplier Spirit AeroSystems Holdings has become a protracted process over pricing for factories that make components for Airbus, complicating the US planemaker’s efforts to gain tighter control over manufacturing quality.
Since Boeing first confirmed its intention in early March to re-integrate Spirit, talks have only progressed slowly and don’t appear anywhere close to completion, according to people close to the matter. Untangling Spirit is complicated because the company makes parts not just for Boeing, but also for arch-rival Airbus as well as manufacturers including Northrop Grumman, said the people, who asked to not be identified as the negotiations are confidential.
The US planemaker had sought to quickly forge a deal with its struggling former aero structures unit, which builds 737 Max fuselages, as it works to improve quality under the close scrutiny of federal regulators. Buying back Spirit, which Boeing spun off in 2005, would mark a dramatic step to stabilise its supply chain after a series of high-profile lapses.
Talks between the parties have not broken down, and the companies involved remain willing to reach an accord, the people said. Boeing declined to comment. Airbus said it’s in “early stage discussions on a variety of options, including acquiring from Spirit Aerosystems some of the activities that they carry out for Airbus.” The company declined further comment on the status of negotiations.
“As negotiations continue, our focus remains on providing our customers with the highest-quality product,” Spirit spokesman Joe Buccino said.
Analysts will seek more details during a conference call with Boeing executives when the company reports earnings on Wednesday (Apr 24), including how the cash-strapped company intends to finance the deal. Reintegrating its former Wichita, Kansas hub won’t resolve the US manufacturer’s near-term crisis, but could prove beneficial over the longer term, Ken Herbert, analyst with RBC Capital Markets, said in an April 19 note.
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While it negotiates with Boeing, Spirit has been looking to spin off a handful of manufacturing complexes to Airbus, which accounts for about 19 per cent of the supplier’s sales. Neither planemaker wants Boeing to wind up owning factories that build crucial structural components for Airbus’s A220, A320 and A350 aircraft, the people said.
But Airbus appears to be in no rush to strike a quick deal for the sites, which would expand the holdings of its aero structures division, some of the people said. Among the Toulouse, France-based company’s concerns: the manufacturer would have to shoulder any operating losses at plants like Spirit’s composite wing factory in Belfast, Ireland, adding to the financial drain from the A220 programme.
Given the complexity of reaching an agreement with its biggest rival, Boeing is considering moving forward with the Spirit takeover without the Airbus deal in place, one of the people said. BLOOMBERG
