Boeing buys back fuselage maker hoping to address safety, quality control issues

Back in 2005, aerospace giant Boeing split off fuselage manufacturing at plants in Kansas and Oklahoma as part of a cost-savings plan to outsource more plane-building duties during a period in which the company sought efficiencies as part of a broader restructuring plan.

Now, Boeing is completing a deal that first surfaced this spring to buy back the facilities, now known as Spirit AeroSystems, in a response to rising criticism and scrutiny amid a raft of quality control issues and cataclysm’s like a brand new Boeing 737 Max 9 plane flown by Alaska Airlines losing an emergency door plug during a flight to Portland. The plane landed safely following the blowout and no passengers or crew members sustained serious injuries as a result of the incident.

Company officials believe bringing the fuselage manufacturing duties back under the corporate umbrella will allow it to more closely monitor and address quality issues that have led to widespread concerns including among federal lawmakers who grilled Boeing CEO Dave Calhoun over safety during a June congressional hearing.

“Among the many actions we’re taking as a company, this is one of the most significant in demonstrating our unwavering commitment to strengthen quality and make certain that Boeing is the company the world needs it to be,” Calhoun said in a message to employees, per CNBC .

Calhoun has previously announced his plans to step down from his CEO position at the end of the year.

What’s the Boeing-Spirit deal worth?

Boeing is acquiring Spirit AeroSystems in an all-stock deal that gives the fuselage maker a valuation of about $4.7 billion. Including Spirit’s debt obligations, the all-in value of the transaction is over $8 billion. About 70% of Spirit’s contracts are for Boeing components but the company also does some manufacturing for Boeing’s main commercial airlines competitor, European conglomerate Airbus.

Calhoun said he expects the Spirit AeroSystems deal to close mid-2025, subject to approval by regulators, Spirit shareholders and the sale of Spirit’s operations dedicated to Airbus planes.

Senators grills Boeing CEO

Two weeks ago, Calhoun was called to testify on Boeing’s safety record during a hearing hosted by the U.S. Senate’s Subcommittee on Investigations and following release of a report that included new allegations from a whistleblower who shared concerns that faulty parts were being used in Boeing 737 aircraft.

Subcommittee Chairman Richard Blumenthal, D-Conn., noted the company was floundering amid ongoing safety concerns following the fatal crashes of two Boeing 737 Max aircraft just five months apart in late 2018 and early 2019 that resulted in 346 deaths and the Alaska Airlines incident earlier this year.

“This hearing is a moment of reckoning,” Blumenthal said. “It’s about a company, a once iconic company, that somehow lost its way.”

Sen. Josh Hawley, R-Mo., called out Calhoun personally, saying that the Boeing CEO, who’s held the top executive position since January 2020, had been too focused on the bottom line, per a report from The Associated Press .

“You are cutting corners, you are eliminating safety procedures, you are sticking it to your employees, you are cutting back jobs because you are trying to squeeze every piece of profit you can out of this company,” Hawley said. “You are strip-mining Boeing.”

Spirit and Airbus part ways

In a Monday press release, Airbus announced it had reached its own agreement with Spirit AeroSystems in relation to a potential acquisition of Airbus-related manufacturing including the production of A350 fuselage sections in Kinston, North Carolina, and St. Nazaire, France; of the A220′s wings and mid-fuselage in Belfast, Northern Ireland, and Casablanca, Morocco; as well as of the A220 pylons in Wichita, Kansas.

Spirit will pay Airbus $559 million in acquisition costs for the manufacturing lines.