Boeing reacquires its largest parts supplier

More than two decades after Boeing sold its Wichita, Kan., plant, the aerospace manufacturer has completed a multibillion-dollar deal to bring the crucial supplier back in house. 

Boeing on Monday officially acquired Spirit AeroSystems, the Wichita-based supplier that builds the entire fuselage for the 737, as well as large pieces of other Boeing jets. 

Boeing spun out its Wichita plant and Oklahoma division in 2004, part of a broad effort to outsource manufacturing of aircraft parts. The then-newly formed Spirit grew its customer base beyond Boeing products, eventually becoming the global supplier it is today. 

But 20 years after the sale Boeing said it would bring Spirit back into its fold to address lax manufacturing standards and defects that had slowed the pace of airplane deliveries. 

Boeing and Spirit announced the acquisition in June 2024, six months after a panel flew off a 737 MAX in midair and thrust both companies into regulatory and public scrutiny. Even before that, Boeing faced a series of quality problems on Spirit-built fuselages that slowed production for the 737 MAX and 787 Dreamliner. 

Boeing executives have promised the acquisition will improve the aircraft parts coming from Spirit and allow Boeing to “continue delivering high-quality airplanes.” 

“While there is a lot of work ahead of us, this is a milestone moment for all of us as we come together as one company,” Boeing CEO Kelly Ortberg wrote in a note to employees Monday.

“For our new teammates, whether you are returning or joining us for the first time, let me be one of the first to welcome you. It’s going to take all of us doing our part to get us back to being the iconic company we all know we can be.”

As part of the acquisition, Boeing will add 15,000 employees and take over several Spirit operations, including all work done for Boeing commercial planes. Because it will bring Boeing’s largest parts supplier in-house, Boeing will expand its maintenance and repair business, as well as its aftermarket services portfolio. 

The deal creates a Boeing subsidiary called Spirit Defense to continue supplying parts to the defense industry, including some of Boeing’s competitors. 

Spirit also finalized a deal Monday with Boeing’s commercial rival Airbus to acquire Spirit facilities that build aircraft components for the European manufacturer. 

Boeing and Spirit completed the $4.7 billion acquisition after more than a year of navigating regulatory approvals. Boeing will also take on Spirit’s net debt of $3.6 billion, so the total transaction value is about $8.3 billion.

The Federal Trade Commission approved the deal last week on the condition that Boeing divest Spirit operations that produce aircraft components for Airbus and commit to continuing defense work for other Boeing competitors.

The history of Spirit

Boeing started operating the Wichita site nearly a century ago, when it bought another plane manufacturer, Stearman Aircraft. Inside the sprawling complex, nearly as large as Boeing’s Everett plant today, mechanics built parts for just about every Boeing jet: the 737, 747, 757, 767, 777 and later the 787. 

Wichita workers also built thousands of the B-29 Superfortress, the heavy bomber used during World War II, and later the B-52 Stratofortress bomber. 

In 2004, Boeing announced it would sell the site, its largest move to divest the parts of its business supplying aircraft components, from fuselages to wings.

According to the company’s mindset at the time, Boeing employees would focus on the beginning and end of production — the overarching design and the final assembly, where machinists put all the pieces together — while independent suppliers would make all the pieces in between.

A Canadian private equity firm bought the Wichita factory in 2005 and Spirit AeroSystems went public in 2006, with a $1.43 billion initial public offering. The newly public firm expanded its customer base over the years, supplying parts to Airbus and other defense contractors, but Boeing remained its largest customer. 

Boeing’s outsourcing plan stretched its suppliers too thin and Spirit’s factory faced a difficult road. Spirit and other suppliers said Boeing executives constantly pressured them to cut costs, weakening the manufacturer’s overall supply chain as companies building components struggled to stay afloat.

Earlier this year, after the midair panel blowout and a strike at Boeing’s Puget Sound area factories, Boeing’s head of supply chain acknowledged the company had to change its strategy, vowing to work with suppliers instead of squeezing them. 

Spirit, meanwhile, faced accusations of lax workplace standards and manufacturing defects that, even if they didn’t create safety risks, delayed production of Boeing’s most popular planes. 

In 2023, Boeing found that MAX fuselages built by Spirit had been delivered with improperly drilled holes in the aft pressure bulkhead and that some fittings that attach the MAX’s vertical tail fin had been improperly manufactured by a Spirit subcontractor.

Investors sued Spirit that year, accusing the company of ignoring reports of low-quality work.

The 787 Dreamliner program separately struggled with a series of manufacturing defects, chiefly related to tiny gaps where sections of the widebody plane locked together.

In the past year, Boeing increased inspections of Spirit-built fuselages before they shipped to Renton for final assembly, and made other changes to its manufacturing process in response to the midair panel blowout. Executives have said the quality of Spirit’s work is already improving. 

“Our job is to meet our commitments and to get better at it every day,” Stephanie Pope, the head of Boeing commercial airplanes, wrote to employees on Monday. “In that regard, we have made significant progress. … We did this as two separate companies; imagine what we can do together.” 

Pope said the new Boeing plants and employees “will continue to operate largely as they do today,” adding that the companies will “fully integrate” operations over time. 

A ‘net positive’ for Boeing and Airbus

Boeing, Airbus and Spirit agreed last year to slice up the supplier so that each manufacturer controls the Spirit units that produce components for their planes. 

Because the deal was driven by Boeing and largely designed to suit Boeing’s needs, Airbus won’t pay to acquire its parts of the business. In fact, Spirit will pay Airbus $439 million, according to an agreement reached in April.

Boeing’s acquisition includes all of Spirit’s Boeing-related commercial operations — including fuselages for the 737 and major structures for the 767, 777 and 787 — as well as fuselages for two defense planes that are derived from commercial products, the P-8 and KC-46. 

Boeing will take over Spirit’s operations in Wichita, Dallas and Tulsa, Okla., as well as Spirit’s Innovation Center in Prestwick, Scotland. 

Also added to Boeing’s ledger will be parts of Spirit facilities in Belfast, Northern Ireland, which will operate as a subsidiary known as Short Brothers. That subsidiary will be part of Boeing’s global services division, which provides aftermarket support, like maintenance and upgrades for Boeing customers. 

Spirit Defense will act as a nonintegrated subsidiary of Boeing’s defense, space and security division. It will maintain independent governance and operations, Boeing said Monday. 

Airbus, meanwhile, will acquire Spirit’s sites in Kinston, N.C.; Saint-Nazaire, France; and Casablanca, Morocco. It will also take over parts of the Belfast site, which will be known as Airbus Belfast, and some production in Prestwick, which will be called Prestwick AeroSystems.

Airbus will move work previously done in Wichita to its factory in Toulouse, France.

“This milestone marks a special moment for all of us at Airbus,” Florent Massou, executive vice president of operations for Airbus’ commercial aircraft business, said in a statement Monday. “We are proud to welcome over 4,000 new colleagues, with whom we will embark on a new chapter in our industrial operations.”

Spirit also sold its Malaysia site to yet another company, Composites Technology Research Malaysia.

Ken Herbert, an aerospace analyst with RBC Capital Markets, told investors Monday the deal was a “net positive” for both Airbus and Boeing. 

It would “de-risk” the supply chain, giving manufacturers more control over their product, and help increase production rates. That’s particularly important for Boeing, which has been steadily working to increase its monthly 737 MAX production after two fatal crashes six years ago and the midair panel blowout last year slowed its pace. 

Finalizing the acquisition also takes one big thing off Boeing’s plate, Herbert wrote, allowing “Boeing management to focus on production execution.” 

This story has been updated. It includes information from The Seattle Times archives.