Airplane parts supplier Spirit AeroSystems (NYSE:SPR) is trending, and SPR stock is up about 4% today. The shares are climbing, and Spirit is attracting attention because Boeing (NYSE:BA) agreed to buy the firm for $4.7 billion.
Boeing, which may be charged criminally by the Department of Justice (DOJ), believes that the deal will help it make its planes safer.
BA stock is up about 3.5% this morning.
The Spirit Deal and the Reasons Behind It
Boeing agreed to pay $37.25 per share for Spirit. The airplane maker stated that the acquisition “is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly,”
The company explained that the acquisition would allow Boeing to align its entire commercial plane business with ” the same priorities, incentives and outcomes.” Specifically, the firm contended that Boeing’s commercial unit would focus “on safety and quality” in the wake of the transaction.
Spirit made and sold the door plug that fell out of a Boeing 737 Max plane during a flight in January, sparking outrage by many at the airplane maker.
Boeing May Face Charges After Whistleblower Disclosures
The DOJ is expected to decide by July 7 whether to levy criminal charges against Boeing. Alternatively, the agency may reach a settlement deal with the firm. Any charges are likely to focus on the company’s actions that could have contributed to the blowout of the door plug in January.
Over the last several years, over a dozen whistleblowers have identified problems with Boeing’s planes and manufacturing processes. Since the January incident, a significant number of new whistleblowers have come forward with additional allegations against the company. Last month, someone who currently works for the firm reported that it had “tried to shield broken or out-of-specification 737 Max plane parts from regulators and lost track of them,” CNN reported.
The acquisition of Spirit may represent an attempt by the airplane maker to convince the U.S. government, the DOJ, and its customers that it is taking steps to fix its problems.
Boeing’s CEO, Dave Calhoun, has resigned but intends to keep his job until the end of the year.
The Price Action of SPR Stock
Heading into today, SPR stock had risen 5.5% in the last month, while it was down 7.3% in the preceding three months.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
