In an effort to land a key supplier, Boeing has changed how it plans to pay for the deal, according to two people familiar with the negotiations, a move that could help the planemaker preserve cash as it faces safety and quality issues.
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 makes aircraft parts including the fuselage of the Boeing 737 Max, the company’s most popular plane.
One of the people familiar with the talks said the decision to move to the stock from cash is not expected to significantly delay a deal, which could be announced next week.
Based on its share price on Tuesday, Spirit has a market value of more than $3.6 billion.
The news that Boeing proposed to use its stock, instead of cash, to buy Spirit was reported earlier by the Wall Street Journal.
The stock payment could help Boeing’s financial situation as it invests in improving production quality after a panel blew off 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.
Negotiations to acquire Spirit are complicated by the fact that Spirit also supplies parts to Boeing’s biggest competitor, Airbus. This company is expected to take over the operations of Spirit which produces parts for Airbus.
Federal investigators said 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 since, Boeing has taken a number of steps to improve quality. Last week, its CEO, Dave Calhoun, faced tough questions 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 have been exacerbated by the pandemic, which has disrupted supply chains across the airline industry. While the supply of materials and parts has recovered somewhat, it remains questionable.
On Monday, Airbus cut the number of commercial planes it expects to deliver to airlines this year to 770, from an earlier estimate of about 800. The company, based in Toulouse, France, said it was struggling to get enough engines, aircraft manufacturing and cabin equipment. As a result of that change and problems in its space business, Airbus cut its profit and cash flow forecasts for 2024. The company’s stock fell 10% on Tuesday after its announcement.
