Boeing in discussions to buy supplier Spirit AeroSystems
By Abhijith Ganapavaram and Allison Lampert
(Reuters) -Boeing is in talks to buy its struggling former subsidiary Spirit AeroSystems (NYSE:SPR), as both companies try to solve persistent quality problems and contain costs related to 737 MAX production, an industry source familiar with the matter said on Friday.
A merger would bring Spirit back under the umbrella of Boeing (NYSE:BA), which spun it off in 2005 and in recent years has struggled with cost pressures and problems that have slowed aircraft deliveries and thinned its balance sheet.
Spirit has hired bankers to explore strategic options and has had preliminary discussions with Boeing, the Journal reported earlier on Friday, citing people familiar with the matter. Boeing and Spirit declined to comment.
An industry source confirmed the move to Reuters.
Boeing had previously considered the prospect of buying Spirit AeroSystems back since divesting it, but the optics of buying at a higher price were among the factors that discouraged such a move, according to a second industry source.
Shares of Spirit jumped over 13% on Friday, while those of Boeing fell more than 1%.
Both Boeing and Spirit have been under fire since a Jan. 5 incident when a door plug blew off a 737 MAX plane in mid-flight, exposing frightened passengers to the outside air.
Reuters reported last month that years of decentralization of Boeing's planemaking capacity — along with an exodus of experienced workers and aggressive cost-cutting — has affected quality.
Bringing Spirit back into the fold could address some of those quality issues as it would give Boeing more control over manufacturing.
Such a move would also help Boeing lower Spirit production costs through economies of scale, the second
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