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Boeing definitively acquires Spirit worth $8.3bn

Posted on by darion

View of Spirit Aerosystems building at Wichita State University, September 17, 2023. Credit: Kit Leong.

After only three months of talks, the US aerospace giant Boeing has today (1 July 2024) confirmed its definitive acquisition of Spirit AeroSystems, a major aircraft parts supplier based in Wichita, Kansas.

The deal is worth $4.7bn – the approximate equity value of the company – while the total transaction amounts to $8.3bn, including Spirit’s last reported net debt.

Spirit originally emerged from within the Boeing portfolio until the Wichita division was sold in 2005. Since then, around 70% of Spirit’s orders came from Boeing, others include Airbus and the US Department of Defense among others.

The two companies will remain independent while necessary regulatory approvals are pending. The transaction is expected to close mid-2025 and is also subject to the sale of the Spirit operations related to certain Airbus commercial work packages.

Discussions began in the weeks after the prime fell under scrutiny over the safety of its commercial airlines earlier this year. The decision subsequently spurred uncertainty in US defense circles, where some have expressed concerns that Spirit’s defense commitments may be sidelined for its commercial restructuring.

Concerns defense will take a hit

Senator for Kansas, Jerry Moran, in a Senate Defense Appropriations Committee hearing on March 15 inquired: “My assumption is that Boeing is almost exclusively interested in this for commercial manufacturing, and yet if (there is an) absence of Spirit Aerosystems (then) we lose a lot of defense capabilities.”

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U.S. Marine Corps CH-53 King Stallion lifts armored vehicle, April 26, 2022. Spirit Aerosystems designs and builds the cockpit and cabin assembly inside Sikorsky’s King Stallion. Credit: DVIDS.

In a press release announcing the definitive agreement from this morning, Boeing president and CEO Dave Calhoun also looked to assuage these fears, suggesting that there will remain a balance of operations on both sides of the business.

“Our acquisition of Spirit will include substantially all Boeing-related commercial operations, as well as additional commercial, defense and aftermarket operations.

“As part of the transaction, Boeing will work with Spirit to ensure the continuity of operations supporting Spirit’s customers and programs we acquire, including working with the US Department of Defense and Spirit defense customers regarding defense and security missions.”

No need to be afraid

GlobalData Defense Analyst Tristan Sauer assessed the impact repurchase of Spirit will have on the defense industrial ecosystem.

“Both Boeing’s commercial aerospace and defense and space units are facing strong headwinds but should still be operating on relatively independent budgets.

“The purchase of Spirit is likely designed to offset some of the issues they have had with manufacturing and quality control, likely looking to bring Spirit’s expertise and infrastructure in-house to help address their production backlog.”

While the new deal will have no negative impact on Boeing’s defence operations, Sauer added that it will not enhance its defence output much either.

“Maybe some Spirit personnel will eventually move into Boeing Defense, but the focus of this deal seems to be on benefits to Boeing’s commercial aerospace business.”