Hari Krishnan Airbus, the European aircraft manufacturing giant, is cautiously optimistic about finalizing the acquisition of a portion of Spirit Aerosystems, a struggling U.S. aerostructures supplier. While talks are progressing smoothly, CEO Guillaume Faury acknowledges the challenges that lie ahead.
The deal involves Airbus taking control of four Spirit plants crucial for the production of Airbus’s A350 and A220 jetliners. This move is part of a larger, collaborative effort with Airbus’ arch-rival Boeing, which intends to acquire the remaining assets of Spirit, a former Boeing subsidiary.
The unusual cooperation between these two aviation giants stems from concerns about the rapid decline of Spirit. A potential collapse of this key supplier could have sent shockwaves through the entire aerospace industry. To prevent such a scenario, Airbus and Boeing have opted for a strategic carve-up of Spirit’s assets.
However, the path to acquisition is not without hurdles. The money-losing Spirit plants pose significant integration challenges for Airbus. While Spirit has agreed to a $559 million payment to Airbus subject to certain conditions, the French CEO acknowledges the complexities involved in the process.
“We will have to go from signing to closing and then we will have to get our hands on it, and will have to do the ramp-up,” Faury explained. “There are plenty of problems to be solved. It is not a walk in the park but it seems that we are ticking the boxes one by one.”
The urgency of the situation led Airbus and Boeing to jointly provide Spirit with a $457 million lifeline to ensure its survival while the three-way deal is finalized. Regulatory approval also remains a crucial step in the process.
Faury’s comments highlight Airbus’s primary concern – the potential domino effect a failing Spirit could have had on its own operations, considering Spirit relies on Airbus for a significant portion of its sales. He expressed relief at Boeing’s recent financial maneuvers, including a $24 billion equity raise, which analysts believe will strengthen Boeing’s position and prevent any potential roadblocks in the Spirit deal.
With Boeing’s recent $350 million advance to Spirit, Faury believes the risk for Airbus is further mitigated. He acknowledged, “The fact that Boeing was able to refinance itself is good news…in theory that de-risks the signing for Airbus.”
Airbus’s $107 million advance to Spirit last week signifies its commitment to the deal. While challenges abound, Airbus remains cautiously optimistic about successfully integrating these crucial assets and securing a stable supply chain for its A350 and A220 jetliners. The success of this complex three-way agreement will have significant implications for the future of both Airbus and Boeing.
