Under pressure on plane safety, Boeing is buying stressed supplier Spirit for $4.7 billion
Under pressure on plane safety, Boeing is buying stressed supplier Spirit for $4.7 billion
Boeing, which previously owned Spirit, said it is bringing the supplier back into the Boeing fold to improve plane quality and safety, which has come under increasing scrutiny.
Boeing announced plans to acquire key supplier Spirit AeroSystems for $4.7 billion, a move that it says will improve plane quality and safety amid increasing scrutiny by Congress, airlines and the Department of Justice.
Boeing previously owned Spirit, and the purchase would reverse a longtime Boeing strategy of outsourcing key work on its passenger planes. That approach has been criticized as problems at Spirit disrupted production and delivery of popular Boeing jetliners including 737s and 787s.
“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly,” Boeing President and CEO Dave Calhoun said in a statement late Sunday.
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For people lacking context, Boeing split off and sold their division that became Spriti Aerosystems. The theory at the time was that Boeing's core competency wasn't building airplanes, it was managing relationships with other vendors. In particular, the actual plane manufacturing part of the company was undesirable due to perceived poor "Return on Net Assets." The theory they pitched to shareholders was they should sell off non obviously profitable divisions so they reduced asset liability while keeping the same or better profits.
That was their explanation, of course it was a terrible idea.