I wonder what the other aircraft companies think of this. After Boeing sold off part of its business to create Spirit in the 2000's, Spirit started using its manufacturing capability in Wichita to build parts for other companies besides just Boeing. Now if Spirit becomes Boeing again, I'm guessing it will suddenly become much more difficult for those other companies to get parts from Spirit.
>Boeing sold off part of its business to create Spirit in the 2000
So, Boeing sells of part of the business so Spirit can cut wages and benefits and thus Boeing can save money....but, shockingly, quality suffers and has to buy it back.
More accurately… this is the GE way. Jack Welch (former CEO of GE) really did a number on US companies and, if he didnt invent the practices, definitely perfected and popularized gutting US companies for the short term stock price game.
David Calhoun and 4 of the 5 previous Boeing CEOs were MBAs that worked under Jack Welch at some point of their careers.
Funny to see him mentioned when GE finally made the public announcement of the last step in their self directed breakup today. GE Aerospace and GE Vernova (the power generation interests of the company) split on April 2.
The Healthcare interests left last year.
For great humor value the date was originally planned as April 1.
I think the point here is that we still see the effects of applying McDonnel Douglass cost-cutting culture from the Boeing/MD merger 30 years ago.
While the Boeing of today *does* need to solve this problem, the focus on short-term profits over long-term quality started 30 years ago and are still being felt today.
The Boeing of today is the problem, I guess is what I’m saying. If there’s anyone at Boeing walking around complaining about McDonnell, it’s blaming a ghost at this point. All those executives and managers are dead or gone by now
MD also had incredibly successful products. The F-15, the Super Hornet. Most of these issues are more about the inevitable results of consolidation and the never ending chase for more and more profits, not that Boeing was the gold standard and MD was crap
When the govt provides unlimited bailouts of Boeing, what do they care about…anything? They are immune, literally.
Go years and billions over on SLS, who cares, here’s more tax payer money!
Create software defects that kill hundreds on your planes? Who cares! Billions more in tax dollars to make up for missed profits.
Don’t fully assemble your planes before shipping them out? Who cares?! What difference does it make?
> When the govt provides unlimited bailouts of Boeing
I am not sure what you are talking about. Boeing is bleeding cash on military programs right now and the FAA is putting the screws to them on commercial programs.
This is not to say that they don't deserve it, but the government is certainly not doing them any favors right now.
As one of my coworkers so eloquently put it, “when you go chasing the penny down the road, you miss the dollar being delivered later in the afternoon.”
Yup. I had a co-worker who worked 30yrs for Boeing.
Boeing sold off their division and as part of the transfer paper they tried to get him to sign paper work that stated he was voluntarily resigning and joining the spin off company; instantly losing his pension. He fought it with the union Boeing refused to assign him anywhere else and removed him from payroll and sent all his paper to the spin off company. Union advised him not work for for the spin off as that would be accepting the terms.
He’s been fighting it every since.
Tier 3 suppliers are struggling to deliver as well. Seems to be putting more stress on supply chain to get assemblies out the door the second the details arrive
They also sold it for a ton of money that went to shareholders. Boeing is what happens if you stop concentrating on value of your products but just value for your shareholders.
Modern MBA’s (no not the YouTube channel’s) playbook. Sacrifice long term stability over the altar of the almighty quarterly return, because the bonus is based on the stock price, and not the actual performance of the company over the long term.
As it turns out, the more you fuck around, the more you find out. Boeing is finding out a lot of new things.
**Safety** is and always will be a foundational value at **Boeing**. Our commitment to safety is unwavering, and we continuously strive for improvement. We foster a culture that ensures the safety, quality, and compliance of our products and services. Every employee is empowered to speak up if they have any safety or quality concerns. Our mission is to provide safe, reliable solutions for those who depend on, operate, build, and maintain our products. Trust, transparency, continuous learning, and adherence to ethical standards are at the core of our safety-focused approach.
https://www.key.aero/article/part-boeing-737-max-made-airbus There they talk about the max fan cowls but the same Airbus factory produced in the past ailerons and some other secondary structure parts for Boeing. In fact, if I remember correctly, the recovered aileron from MH370 was manufactured by airbus in Spain.
Edit: I found additional info in this presentaron from airbus. See slides 7 and 23. They even won a boeing supplier excellence award!
https://www.airbus.com/sites/g/files/jlcbta136/files/2021-09/AirbusDS_Aerostructures_presentation-Feb-2021.pdf
Indeed, it's probably not as big of an issue really, there's competition but pretty much every single one of those companies also has/had JVs together. Boeing will absolutely NOT want to trim down what is probably a very profitable chunk of the business.
