Troubled Boeing is absorbing Spirit with the Wichita economy in the balance

For Ed Ball, everything old is new again in the aviation industry.

He began working at Metal Finishing Co. 25 years ago and watched Boeing spin off Spirit AeroSystems in 2005. Now Ball is a vice president at the aviation supplier, and he’s watching history reverse itself as Boeing buys back Spirit.

“We have long-term agreements with both Spirit and Boeing,” Ball said. “We really don’t see any change.”

He said the buyout may benefit his 500-employee company, allowing it to cut out the middleman and work directly with Boeing.

Aviation consultant Mike Boyd said the sale is more a shift in corporate structure than a shift in how planes will get made in Wichita.

“There won’t be any changes,” Boyd said. “It’s just (that) the facility is getting a new title.”

The two companies announced this month that Boeing would buy Spirit for $4.7 billion and take on Spirit’s debts for a total cost of $8.3 billion.

This move follows a long string of sometimes deadly safety failures for Boeing planes and increased scrutiny of the company, which has included mounting criticism and tough hearings before Congress.

In a message to employees, Boeing CEO Dave Calhoun said the merger marks an effort by the troubled company to improve the quality of its planes.

“Among the many actions we’re taking,” Calhoun said, “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.”

Are more Spirit layoffs on the way?

On Jan. 5, a door plug on an Alaskan Airlines 737 MAX 9 Boeing jet blew off during a flight. The fallout from this event and other mechanical failures caused Boeing to slow production following increased scrutiny from regulators.

Spirit makes 737 fuselages, the main body of the aircraft, and announced plans in May to lay off hundreds of workers, citing lower production.

“This was bound to happen,” Spirit worker Mike Paolini told KAKE news. “We haven’t really been the busiest lately.”

Spirit notified the union representing workers at the Wichita plant that it would lay off nearly 300 workers at the end of June.

The merger could help prevent future rounds of layoffs.

“I imagine there’ll be more jobs rather than fewer,” said Richard Aboulafia, a consultant with AeroDynamic Advisory, as Boeing prepares to ramp up manufacturing.

Aboulafia said Spirit doesn’t have to generate profit as a standalone company and could operate as a better-funded branch of Boeing.

Boyd agrees. He expects Boeing will soon want to start increasing production again.

“Jetliners are flying skyscrapers in terms of industrial content, just incredibly complex,” Boyd said. “This doesn’t change that. It simply removes that level of profit pressure and management.”

The only change to employment may be a shift in Spirit’s top leadership, but Boyd said he expects most of those jobs will also stay in Wichita.

Union benefits remain, for now

Last year, members of the International Association of Machinists and Aerospace Workers went on strike during contract negotiations with Spirit, securing a 20% wage increase over the next four years.

A spokesperson for Spirit told The Wichita Eagle that it is uncertain if the terms of the contract will continue when Boeing officially takes over. In the meantime, while Spirit continues to operate independently, there will be no changes.

The acquisition is expected to be completed in mid-2025, pending approval by regulators and Spirit shareholders.

The union has said the merger is just one more in a string of changes it has seen in recent years.

“Our top priority will always be to ensure our members are treated fairly and respectfully,” the union said in a statement.

The future of Airbus in Wichita

Even though experts say Spirit should not worry about layoffs, Airbus’ future in Wichita is less clear.

Spirit makes parts for both Boeing and rival Airbus.

Spirit’s Wichita plant makes pylons for the Airbus A220, which connect the engine to the aircraft. Airbus makes up about 20% of Spirit’s business.

In a press release, Airbus announced it will take over the manufacturing of the A220 pylon. The European aerospace company will also take over four Spirit manufacturing plants in North Carolina, France, Northern Ireland and Morocco.

Spirit’s work for Airbus was a loss. To compensate the company for taking on the plants, Boeing will pay Airbus $559 million, and Airbus will pay a symbolic $1 for the facilities.

Airbus spokesperson Kristi Tucker said that it’s too early to know how Airbus operations will be handled in Wichita once the deal between Airbus and Boeing has been finalized.

“We will need several months of due diligence to work through the details,” Tucker said.

She said there would be no effect on the Airbus engineering center at Wichita State University.

Wichita’s future aerospace economy

At 12,000 workers, Spirit AeroSystems is Wichita’s largest employer.

The Greater Wichita Partnership, an economic development group, says on its website that Wichita is home to over 450 aerospace suppliers, and 35% of all general aviation planes are built in Kansas.

John Rolfe, president and CEO of the Wichita Chamber of Commerce, said the deal’s impacts are uncertain.

“We have a strong aerospace industry,” Rolfe said. “We’re looking forward to keeping it and making it grow stronger.”

Aboulafia said Wichita should expect more good than bad.

“It’s not like Boeing is going to move these jobs,” he said, “and now they’ll have the resources needed to achieve their production goals.”

Yet major leadership shake-ups have plagued the company since the door plug incident in January.

Calhoun, Boeing’s CEO, announced he will step down at the end of this year. Boeing Commercial President and CEO Stan Deal plans to retire this year.

Ball is watching to see what the changes will mean for suppliers like his.

“Time will tell,” Ball said. “We’ll see if it is a great thing for us or not. But we’re not worried about it.”