Boeing late Friday confirmed talks about buying Spirit AeroSystems Holdings, saying such a move would “further enhance aviation safety.”
boeing BS,
It said it was having “preliminary discussions” about making the Spirit AeroSystems SPR,
Part of the company again. Boeing sold the assets that became Spirit AeroSystems in 2005.
“We believe the re-integration of Boeing and Spirit AeroSystems’ manufacturing operations will further enhance aviation safety, improve quality and serve the interests of our customers, employees and shareholders,” the aerospace and defense company said.
Shares of both Boeing and Spirit AeroSystems rose in the extended session on Friday. Spirit AeroSystems shares ended the regular trading day up 15%, while Boeing shares closed down about 2%.
“Although there is no guarantee that we will be able to reach an agreement, we are committed to finding ways to continue to improve the safety and quality of the aircraft that millions of people depend on every day,” Boeing said.
Spirit AeroSystems issued a similar statement shortly after, adding that it did not intend to comment further.
The Wall Street Journal reported that the talks took place earlier on Friday. Spirit AeroSystems, which makes fuselages and other aircraft components for Boeing, is at the center of several recent quality issues facing the aerospace and defense company.
Investors will want to know whether this acquisition will solve Boeing's quality issues, but the short answer to that question is no, at least not in the near term, RBC Securities' Ken Herbert said in a note Friday.
Overall, the aviation industry is moving toward more vertical integration after several years of outsourcing, Herbert said. But he said the news that Boeing was seeking to acquire Spirit AeroSystems came as a surprise.
“We don't believe in buying [Spirit AeroSystems] Herbert said this represents a near-term solution for Boeing and concerns about its 737 MAX aircraft. Moreover, the purchase would add to Boeing's near-term execution woes, even though Spirit was once part of the aerospace and defense giant.
On the flip side, there are potential long-term benefits to Boeing from “more integration around tooling, supplier management, production best practices, and execution, among other factors.”
Spirit AeroSystems manufactured the fuselage involved in a mid-air panel explosion on an Alaska Airlines plane last month.
A preliminary report earlier this month found that bolts were missing on that plane. Aviation regulators this week gave Boeing 90 days to come up with a plan to improve safety and quality issues.
Last year, Boeing and Spirit revealed problems with the 737 MAX that slowed production.
The potential acquisition would dilute Boeing's free cash flow by as much as 3.6%, or $297 million, compared with Jefferies' 2025 cash flow estimate of $8.2 billion, Jefferies analyst Sheila Cahyoglu said in a note on Friday.
Assuming Spirit's assets linked to France's Airbus SE AIR,
Kahyaoglu said the deal would not affect Boeing's revenues. According to a previous Wall Street Journal report, Spirit AeroSystems is also exploring selling its operations in Ireland that support Airbus production. This represents less than a third of Spirit's sales, the analyst said.
Jason Gorsky, an analyst at Citi, estimated that Boeing finished last year with about $22 billion in cash, but said that if a deal were reached, an all-stock deal would likely “make more sense because the success of the two companies has been and will continue to be closely linked.” “.
Gorsky maintained buy ratings on both Boeing and Spirit AeroSystems shares, saying that “efforts to improve operations should result in improved earnings visibility for shareholders.”
In the past 12 months, Boeing shares are down 1.8% and Spirit AeroSystems shares are down 4.5%. This contrasts with gains of about 30% for the S&P 500 SPX in the same time frame.
