Boeing Is Said to Offer Stock to Buy Spirit, Preserving Cash Amid Struggles
In a bid to acquire a key supplier, Boeing has shifted how it plans to pay for the deal, according to two people familiar with the negotiations, a move that could help the plane maker preserve money as it addresses safety and quality problems.
Boeing would use stock instead of cash to buy Spirit AeroSystems, said the two people, who were not authorized to speak publicly about the deal. One added that Boeing would pay more than $4 billion for Spirit, which produces aviation parts, including the body of the Boeing 737 Max, the company’s most popular plane.
One of the people familiar with the talks said that the decision to shift to stock from cash was not expected to significantly delay a deal, which could be announced as soon as next week.
Based on its stock price on Tuesday, Spirit has a market value of more than $3.6 billion.
News that Boeing was proposing to use its stock, rather than cash, to buy Spirit was reported earlier by The Wall Street Journal.
Paying in stock could help Boeing’s financial situation as it invests in improving production quality after a panel blew away from a 737 Max plane during an Alaska Airlines flight in January. The Federal Aviation Administration limited the company’s ability to increase production of the 737 Max after the January incident. In May, Boeing said its operations would use more cash than it brought in this year.
The negotiations to acquire Spirit have been complicated by the fact that Spirit also supplies parts to Boeing’s biggest competitor, Airbus. That company is expected to take over the operations of Spirit that produce parts for Airbus.
Federal investigators have said that the plane involved in the January incident appeared to have left a Boeing factory without the bolts needed to secure the panel in place. In the months that followed, Boeing has taken a number of steps to improve quality. Last week, its chief executive, Dave Calhoun, faced tough questioning from lawmakers about the episode and two fatal crashes involving the Max in late 2018 and early 2019.
Boeing’s problems with the 737 Max were compounded by the pandemic, which disrupted the supply chain across the aviation industry. While the supply of materials and parts has recovered somewhat, it remains challenged.
On Monday, Airbus lowered the number of commercial planes it expects to deliver to airlines this year to 770, from a previous estimate of around 800. The company, based in Toulouse, France, said it was struggling to get enough engines, plane structures and cabin equipment. As a result of that change and problems in its space business, Airbus lowered its profit and cash flow forecast for 2024. The company’s stock was down 10 percent on Tuesday after its announcement.