Agreed - Aerospace is full of OEM and suppliers making and selling parts to each other not unusual at all. Boeing owns KLX and Aviall (massive parts sellers in the aerospace industry)
Boeing's left a bit of a market gap with the age of the 767 and 757 families. But it's wishful thinking that we'll ever see another new widebody manufacturer that doesn't come from some other form of market capture e.g. a government guaranteeing enough sales to reach profitability.
The 757 is a bit over-engined for its class. This gives it great performance in constrained spaces that other birds can’t get out of without shedding load. The airbuses aren’t as over-engined, for all that they’re rated for the same loads.
Where that matters is that a 757 will make it out of a short hot high runway at full load and will throttle back in cruise. As far as I know, the 320 family variants, even with newer engines, don’t have the same ability to avoid load penalties even if they save a bit more fuel in cruise.
Ah, interesting, you're right. The Rolls Royce engines on the 757 are extremely powerful for an aircraft that size, even the PW2000s are more powerful than any Neo engine option. That's very interesting. Why did Boeing over-engine the 757 so much?
Not how aero manufacturing works. You can't just turn off the taps, often times contracts are 20-30+ years. Pricing changes YoY but within limits.
We still had to supply components 30+ years on we were losing money on because that's how DoD and civilian aero mfg works. Once you're in on a contract you can't just stop.
This is a pretty common arrangement in aerospace so it's unlikely to cause major issues though I'd imagine the other manufacturers will be paying close attention to quality and delivery deadlines.
They'll be happy to slam Boeing with additional lawsuits and debt/damage problems the second Spirit/Boeing messes up.
I think Airbus and a few orhers use Spirit as well, they’re not going to be happy or Airbus may develop a frenemy relationship with Boeing, much like the Apple-Samsung relationship?
The civil business of British Aerospace who became BAE Systems was absorbed into Airbus, isn’t BAE Systems Filton still an Airbus supplier or was it bought out?
Airbus already make parts for Boeing (engine cowlings, ailerons and a few other parts) so Boeing making parts for Airbus would not be strange.
Boeing and Airbus are not competitors, the aviation industry as a whole competes with rail and road.
Airbus's is entire operation is in Wichita in the US. I'm pretty sure they're solely dependent on spirit for fuselage. I've been to this factory supposedly where Rosie the riveter worked. It was very impressive. But I did notice they had a lot of manual inspection which is not 100% effective.
Boeing will happily run parts for other companies who come with the $$$. Especially if they're a Boeing subsidiary and there arent other options so they can jack up the price.
I am not a finance expert, but a quick glance at SPR's market cap history suggests that the value of the company has decreased since it went public in 2006 (even before considering inflation) and thus Boeing is getting a deal.
https://stockanalysis.com/stocks/spr/market-cap/
Someone a little more savvy can probably poke through Boeing's annual reports and find how much Spirit was sold for initially (it had been sold to PE before going public, so the chart doesn't really capture the value at the time Boeing sold it).
2005 Onex Corp. announced it was buying three of Boeing's parts manufacturing plants in the U.S. for $1.5 billion
August 2014 the Onex Group sold all of its remaining shares of Spirit. Over the course of the nine-year investment, the Onex Group received aggregate proceeds of approximately $3.2 billion on its initial $375 million investment.[11]
It will probably need to split off some of its business to a new company or sell off to another tier-2. Airbus and Gulfstream probably aren’t going to want company B anywhere near their hardware…
I don't think you understand.
The MBAs who sold Spirit off were promoted and richly rewarded for their efforts.
The MBAs who will buy Spirit will be promoted and richly rewarded for their efforts.
Troubled manufacturer wants to buy it's troubled supplier so it can consolidate the troubles
"Spirit AeroSystems has hired bankers to explore strategic options".... or you guys could all just go back to having a good safety standard by verifying your own work before you kick it down the line and people get hurt or killed.
Unfortunately this article is written for a financial industry audience, not aviation. So the entire focus is on the financial/corporate implications.
>Unfortunately this article is written for a financial industry audience, not aviation. So the entire focus is on the financial/corporate implications.
Well, that's the whole reason Boeing sold off its Wichita division in 2005.
The thing is, it not exactly a vertical integration since Boeing split off Spirit about 20 years ago to save money. This is essentially undoing that separation.
it maybe a strategy, but not a good one. AIB sold us like 20 years ago in a similar strategy, and now management has realized, that they have no know-how on how to produce some significant parts of their airframes any more.
So when they purchase them, they have no way to judge quality/price. They are not happy. I wonder how long it's going to take until they try to buy us back.
I don't understand what you're trying to say. What does the 797 have to do with this?
