Boeing simply can’t afford a cash deal for Spirit AeroSystems

By Scott Hamilton


June 25, 2024, © Leeham News: News that Boeing over the weekend wanted to acquire Spirit AeroSystems through a stock rather than a cash transaction should surprise absolutely nobody.

Anyone following Boeing’s financial performance and weak balance sheet could see this one coming.

Boeing’s financial condition is a mess. Frankly, it’s unfathomable that the credit agencies still rate Boeing as investment grade, albeit at the lowest level.

Boeing’s production rate is a mess and so is its quality control. There is no end in sight. There is not assurance when certifications of the 737-7, 737-10 and 779-9 will occur. Boeing apparently shifted engineers from its X-66A Truss Brace Wing project these programs, things are so bad. This shifts development of a new airplane to the right by at least two years.

When it comes to reacquiring Spirit, Boeing simply can’t afford to pay cash for the company, which at the close of the stock market yesterday had a market cap of $3.8bn+. Essentially, in our view, it’s the same reason Boeing walked away from the Embraer joint venture in April 2020: it could not afford the $4.5bn cash price tag. (The decision by an arbitrator of whether Boeing’s walk was justified is expected within the coming weeks or months.)

Boeing can’t afford to buy Spirit. We’re not sure Boeing can even afford to acquire Spirit in a stock swap. The  money required to bring Spirit into shape is unknown, perhaps even to Boeing.

This is a mess that keeps on giving.

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Shanahan: Spirit AeroSystems and Airbus need to have “family meeting”

By the Leeham News Team

May 7, 2024, © Leeham News: For a company actively negotiating its own dismemberment, Spirit AeroSystems managed to record first quarter losses even worse than Wall Street expected. The company recorded $617M in losses and burned through $444M in cash during the first three months of the year due to the ongoing Boeing 737 MAX crisis and unfavorable prices on its Airbus A530 and A220 work.

“The death throes of Spirit are hard to watch, as these 1Q numbers are pretty horrendous,” Rob Stallard, Vertical Research aerospace analyst, wrote in a research note after the company released its earnings report.

It recorded $495M in net forward losses, largely from the Airbus A350 ($280M) and A220 ($167M) programs. Read more

Boeing’s safety improvement since the 2018-19 MAX crisis needs more work

Editor’s Note: This story was written before the release yesterday of an independent Expert Panel appointed by Congressional mandate to review Boeing’s safety culture. The report may be downloaded here: Boeing Safety Study by FAA Panel 2-26-24

By Scott Hamilton

The interior of the Alaska Airlines Boeing 737-9 MAX at Row 26, where the emergency exit door plug separated from the airplane at 16,000 ft.

Feb. 27, 2024, © Leeham News: The safety culture at Boeing Commercial Airplanes (BCA) came under fire again following the Jan. 5 Alaska Airlines Flight 1282 accident in which an emergency exit door plug separated from the plane on climb out from the Portland (OR) airport.

The plane, a 10-week-old 737-9 MAX, fully depressurized at about 16,000 ft. Nobody died and injuries were slight. Damage throughout the cabin and into the cockpit occurred when the door plug, at row 26, blew out. Pilots landed the plane safely at Portland 14 minutes after the decompression.

Within days, quality “escapes” were determined to have occurred at Spirit AeroSystems, which built the fuselage and door plug, and at Boeing during final assembly. Since Boeing had the fuselage last and its employees completed the final assembly, Boeing’s ultimately responsible for the quality escapes.

Boeing Co. CEO David Calhoun was quick to accept responsibility for the company. Such life-threatening escapes should never happen, he said. Calhoun appointed an independent safety committee headed by a retired Admiral, Kirkland Donald, with a nuclear submarine safety background.

The appointment of a special safety committee is reminiscent of a board-level safety committee appointed in September 2019 by then-chairman and CEO Dennis Muilenburg in the aftermath of the MAX crisis following the October 2018 and March 2019 fatal accidents of two 737-8 MAXes. These accidents killed 348 people and led to a 21-month grounding of the global MAX fleet from March 13, 2019.

Jon Holden, the president of Boeing’s largest union, the IAM 751, said neither he nor others from the union had any contact from the 2019 committee. Boeing’s engineering and technicians union, SPEEA, declined comment. But a source familiar with the situation said the union didn’t see any changes implemented from the 2019 committee at its level.

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Ultimately, Congress is responsible for mess at FAA, Boeing, Spirit, et al

Editor’s note: Mondays are ordinarily paywall days. Because of the nature of this topic, today’s article is a freewall post.

By Scott Hamilton


The Alaska Airlines Boeing 737-9 MAX that was involved in the Jan. 5, 2024, accident. The door plug for this emergency exit blew off the airplane during climb out from the Portland (OR) airport. Nobody died and injuries were minor.

