Airbus seeks compensation to take over loss-making Spirit business, sources say

Airbus seeks compensation to take over loss-making Spirit business, sources say
Airbus seeks compensation to take over loss-making Spirit business, sources say

Airbus has sought financial compensation to take over Spirit AeroSystems’ loss-making business, a demand that has emerged as one of the obstacles to a tie-up deal between the supplier and its main customer , people familiar with the matter said.

Spirit and Airbus executives are holding discussions in New York, reported by Bloomberg, to try to resolve issues such as the European aircraft manufacturer’s demands for financial compensation to take over the equipment manufacturer’s loss-making activities. The discussions also focus on mechanisms for separating the Airbus and Spirit businesses, said two of the sources who spoke on condition of anonymity.

It was not clear how the negotiations progressed or whether any of the obstacles were resolved. The world’s major aircraft makers have been exploring ways to unravel their respective ties to Spirit through a carefully timed “framework” deal to separate businesses, Reuters reported in April. The sources did not give financial details, but industry sources said a British Airbus plant run by Spirit needed a reinvestment of more than $1 billion to emerge from its losses. Boeing is focused on acquiring its main aerostructures supplier, which produces the fuselage for its 737 MAX aircraft. To regain control, Boeing must deal with its archrival Airbus, which accounts for about a fifth of Spirit’s revenue. Boeing is likely to object to Airbus receiving payments to take control of operations. He wants to close the deal to focus on increasing production of the MAX, which has been in freefall, one of the sources said. “They want this done in order to stabilize things and prepare the whole production system to ramp up,” he said.

Separating Spirit’s Airbus business involves both transferring factories and extracting some work from other factories, a second Source said. Spirit’s money-losing Belfast factory is one of the sticking points being resolved, two of the sources said. Spirit will release its results on May 7. An Airbus spokesperson reiterated that the company was in discussions about its Spirit-based operations and declined further comment. Boeing also declined to comment.

Joe Buccino, a spokesperson for Spirit Aero, said: “Regardless of the negotiations, we are and will always be committed to quality, safety and the highest technical rigor.” Last month, Airbus CEO Guillaume Faury told Reuters it was “not unlikely” that Airbus would take control of Belfast and the Kinston, North Carolina, factory where Spirit makes part of the A350. Spirit was spun off from Boeing in 2005 and quickly began diversifying to supply Airbus, which is now its second-largest customer behind Boeing. It still makes about 70% of the 737, Boeing’s best-selling model, including the fuselage, and supplies large parts of the 787.

The saga has renewed concerns about the future of Northern Ireland’s largest manufacturing employer and its 3,400 employees, after Spirit stepped in to buy it from struggling Bombardier in 2019.

In addition to building wings for the Airbus A220, the company has expanded into the defense and space sectors.

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