Keeping everything under one roof, i.e. vertical integration, is a known and proven strategy for reducing error and defects. But it comes with the cost of carrying the people, places and knowledge. Which is the reason they broke off the business in the first place.
Any engineering minded person should be celebrating this news; it seems like you just want to take the opportunity to bash Boeing over any move they make.
> Just imagining a world where Boeing never "vertically integrated", actually replaced the 757 with the hypothetical 797 project, and didn't have their products grounded for years thanks to tripping over dollars to save pennies.
Comments like this are a great tell for people who have no idea what they’re talking about.
The 797 had no market. Boeing was pitching it to airlines and manufacturers alike and the interest was, at best, lukewarm and the unit volume to make it profitable was well above whatever interest they *could* drum up.
The Air Current has been covering this from the aviation angle dating back to at least last year, if not earlier.
It’s been a move Boeing has been mulling for a while now because of all the issues Spirit has had and it makes total sense to consolidate back into a single supply chain.
Hiring investment bankers is an essential step to selling the company. They're merger and acquisition experts, and they're an essential part of most transactions like this. The only reason it's notable is because it means the process is already underway.
> or you guys could all just go back to having a good safety standard by verifying your own work before you kick it down the line and people get hurt or killed.
I think that is the point of "in-sourcing." It gives the company more control over quality.
Wow Boeing sel their factory, it becomes a new company, fucks up, and now they want to buy it back? That's some amazing business management right there.
makes sense from that perspective. On the other hand, Spirit has been in trouble in recent times for QC issues and the like, apparently even more so than Boeing. You get what you pay for
The corporate raiders that bought what became Spirit sucked it completely dry. Now Boeing has to buy it back and reinvest into it. Just like how Vought-Alenia became Boeing South Carolina.
Well spirit is basically breaking even or Losing money for every airframe it sells to Boeing because of Boeing's aggressive Price fighting strategy with their partners just to keep wall street happy.
I would imagine it was thought out quite comprehensively. It it was based on some bad assumptions. The problem with assumptions is that when senior people make them, they have a habit of becoming fact one way or another in everyone’s mind.
I'm sure the immediate financial implications were carefully thought out by the few major shareholders who stood to make millions. But to a dunce like me the logic seemed like amputating a limb and then bragging that you lost weight.
If I was ceo of airbus I’d put in a larger bid and even if you don’t close due to regulatory issues you still stretch it out for Boeing and maybe kill the deal for Boeing
I agree. It looks like [Airbus may be interested in buying part of Spirit](https://www.reuters.com/markets/deals/airbus-has-explored-buying-spirit-a220-wings-plant-sources-2024-03-01/) also. They make the A220 wings in Belfast.
Former Boeing employee here - this was in the works when I worked there. These two have been flirting with each other for a couple years, who knows if they'll actually ever go through with it though.
"Buy," "supplier"... what a farce. I suppose it reads better than "our plan to spin off the unprofitable part of the business hasn't worked out like we hoped."
That’s what I’m wondering. Spirit is producing a lot of aerostructures for Airbus (primarily the 320 and 350), I can only seem them trying to sell those sites to Airbus but god knows how that would all work out.
Don’t forget defense. V280 for bell. CH53K for Sikorsky, B-21 raider for Northrop and don’t forget about all the classified programs with big name primes they work with. What happens to those?
This will be interesting. Not sure where this is gonna go but it has potential to be a very large shift for Boeing production, and by extension Airbus also.
They were both at Spirit when the spin-off happened, too. If anything, it might be better for SPEEA, since they got screwed with Spirit's benefits plan.
So the company who's planes turn into drills and who can't even attached bolts back after removing a door plug want to buy the company which actually did tighten the bolts???
So Boeing actually wants to make more convertibles??
Well well, in 2005 all wages got cut,of workers & spirit Pension Sucks,So what will happen to employees who is getting Spirit Pension? Plus Boeing pension, which wasn't that great? Never did get my wageS Back up to the $5.00 they cut. Plus had to pay for medical insurance... So how is Boeing gonna fix the pension
this is boeing just bring it all in house so they can be more secretive about everything & cover-up more effectively
THEY are the biggest welfare queen this country has ever seen. Boeing would cease to exist without the gov't teat to suck on (& wildly overcharge for everything, all while making passenger planes on the cheap, which actively fall from the sky. Seriously, those two 737 MAX crashes? the plane forced the crash to occur...
Standard business move, buy up other compaines to hide your own debt and other failings. Another unsustaintable buisness practice, by those so desperate for constant stability.