Feb. 26, 2024, © Leeham News: There’s no getting around the culpability of the Federal Aviation Administration (FAA), Boeing, and Spirit AeroSystems in the current 737 MAX mess. Nor was there any doubt about the culpability of the FAA and Boeing in the first MAX crisis in 2018-2019.

But let’s face it: Ultimately, Congress is where the buck stops. Because Congress for decades failed to appropriate the bucks needed for the FAA to do its job without overreliance on Boeing or Spirit.

Shifting oversight responsibilities and diminishing the FAA’s role may well have been the result of effective lobbying by Boeing and others in the aerospace industry. Congress could have rejected changes to laws governing the FAA’s oversight authority in favor of Boeing and other aerospace companies.

So, it’s Congress, once again, that is ultimately culpable.

Let’s not be naïve. There is no way Congress or Members of Congress will step up to assume responsibility for the mess the US commercial aviation industry sees itself in today.

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NTSB confirms door plug bolts were missing on Boeing 737-9 MAX

By the Leeham News Team

Feb. 7, 2024, © Leeham News: The National Transportation Safety Board (NTSB) yesterday issued its preliminary report on the Alaska Airlines Flight 1282 structural failure on Jan. 5 this year. (A link to the report is below.)

The emergency exit door plug separated from the two-month-old Boeing 737-9 MAX due to faulty installation, the National Transportation Safety Board confirmed.

A door plug on an emergency exit on a two-month-old Boeing 737-9 MAX blew off the airplane as it passed more than 16,000 ft shortly after takeoff from Portland (OR). Nobody was killed and only a few injuries occurred. The flight crew made an emergency landing in Portland a few minutes later.

Within days, the focus for the incident landed on Spirit AeroSystems, which makes the fuselages and installed the door plug, and on Boeing, which completed final assembly at its Renton (WA) 737 plant. Quality assurance, or “quality escape” in aviation jargon, was suggested to be issues at Spirit and Boeing.

LNA’s Bjorn Fehrm quickly concluded that four bolts meant to hold the door plug in position after installation were missing. The bolts are designed to prevent the plug from moving upward off flanges that hold the plug in place in the fuselage opening.

The NTSB’s investigation confirmed that these four bolts were missing after Boeing removed and reinstalled the plug to fix a quality escape from Spirit affecting the plug. Boeing employees failed to reinstall the plug.

Removing the plug is not a standard final assembly procedure. It’s called an “unplanned removal.” There is a specified procedure to reinstall an unplanned removal. It appears that Boeing failed to follow its own procedures.

LNA on Jan. 15 detailed the procedures for unplanned removals and reinstallation.

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Quality Will Drive Pay for Spirit Executives

By Dan Catchpole

Feb. 6, 2024 © Leeham News: Quality more than quantity will drive Spirit Aerosystems executives’ compensation when the company unveils its new formula when it files its proxy statement in March, the company’s CEO Pat Shanahan told Wall Street analysts on Tuesday.

“It will be significantly different, and the heaviest weighting will be only quality,” he said during a conference call discussing Spirit’s fourth quarter earnings report.

The panel blowout on Alaska Airlines Flight 1282 last month highlighted ongoing quality problems at Spirit and Boeing. Unlike the violent decompression on the 737 MAX 9, the quality problems typically just create financial headaches and public embarrassment for the two companies.

Spirit recorded $59M in net income, 48 cents adjusted earnings per share, and $42M free cash flow in the fourth quarter of 2023, its first profitable quarter since the beginning of 2022.

The company’s performance was boosted by a contract renegotiation and financing deal signed with Boeing in October. Spirit is getting close to signing a similar deal with Airbus, Shanahan said.


  • Quality metrics for exec compensation
  • Short term, long term plans for improving quality
  • Negotiations with Airbus

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Culture key to latest Boeing MAX crisis: panelists

By Scott Hamilton

Special Coverage of the Boeing crisis

Jan. 24, 2024, © Leeham News: What began as a non-fatal accident with an Alaska Airlines 737 MAX 9 on Jan. 5 has blown into a full crisis for Boeing. The company was once considered the gold standard of commercial aviation.

Today, 171 737-9s remain grounded in the US by the Federal Aviation Administration (FAA). There is no end in sight as the FAA and National Transportation Safety Board (NTSB) investigate the accident of Flight 1282 in which a door plug (an inactive emergency exit) blew off the 10 week old Alaska MAX 9 on climb out from Portland (OR).

It is the second time the MAX has been grounded. All MAX 8s and MAX 9s were grounded from March 2019 for 21 months. This grounding only affects the MAX 9.

Evidence points to Boeing quality assurance flaws in final assembly. An anonymous Boeing employee posted on LNA a detailed scenario how Boeing failed its own processes in final assembly of the Alaska plane. (His post follows this article.)

