Under pressure, Boeing to buy stressed supplier Spirit

Enters all-stock deal at $4.7 bn valuation in a bid to improve manufacturing

Six months after a fuselage blowout threw Boeing Co. into crisis, the full weight of the legal and financial fallout from the near-catastrophic accident is bearing down on the embattled US planemaker.

The US Justice Department plans to charge Boeing with criminal fraud after finding the company violated a 2021 deferredprosecution agreement tied to two previous, fatal crashes, Bloomberg News reported late on Sunday. Just hours later, Boeing announced a plan to buy back Spirit Aerosystems Holdings Inc., a supplier it spun off two decades ago, for $4.7 billion in a bid to improve manufacturing.

The intertwined developments reveal the sheer magnitude of Boeing’s current troubles. The planemaker now has a few days to make a tough legal choice: plead guilty or go to trial, neither of which are without risk. The Spirit deal, meanwhile, will saddle Boeing with more debt and tie up the manufacturer with the complex task of turning around operations at a contractor that’s suffered from poor workmanship for years — at a time when Boeing’s own facilities aren’t running smoothly. Neither of Boeing’s legal options are particularly appealing. Pleading guilty and accepting a fine potentially locks the company out of important government contracts and might lead to higher compensation to families of victims in the two crashes. But going to court creates an uncertain legal overhang for whoever follows Chief

Executive Officer Dave Calhoun, who has said he will step down by year-end at the latest. “Either way, this is a terrible outcome for Boeing,” Nick Cunningham, an analyst at Agency Partners in London, said of Boeing’s legal options. With Spirit, “Boeing gains very little from this transaction and would not have chosen to do it, given that it only spun Spirit out about 20 years ago.”

The US planemaker said Monday that it will pay $37.25 a share for Spirit in an allstock deal. The total transaction value is about $8.3 billion, including Spirit’s last reported net debt. Arch-rival Airbus SE, meanwhile, gets to walk away with some parts of Spirit that make components for the European planemaker, and stands to get $559 million in compensation.