Shares of Spirit AeroSystems rose on Friday after a report that it could be bought by Boeing, as the aviation giant tries to right itself amid its latest safety crisis.
Spirit has hired bankers and has had “preliminary discussions” with Boeing, according to the Wall Street Journal, which cited unnamed sources and said the talks may not result in a transaction.
A deal would bring Wichita, Kansas-based Spirit back to Boeing after it was spun off from the larger company in 2005.
Shares of Spirit, which makes fuselages and other large aircraft structures, were up about 13 percent by midday, while Boeing was down 1.3 percent.
The boost lifted Spirit’s market capitalization to $3.75 billion.
Representatives for both companies declined to comment.
The talks come as Boeing faces intense scrutiny from Washington following a Jan. 5 incident on an Alaska Airlines Boeing 737 MAX in which a panel exploded mid-flight.
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A preliminary investigation in the US found that four bolts that help secure the panel were missing.
This investigation pointed to Boeing’s operations in Renton, Washington, where the airplane was assembled. But Boeing last year also revealed manufacturing and quality control problems at Spirit, which in October replaced its chief executive.
The Federal Aviation Administration on Wednesday gave Boeing 90 days to come up with a plan to address quality control issues.
On Jan. 31, Boeing CEO Dave Calhoun told CNBC that Boeing had sent a “huge team” to work with Spirit personnel.
Calhoun acknowledged that the company’s previous moves to retool its supply chain processes, such as the sale of Spirit, likely “went too far.”
But “it’s here and now,” Calhoun told the network. “And now I have to deal with it. And we’re going to do it with engineers and engineers working together constructively.”
Boeing initially sold the Wichita assets to Canadian private equity firm Onex in February 2005. The company went public as Spirit AeroSystems in November 2006.
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Alan Mulally, who was Boeing’s CEO at the time, described the move as allowing Boeing to focus on assembling airplanes, “which is where we are most competitive and can add the most value to our airplanes and services.” he said, adding that operating Wichita independently would result in lower procurement costs for Boeing.
But in the wake of Alaska Airlines’ trouble, Boeing is under pressure to show improvement as it falls short of arch-rival Airbus at a time of strong demand for new planes.
Source: AFP