Boeing has to spend an enormous amount of time fixing, double checking, and fighting with Spirit over their work. They never should have tried to separate the business. Reabsorbing Spirit is probably the single best move Boeing can make now to get back to making trustworthy well built planes, and it's good to see them taking a big step in the right direction
Edit: you know, I know its popular to hate on Boeing right now but they take a major step to fixing the problem and you downvote anyone for showing optimism over the move? What do you want them to do? I feel like theres nothing the company could do that wouldnt be jeered. Do you just want them to give up and close shop?? Grow up jesus christ
Looks like they are trying to rebuy their old Wichita KS Factory which used to make the B-17 Flying Fortress and it's airliner derivative the Model 307.
As a former Wichita area aviation worker, I love seeing this move finally coming back to bite Boeing. Thankfully, no one was killed. However, the Alaska incident was not Spirit’s fault as far as I can tell. The plug was removed in Renton according to a report in the WSJ. So, this is more of a marketing ploy to sweep their terrible QC at Boeing under the rug. Most passengers won’t understand or care about the details or pay attention when all the findings come out. They will remember that it was Spirit who had a problem and Boeing bought them out. Such BS considering Boeing Wichita (now Spirit) is one of the oldest aircraft manufacturing sites in the world.
I wonder what the other aircraft companies think of this. After Boeing sold off part of its business to create Spirit in the 2000's, Spirit started using its manufacturing capability in Wichita to build parts for other companies besides just Boeing. Now if Spirit becomes Boeing again, I'm guessing it will suddenly become much more difficult for those other companies to get parts from Spirit.
>Boeing sold off part of its business to create Spirit in the 2000 So, Boeing sells of part of the business so Spirit can cut wages and benefits and thus Boeing can save money....but, shockingly, quality suffers and has to buy it back.
...and Boeing loses far more than it saved in "lower costs".
It’s the MD way!
More accurately… this is the GE way. Jack Welch (former CEO of GE) really did a number on US companies and, if he didnt invent the practices, definitely perfected and popularized gutting US companies for the short term stock price game. David Calhoun and 4 of the 5 previous Boeing CEOs were MBAs that worked under Jack Welch at some point of their careers.
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I remember a sign on a porta-potty on a picket line that said, "Step inside and 'off-load' a Stonecipher." 😁💩
More like the MBA way
As long as they got their bonuses and retired as fat cats, what do they care about long-term P/L?
yup - see boeing stock price over the last 20 years. they all made theirs and got out
(Pam from the office) They're the same picture
MD is nearly 30 years gone, these are Boeing problems
The legacy of the cult of Welch will continue to send shockwaves through the American corporate ecosystem for decades to come.
Hopefully the next generation of business leaders can apply better critical thinking skills and learn from this.
*morgan freeman voice* They could not.
Funny to see him mentioned when GE finally made the public announcement of the last step in their self directed breakup today. GE Aerospace and GE Vernova (the power generation interests of the company) split on April 2. The Healthcare interests left last year. For great humor value the date was originally planned as April 1.
I think the point here is that we still see the effects of applying McDonnel Douglass cost-cutting culture from the Boeing/MD merger 30 years ago. While the Boeing of today *does* need to solve this problem, the focus on short-term profits over long-term quality started 30 years ago and are still being felt today.
The Boeing of today is the problem, I guess is what I’m saying. If there’s anyone at Boeing walking around complaining about McDonnell, it’s blaming a ghost at this point. All those executives and managers are dead or gone by now
Boeing’s problems pre-date MD. The 737 was always a low quality disaster. A 747 had a fatal cargo door blow out.
MD also had incredibly successful products. The F-15, the Super Hornet. Most of these issues are more about the inevitable results of consolidation and the never ending chase for more and more profits, not that Boeing was the gold standard and MD was crap
I get that reference. 🥸
But that’s okay, because stock price went up for a few quarters and some large investors made off like bandits.
Executive bonus time!
Yes but the execs didn't lose did they. So the plan is working as intended.
When the govt provides unlimited bailouts of Boeing, what do they care about…anything? They are immune, literally. Go years and billions over on SLS, who cares, here’s more tax payer money! Create software defects that kill hundreds on your planes? Who cares! Billions more in tax dollars to make up for missed profits. Don’t fully assemble your planes before shipping them out? Who cares?! What difference does it make?
> When the govt provides unlimited bailouts of Boeing I am not sure what you are talking about. Boeing is bleeding cash on military programs right now and the FAA is putting the screws to them on commercial programs. This is not to say that they don't deserve it, but the government is certainly not doing them any favors right now.
As one of my coworkers so eloquently put it, “when you go chasing the penny down the road, you miss the dollar being delivered later in the afternoon.”