The FAA is booting more inspectors on the ground at the 737 Renton factory. On Jan. 24, Boeing shut down the 737 assembly line for a “safety stand down.” CEOs of Alaska and United airlines, the two US carriers with the 171 MAX 9s on the ground, publicly eviscerated Boeing.

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At the first aviation conference following the Alaska incident, the Aviation Week suppliers event, some speakers called for leadership changes at Boeing.

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Alaska 1282 isn’t a “737 MAX” story; it’s about quality assurance at Boeing or Spirit

Update: The Federal Aviation Administration today notified Boeing it is under investigation for potentially failing to ensure the door plug was properly installed.

By Scott Hamilton

Jan. 11, 2024, © Leeham News: Alaska Airlines Flight 1282’s (AS 1282) decompression last Friday on a Boeing 737-9 MAX understandably brought new focus and doubts about the MAX program.

The MAX was grounded by the Federal Aviation Administration for 21 months after the March 2019 crash of an Ethiopian Airlines 737-8 MAX. This followed an October 2018 crash of a Lion Air MAX 8 under similar flight conditions. The two accidents were traced to the root cause of a mis-designed Maneuvering Characteristics Augmentation System, or MCAS.

Note: This data is based on October 2023 information. Full year 2023 data is not available at this writing.

When a door plug for an inactive emergency exit blew out of AS 1282 at 16,000 ft minutes after departure from Portland (OR), it meant trouble for Boeing and confidence in the MAX. Fortunately, no fatalities and only a few minor injuries resulted from the decompression. The flight returned to Portland and landed safely.

Alaska grounded its fleet of 65 MAX 9s within hours. United Airlines followed the next day. It has more MAX 9s—79—than any other airline. Shortly after United’s action, the FAA made it mandatory: the MAX 9s would remain grounded until inspections and fixes, if required, could be completed. A few other international airlines followed suit.

But as information emerged through Tuesday of this week, it became clear that this story is not a “MAX” story. It’s a story about quality assurance at Boeing or Spirit AeroSystems, the maker of the 737 fuselages and the plug door.

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737 incidents prompt new scrutiny at Boeing

 By the Leeham News Team


 Jan. 8, 2024, © Leeham News: Following in the footsteps of the 737 rudder bolt omission inspection just last month, we have the Jan. 5 incident on Alaska Airlines Flight 1282 in which an emergency exit plug door blew off the airplane at 16,500 ft.  This may indicate another quality assurance failure at either Boeing or Spirit AeroSystems.

The door plug design used on the Boeing 737-900/900ER, 737-8-200 and 737-9. Credit: Boeing, via the National Transportation Safety Board.

We don’t know if this is a Boeing problem, a Spirit problem, a bolt manufacturer problem, or an Alaska Airlines problem. It’s way too soon in the investigation to draw conclusions. Certainly, because it’s Boeing’s name on the airplane, and especially given the MAX history, people are jumping to the conclusion that Boeing screwed up again. While this may ultimately prove true, LNA is not at all prepared to conclude today that this is the case.

Illustration of the bolt locations securing the Boeing 737-9 door plug to the airframe. Credit: Capt. Chris Brady.

The flight left Portland (OR) for Ontario (CA) about 4:30pm. Six minutes later, as the two-month-old Boeing 737 MAX 9 was climbing through 16,500 ft to cruising altitude, the inactive emergency exit plug door, aft of the wing on the left side of the plane, separated from the aircraft. Decompression followed, with an emergency descent and landing back at Portland. There were no serious injuries.

The area where the door plug and cell phones fell from Alaska Airlines Flight 1282. Credit: Google Earth, NTSB.

Boeing and Spirit have been plagued in recent years by quality “escapes.” Inspection and quality assurance may be the culprit again. The official investigation will take some time. The rapid issuance of the Emergency AD Note mandating only a one time inspection is a logical response to something having been misassembled, with the fix being to verify it is assembled per drawing. Whether this is another piece of poor workmanship not being caught by inspection remains to be seen.

The following analysis was compiled by LNA’s news team.

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Spirit Focused on Delivering On Time and At Quality

By Dan Catchpole

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Nov. 6, 2023, © Leeham News: Spirit Aerosystems’ new CEO Pat Shanahan’s focus right now is “to restore confidence in the company” with its biggest customers—Airbus and Boeing.

During a Nov. 1st conference call discussing the company’s third quarter earnings, Shanahan said,  “I recognize we have disappointed our stakeholders.”

Shanahan just came on as chief executive in October to help turn around Spirit, which has been flailing, along with much of the aerospace supply chain. Boeing and Airbus will be watching Shanahan’s progress. He gained a reputation as Mr. Fix-It during his time at Boeing.

  • Market responds favorably to latest earnings report and management’s promises.
  • Shanahan says Spirit is on track to deliver more than 50 737 MAX airframes in 2025.
  • Goal is zero-quality issues.

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