BRUSSELS – The head of the European planemaker Airbus said talks to finalize the takeover of part of troubled U.S. aerostructures supplier Spirit Aerosystems (NYSE: SPR) were going smoothly but that bringing it into Airbus would “not be a walk in the park”.
Airbus plans to take over the running of four Spirit plants associated with its A350 and A220 jetliner programs as part of a loosely coordinated plan to carve up the company with Boeing, which is buying back almost all the rest of its former unit.
The rare act of cooperation between business foes reflects concerns that the rapid decline of one of the industry’s key suppliers, spun off from Boeing (NYSE: BA) almost 20 years ago, could have spread havoc through the world’s largest planemakers.
Because the plants lose money, Spirit Aerosystems (NYSE: SPR) has agreed to pay $559 million to Airbus subject to due diligence and the shape of the deal, which could also include a fifth Scottish plant.
“My teams say the finalization is going reasonably well…so I am quite optimistic on Spirit,” Airbus CEO Guillaume Faury told Reuters in an interview.
But the French CEO said tough tasks still lay ahead.
“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 said on the sidelines of a European industry event.
“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.”
Spirit did not respond to a request for comment.
The Wichita-based company this month issued a going concern warning, indicating doubts over its ability to pay its bills at some point in the next 12 months.
Already facing financial pressure, Spirit’s fortunes had taken a tumble after the blowout of a door plug on a Boeing 737 MAX in January, prompting the U.S. planemaker to offer to buy back the fuselage supplier for its most-sold jetliner series.
Last week, Boeing (NYSE: BA) and Airbus agreed to advance Spirit a combined $457 million to keep it afloat while the three-way split is finalized. The plan must also win regulatory approval.
Faury’s remarks highlight the extent of Airbus’ concerns that contagion from the Boeing crisis could have reached its own operations via Spirit, which relies on Airbus for 25% of sales.
“The risk was not on our side. It was on Spirit’s side and even Boeing’s,” Faury said.
“The fact that Boeing was able to refinance itself is good news,” Faury said referring to Boeing’s $24 billion equity raise in late October, which analysts say put Boeing on an improved footing and removed potential distractions from the Spirit Aerosystems (NYSE: SPR) deal.
Faury said Boeing’s latest advance of $350 million to Spirit “is also good news for us; in theory that de-risks the signing for Airbus”.
Last week, Airbus agreed to advance $107 million to Spirit.