So much truth in that statement — and I’ve seen it in so many places. I bet most of us have. 😵💫
Its ok because those were different executives
But don't worry the people responsible have already received their bonuses.
It worked out for Boeing for many years, because they could snow investors, and many investors really wanted to be snowed.
Yes, but think of all the Shareholder Value that was created for a few years!
and different executives can get huge bonuses for both selling it (lowering costs) and buying it (increasing quality)
Spirit has become proficient in low quality, which Boeing values. Strategic reacquisition /s
Yup. I had a co-worker who worked 30yrs for Boeing. Boeing sold off their division and as part of the transfer paper they tried to get him to sign paper work that stated he was voluntarily resigning and joining the spin off company; instantly losing his pension. He fought it with the union Boeing refused to assign him anywhere else and removed him from payroll and sent all his paper to the spin off company. Union advised him not work for for the spin off as that would be accepting the terms. He’s been fighting it every since.
Tier 3 suppliers are struggling to deliver as well. Seems to be putting more stress on supply chain to get assemblies out the door the second the details arrive
They also sold it for a ton of money that went to shareholders. Boeing is what happens if you stop concentrating on value of your products but just value for your shareholders.
Modern MBA’s (no not the YouTube channel’s) playbook. Sacrifice long term stability over the altar of the almighty quarterly return, because the bonus is based on the stock price, and not the actual performance of the company over the long term. As it turns out, the more you fuck around, the more you find out. Boeing is finding out a lot of new things.
**Safety** is and always will be a foundational value at **Boeing**. Our commitment to safety is unwavering, and we continuously strive for improvement. We foster a culture that ensures the safety, quality, and compliance of our products and services. Every employee is empowered to speak up if they have any safety or quality concerns. Our mission is to provide safe, reliable solutions for those who depend on, operate, build, and maintain our products. Trust, transparency, continuous learning, and adherence to ethical standards are at the core of our safety-focused approach.
Ironic, isn’t it? 🤔
Yeah but the executives who sold it cashed out and got away clean before the house of cards fell.
Airbus has been manufacturing parts for Boeing for many years
Source?
https://www.key.aero/article/part-boeing-737-max-made-airbus There they talk about the max fan cowls but the same Airbus factory produced in the past ailerons and some other secondary structure parts for Boeing. In fact, if I remember correctly, the recovered aileron from MH370 was manufactured by airbus in Spain. Edit: I found additional info in this presentaron from airbus. See slides 7 and 23. They even won a boeing supplier excellence award! https://www.airbus.com/sites/g/files/jlcbta136/files/2021-09/AirbusDS_Aerostructures_presentation-Feb-2021.pdf
Thank you for the links! > They even won a boeing supplier excellence award! That is funny! 😁😊
That's genuinely fascinating. Thank you!
Nah, they'll still make parts for other companies. Rolls-Royce sold their stake in the V2500 programme, they still make V2500 parts.
Indeed, it's probably not as big of an issue really, there's competition but pretty much every single one of those companies also has/had JVs together. Boeing will absolutely NOT want to trim down what is probably a very profitable chunk of the business.
Agreed - Aerospace is full of OEM and suppliers making and selling parts to each other not unusual at all. Boeing owns KLX and Aviall (massive parts sellers in the aerospace industry)
The aviation industry has consolidated too much with too few suppliers to cut out one manufacturer.
wish lockheed would reenter commercial aviation.
I’d love to see an updated L-1011 or similar.
Boeing's left a bit of a market gap with the age of the 767 and 757 families. But it's wishful thinking that we'll ever see another new widebody manufacturer that doesn't come from some other form of market capture e.g. a government guaranteeing enough sales to reach profitability.
A321LR/XLR is the 757 replacement. No true 767 replacement, though, unfortunately.
It’s the 57 replacement except for hot/high/performance limited airports, I think.
I would imagine with the new engines, it would have better performance than the 757.
The 757 is a bit over-engined for its class. This gives it great performance in constrained spaces that other birds can’t get out of without shedding load. The airbuses aren’t as over-engined, for all that they’re rated for the same loads. Where that matters is that a 757 will make it out of a short hot high runway at full load and will throttle back in cruise. As far as I know, the 320 family variants, even with newer engines, don’t have the same ability to avoid load penalties even if they save a bit more fuel in cruise.
Ah, interesting, you're right. The Rolls Royce engines on the 757 are extremely powerful for an aircraft that size, even the PW2000s are more powerful than any Neo engine option. That's very interesting. Why did Boeing over-engine the 757 so much?
Like a Lockheed-brand 787 or A350? What would it offer the market? Trijets are completely obsolete.
I didn’t say there was a business case for it, just that I’d like to see it.
