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Boeing pumps cash into Spirit AeroSystems to shore up troubled supplier

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Dominic Gates

Boeing has reached a sweeping financial agreement with Spirit AeroSystems of Wichita, Kansas, pumping in millions of dollars to support the financially hobbled supplier.

The deal comes after Spirit’s chief executive Tom Gentile was fired earlier this month and replaced by former top Boeing executive Pat Shanahan, who was deputy secretary of defense under former President Donald Trump.

The goal of the agreement is to stabilize Spirit’s production system, by both stemming the flow of quality defects that have afflicted the 737 MAX and the 787 Dreamliner jet programs this year and positioning Spirit to ramp up to Boeing’s planned rate increases.

The most recent quality problem was the discovery of misdrilled holes in the aft pressure bulkhead of the 737 MAX fuselage. Boeing has said it will post a loss in the third quarter as a result of the extensive inspections and repairs required on previously built MAXs.

In a statement Wednesday, Spirit said the deal will provide “greater collaboration to achieve improved quality and higher deliveries in the future.”

“Boeing and Spirit will continue to work shoulder to shoulder to mitigate today’s operational challenges,” Shanahan said. 

Boeing has agreed to provide Spirit $100 million immediately for capital investment in tooling.

In addition, the deal provides new pricing so that Boeing will increase what it pays Spirit for its parts by a total of $455 million over the next two years.

The agreement allows Boeing to claw back some $265 million of that amount with price reductions on its parts between 2026 and 2033.

With Spirit in deep debt and financially weak, Boeing senior vice president Ihssane Mounir, who heads up the global supply chain for Commercial Airplanes, has been in negotiations on pricing and compensation claims for many months.

The agreement ends all legal claims of liability between the parties.

The deal, released publicly Wednesday morning, was signed just 10 days after Gentile was fired. Shanahan’s close ties with Boeing and the mounting sense of crisis at Spirit seems to have provided the final impetus to come to the agreement.

In a statement, Boeing called the deal “mutually beneficial.”

“This agreement with our valued supplier will enhance operational stability in our production system and help us deliver on our customer commitments,” Boeing said.

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