Boeing crisis: Boeing brings supplier Spirit back into the group

Boeing crisis: Boeing brings supplier Spirit back into the group
Boeing crisis: Boeing brings supplier Spirit back into the group

The fuselage of Boeing’s best-selling 737 comes from supplier Spirit. The company was once part of the group – and will soon be again. Meanwhile, Boeing is facing new trouble with the US Department of Justice.

After a series of problems, the struggling aircraft manufacturer Boeing is bringing its important supplier Spirit Aerosystems back under the corporate umbrella. There has long been criticism that the separation of the former Boeing division made it difficult to maintain quality standards.

Boeing is paying the purchase price in the form of shares. Spirit is valued at around $4.7 billion in the deal, Boeing announced. The aircraft manufacturer is also taking on around $3.6 billion in Spirit’s debt. A few hours earlier, the financial service Bloomberg had reported details of the deal.

Key role in Boeing 737

Spirit builds, among other things, the fuselage of Boeing 737 aircraft. The company, which was spun off from Boeing in 2005, also produced wing parts and fuselage fragments for Airbus after later acquisitions. A solution had to be found for this before Boeing could take Spirit back into its own hands.

Airbus has now announced that several Spirit plants will go to the European company. Unlike Boeing, Airbus will not pay a purchase price for them – instead, it will receive $559 million from Spirit as a kind of dowry.

The separation of the division from Boeing followed the trend at the time to streamline companies and save money by outsourcing activities to suppliers. Over time, however, the general view became that the separation from Spirit led to quality problems and a loss of control by Boeing.

There have been repeated problems in recent years. In one case, for example, it was discovered that holes in the fuselage of several Spirit aircraft had been drilled incorrectly.

Alaska incident was the last straw

Spirit also played a role in the dramatic incident in January, in which a fuselage section of an almost new Boeing 737-9 Max belonging to Alaska Airlines broke off during a climb. The fuselage was produced by Spirit and delivered to Boeing, where the fragment was removed for rework. Boeing was unable to find any documentation on this – but the accident investigation authority NTSB assumes that the plane was delivered to the airline without two fastening bolts on the fuselage section.

After the Alaska incident, Boeing came under increased pressure to improve quality controls. One of the measures was to send more inspectors to Spirit so that any errors could be corrected there and not after delivery to the Boeing factory. In March, Boeing also announced that it was negotiating the purchase of Spirit.

Boeing CEO Dave Calhoun stressed that the deal is in the interest of airline passengers, aircraft manufacturers, airlines “and the country as a whole.” Some of Spirit’s defense activities will also be transferred to Boeing.

Media: Boeing faces US government charges

According to media reports, the near-accident with the Alaska plane will have serious consequences for Boeing. The New York Times and Bloomberg, among others, reported that the US Department of Justice wants to officially accuse the aircraft manufacturer of fraud.

This concerns the agreement with which Boeing avoided criminal prosecution after the crash of two 737 Max aircraft in 2018 and 2019. Among other things, the company had to pay a fine of 243.6 million dollars and implement a compliance and ethics program. The Justice Department concluded in May that Boeing had violated the terms of the deal.

Boeing has a few days to decide between admitting guilt and going to trial, media reports said. If Boeing admits guilt, the company will have to pay another $243.6 million and accept a supervisor, Bloomberg wrote.

346 people were killed in the crashes of two 737-Max aircraft in October 2018 and March 2019. According to investigations, one of the causes of the accidents was software on the aircraft that was intended to support pilots but interfered with the controls more than they expected. Boeing came under criticism because employees of the aircraft manufacturer had declared special training for the software to be unnecessary when the type was certified by US authorities.

Bloomberg report on Spirit New York Times report Bloomberg on impending indictment Boeing announcement Airbus announcement

Source: Stern

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