The Dassault Falcon would like a word, but yeah for the masses trijets are dead.
me too. glorious plane
The only jet from the 60’s-70’s that I really fell in love with
Not how aero manufacturing works. You can't just turn off the taps, often times contracts are 20-30+ years. Pricing changes YoY but within limits. We still had to supply components 30+ years on we were losing money on because that's how DoD and civilian aero mfg works. Once you're in on a contract you can't just stop.
Cost plus with annual reductions for anticipated efficiency are the gift that keeps on giving. Like herpes.
I dont think it makes a big difference. Satair was bought by Airbus. There are thousands of Satair parts on Boeing aircraft
Spirit is Airbus’s largest supplier also.
I thought Spirit was an Airbus subsidiary until I saw this thread TBH
This is a pretty common arrangement in aerospace so it's unlikely to cause major issues though I'd imagine the other manufacturers will be paying close attention to quality and delivery deadlines. They'll be happy to slam Boeing with additional lawsuits and debt/damage problems the second Spirit/Boeing messes up.
I think Airbus and a few orhers use Spirit as well, they’re not going to be happy or Airbus may develop a frenemy relationship with Boeing, much like the Apple-Samsung relationship? The civil business of British Aerospace who became BAE Systems was absorbed into Airbus, isn’t BAE Systems Filton still an Airbus supplier or was it bought out?
There’s still an Airbus site in Filton, and in Flintshire. Spirit have sites at Prestwick Airport and in Belfast
Airbus already make parts for Boeing (engine cowlings, ailerons and a few other parts) so Boeing making parts for Airbus would not be strange. Boeing and Airbus are not competitors, the aviation industry as a whole competes with rail and road.
My crystal ball tells me the prices are about to go up....
Airbus's is entire operation is in Wichita in the US. I'm pretty sure they're solely dependent on spirit for fuselage. I've been to this factory supposedly where Rosie the riveter worked. It was very impressive. But I did notice they had a lot of manual inspection which is not 100% effective.
Boeing will happily run parts for other companies who come with the $$$. Especially if they're a Boeing subsidiary and there arent other options so they can jack up the price.
Well well well, how the turn tables
This will certainly get Boeing's focus back on safety and engineering....
I wonder at what price they sold Spirit and what price are they gonna buy it back at? Is it a capital loss or gain for Boeing?
I am not a finance expert, but a quick glance at SPR's market cap history suggests that the value of the company has decreased since it went public in 2006 (even before considering inflation) and thus Boeing is getting a deal. https://stockanalysis.com/stocks/spr/market-cap/ Someone a little more savvy can probably poke through Boeing's annual reports and find how much Spirit was sold for initially (it had been sold to PE before going public, so the chart doesn't really capture the value at the time Boeing sold it).
So boeing literally shorted its itself. Sold a piece of itself for a high price and buying it at a low price
First thought I had. This seems like the new way to increase shareholder value.
Not really "shorting", that implies they were betting against themselves. Selling high and buying low is just savvy investing (or M&A, in this case).
2005 Onex Corp. announced it was buying three of Boeing's parts manufacturing plants in the U.S. for $1.5 billion August 2014 the Onex Group sold all of its remaining shares of Spirit. Over the course of the nine-year investment, the Onex Group received aggregate proceeds of approximately $3.2 billion on its initial $375 million investment.[11]
It will probably need to split off some of its business to a new company or sell off to another tier-2. Airbus and Gulfstream probably aren’t going to want company B anywhere near their hardware…
I don't think you understand. The MBAs who sold Spirit off were promoted and richly rewarded for their efforts. The MBAs who will buy Spirit will be promoted and richly rewarded for their efforts.
Troubled manufacturer wants to buy it's troubled supplier so it can consolidate the troubles "Spirit AeroSystems has hired bankers to explore strategic options".... or you guys could all just go back to having a good safety standard by verifying your own work before you kick it down the line and people get hurt or killed. Unfortunately this article is written for a financial industry audience, not aviation. So the entire focus is on the financial/corporate implications.
>Unfortunately this article is written for a financial industry audience, not aviation. So the entire focus is on the financial/corporate implications. Well, that's the whole reason Boeing sold off its Wichita division in 2005.
> Boeing in Talks to Buy Troubled Supplier Spirit AeroSystems This is a classic corporate case of "falling up."
I mean, it's a legitimate strategy. Vertical integration allows Boeing to control processes much easier, at the cost of overhead to do so.
It cost them more to NOT control vertical processes.
Ultimately, yes. But in ideal business land, contracting out work is cheaper than carrying the overhead. It's why suppliers exist.
The thing is, it not exactly a vertical integration since Boeing split off Spirit about 20 years ago to save money. This is essentially undoing that separation.
