Boeing announced that it will inject $425 million into Spirit AeroSystems, to bolster its cashflow, ahead of plans to acquire the supplier.
Boeing’s 737 production recently fell to a rate much lower than the limit that the FAA mandated, after the Alaska 737 MAX-9 blowout in January. Boeing has stated that this is because it is concentrating on improving quality, both at its own sites and at those of suppliers like Spirit AeroSystems.
This cash injection is also part of the same process, according to Boeing. The funds, which are essentially advance payments towards Spirit, will allow the company to continue to produce aerostructures at its contracted rates.
Boeing’s move isn’t surprising, considering its intention to acquire its supplier, which was once its subsidiary – called “Boeing Wichita”. During its latest financial call, Boeing confirmed that the process to acquire Spirit AeroSystems is ongoing.
Boeing Acquiring Spirit AeroSystems – Why?
However, this process is taking longer than the manufacturer would like. According to Boeing CEO Dave Calhoun, the company aims to finalize the acquisition by the middle of this year. The acquisition is a reversal of statements by Calhoun and other Boeing officials, made before the January blowout.
But since that accident, many in the industry have stated that Boeing needs better control of its supply chain, including Spirit AeroSystems. Bringing the supplier back into the Boeing group should simplify production processes and hopefully, improve quality.
However, Airbus is also a customer of Spirit, and will NOT want Boeing to control or even get an insight into its supply chain. That’s why the two manufacturers have been working together, effectively to split Spirit AeroSystems.
Meanwhile, it is becoming clear that the FAA and possibly other Boeing stakeholders, including airline customers, would like to have a say on how the manufacturer reintegrates Spirit AeroSystems. The same could well be true when it comes to the Boeing board’s selection of its next CEO.
On Wednesday this week, Boeing announced its Q1 2024 results. The company’s revenue dropped for the first time in seven quarters, which wasn’t surprising. What WAS a bit surprising is that the manufacturer’s losses weren’t as dramatic as some feared, according to Leeham News. This was in large part thanks to good numbers from Boeing Global Services.