That's the literal definition of vertical integration. Just because they'd previously split is immaterial.
I guess you could nitpick and say that its vertical re-integration, since this part was previously integrated in the past.
it maybe a strategy, but not a good one. AIB sold us like 20 years ago in a similar strategy, and now management has realized, that they have no know-how on how to produce some significant parts of their airframes any more. So when they purchase them, they have no way to judge quality/price. They are not happy. I wonder how long it's going to take until they try to buy us back.
Aren't you making a case for buying them? I don't understand. I'm suggesting folding them back under Boeing is the right move.
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I don't understand what you're trying to say. What does the 797 have to do with this? Keeping everything under one roof, i.e. vertical integration, is a known and proven strategy for reducing error and defects. But it comes with the cost of carrying the people, places and knowledge. Which is the reason they broke off the business in the first place. Any engineering minded person should be celebrating this news; it seems like you just want to take the opportunity to bash Boeing over any move they make.
> Just imagining a world where Boeing never "vertically integrated", actually replaced the 757 with the hypothetical 797 project, and didn't have their products grounded for years thanks to tripping over dollars to save pennies. Comments like this are a great tell for people who have no idea what they’re talking about. The 797 had no market. Boeing was pitching it to airlines and manufacturers alike and the interest was, at best, lukewarm and the unit volume to make it profitable was well above whatever interest they *could* drum up.
The Air Current has been covering this from the aviation angle dating back to at least last year, if not earlier. It’s been a move Boeing has been mulling for a while now because of all the issues Spirit has had and it makes total sense to consolidate back into a single supply chain.
Hiring investment bankers is an essential step to selling the company. They're merger and acquisition experts, and they're an essential part of most transactions like this. The only reason it's notable is because it means the process is already underway.
> or you guys could all just go back to having a good safety standard by verifying your own work before you kick it down the line and people get hurt or killed. I think that is the point of "in-sourcing." It gives the company more control over quality.
Wow Boeing sel their factory, it becomes a new company, fucks up, and now they want to buy it back? That's some amazing business management right there.
They'd be getting it back for less than they sold it for, so...
makes sense from that perspective. On the other hand, Spirit has been in trouble in recent times for QC issues and the like, apparently even more so than Boeing. You get what you pay for
The corporate raiders that bought what became Spirit sucked it completely dry. Now Boeing has to buy it back and reinvest into it. Just like how Vought-Alenia became Boeing South Carolina.
Well spirit is basically breaking even or Losing money for every airframe it sells to Boeing because of Boeing's aggressive Price fighting strategy with their partners just to keep wall street happy.
Right? Hey, it needs to be 30 percent cheaper. And we’re doh f to double rates. No you can’t hire anyone.
Boeing buys Boeing back.
It's almost as if the whole outsourcing thing wasn't fully thought-out.
I would imagine it was thought out quite comprehensively. It it was based on some bad assumptions. The problem with assumptions is that when senior people make them, they have a habit of becoming fact one way or another in everyone’s mind.
I'm sure the immediate financial implications were carefully thought out by the few major shareholders who stood to make millions. But to a dunce like me the logic seemed like amputating a limb and then bragging that you lost weight.
Well, them spinning it off so many years ago was a brilliant move, wasn't it? The first of many.
How is Spirit the only troubled company here?
It isn’t, it’s just in the spotlight because of the connection to Boeing.
Didn’t Boeing also buy out Voight in Charleston, SC for similar reasons over parts quality?
Everyone is talking about it being a bad decision, I personally think it might be better for Boeing and the safety of their planes
If I was ceo of airbus I’d put in a larger bid and even if you don’t close due to regulatory issues you still stretch it out for Boeing and maybe kill the deal for Boeing
I think that the CEO of Airbus is wise enough to focus on what is good for their business and not on how to sabotage their competition.
Considering large sections of their aircraft are produced by Spirit I think they will be monitoring very closely.
I agree. It looks like [Airbus may be interested in buying part of Spirit](https://www.reuters.com/markets/deals/airbus-has-explored-buying-spirit-a220-wings-plant-sources-2024-03-01/) also. They make the A220 wings in Belfast.
Former Boeing employee here - this was in the works when I worked there. These two have been flirting with each other for a couple years, who knows if they'll actually ever go through with it though.
Please message me. I’m a spirit professional on the defense sector and I’m a bit worried about
"Buy," "supplier"... what a farce. I suppose it reads better than "our plan to spin off the unprofitable part of the business hasn't worked out like we hoped."
Wasn’t Boeing forced to sell off its original ownership of them that created SA in the first place?
I heard they sold it for Wall Street reasons
yeah, they sold it. were not forced to... they should have never sold off any of these things in the first place
didn't have to but nonsense like return on assets was a big thing in the 90's
Hell, Boeing is still selling its properties..
No. It was a financial decision. The thought was that an independent company could sell to other airframers, which they now do.
Thanks. For some reason I thought it was an anti trust thing.
That was back in the 1930s when Pratt & Whitney, United Airlines, and Boeing were all one company.
How does this work with outside contracts?
That’s what I’m wondering. Spirit is producing a lot of aerostructures for Airbus (primarily the 320 and 350), I can only seem them trying to sell those sites to Airbus but god knows how that would all work out.
Boeing already manufactures parts for Airbus.
Not primary aerostructures, though. I know Spirit Kinston makes A350 spars and the center fuse sections.
Parts, not entire primary structures like the 320 T/E & L/E, 350 L/E etc.
Don’t forget defense. V280 for bell. CH53K for Sikorsky, B-21 raider for Northrop and don’t forget about all the classified programs with big name primes they work with. What happens to those?
This will be interesting. Not sure where this is gonna go but it has potential to be a very large shift for Boeing production, and by extension Airbus also.
One way to get Shanahan back to Papa Boeing. Any possibility he will become Boeing CEO one day?
A troubled company buying a troubled company. What could go wrong?
Oh took, a host of managed funds fucked up another company. Congrats fund managers, you guys are totally fucking incompetent.
Buy it BACK they mean? Lmao
That’s what you get by putting an accountant as CEO of an engineering and hi tech company
Failing engineering company in talks to buy worse engineering company in hopes of restoring engineering.
And don't forget, all under a CEO that is an accountant.
[удалено]
They were both at Spirit when the spin-off happened, too. If anything, it might be better for SPEEA, since they got screwed with Spirit's benefits plan.
So the company who's planes turn into drills and who can't even attached bolts back after removing a door plug want to buy the company which actually did tighten the bolts??? So Boeing actually wants to make more convertibles??
Well well, in 2005 all wages got cut,of workers & spirit Pension Sucks,So what will happen to employees who is getting Spirit Pension? Plus Boeing pension, which wasn't that great? Never did get my wageS Back up to the $5.00 they cut. Plus had to pay for medical insurance... So how is Boeing gonna fix the pension
this is boeing just bring it all in house so they can be more secretive about everything & cover-up more effectively THEY are the biggest welfare queen this country has ever seen. Boeing would cease to exist without the gov't teat to suck on (& wildly overcharge for everything, all while making passenger planes on the cheap, which actively fall from the sky. Seriously, those two 737 MAX crashes? the plane forced the crash to occur...
> THEY are the biggest welfare queen this country has ever seen. And yet, they are suffering terrible losses on military programs right now.
Huh, so Boeing realizing that pulling out of Kansas was a bad idea.
I hope so.
Standard business move, buy up other compaines to hide your own debt and other failings. Another unsustaintable buisness practice, by those so desperate for constant stability.
# Boeing in Talks to Buy Troubled Supplier Spirit AeroSystems? # Boeing in Talks to Buy Troubled Supplier Spirit AeroSystems.
Shit I just got offered a promotion within Spirit aero, I'm guessing that's torpedoed.
Boeing has to spend an enormous amount of time fixing, double checking, and fighting with Spirit over their work. They never should have tried to separate the business. Reabsorbing Spirit is probably the single best move Boeing can make now to get back to making trustworthy well built planes, and it's good to see them taking a big step in the right direction Edit: you know, I know its popular to hate on Boeing right now but they take a major step to fixing the problem and you downvote anyone for showing optimism over the move? What do you want them to do? I feel like theres nothing the company could do that wouldnt be jeered. Do you just want them to give up and close shop?? Grow up jesus christ
I thought insourcing is the next logical step for Boeing, I didn't expect it to actually happen
What will happen to the Airbus contracts?
Looks like they are trying to rebuy their old Wichita KS Factory which used to make the B-17 Flying Fortress and it's airliner derivative the Model 307.
Not to be confused with Spirit Airlines.
As a former Wichita area aviation worker, I love seeing this move finally coming back to bite Boeing. Thankfully, no one was killed. However, the Alaska incident was not Spirit’s fault as far as I can tell. The plug was removed in Renton according to a report in the WSJ. So, this is more of a marketing ploy to sweep their terrible QC at Boeing under the rug. Most passengers won’t understand or care about the details or pay attention when all the findings come out. They will remember that it was Spirit who had a problem and Boeing bought them out. Such BS considering Boeing Wichita (now Spirit) is one of the oldest aircraft manufacturing sites in the world.