Boeing to buy Spirit AeroSystems in $4.7 billion deal

Boeing striking a deal to buy back Spirit Aero Systems. Philip OH joins us right now. He's got more on that front. Hey, Phil, We knew this was coming, but I guess this is the deal. Yeah, well, they it took a while to put together because there is a third party involved here, Airbus, which is taking a chunk of Spirit Aero Systems as well. So here's the deal altogether, it's $8.3 billion. That's the total value of the deal when you include debt, which Boeing will be assuming Boeing gets 80% of Spirit, Airbus gets 20%. For Boeing, the importance here and we've talked about this for months, they have to have some way to better integrate the fuselage manufacturing facilities from Spirit, most notably in Wichita, KS, but also in Tulsa. They have to incorporate those so that there is better quality control, the manufacturing process. So many of the problems that we have detailed over the last year and a half have been surrounding the facilities from Spirit in Wichita. So they now get that fuselage plant, 14,000 workers who were at Spirit will now be part of the Boeing team. If you take a look at shares of Boeing, remember this is an all stock deal structured that way so that it would help Boeing withstand a credit downgrade. If it were to pay cash, there likely would have been a credit downgrade. 3 1/2 billion dollars of Spirit Arrows debt will also be assumed by Boeing. In a message to employees, Boeing CEO Dave Calhoun said, We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing and the country more broadly. This deal is not going to close right away. They expected to take until at least the middle of next year's. You take a look at shares of Boeing, that's when they expect this deal finally to close. And I mentioned the Airbus component of this. Take a look at shares of Airbus. Spirit is actually paying Airbus $559,000,000 to take a couple of its facilities, the most notable one being in Belfast, Ireland, where parts for the Airbus A220 are made. The reason they're paying Airbus, these are all loss making positions so far in terms of their facilities and what they're manufacturing for Airbus. So that's the deal, guys. The one that everybody was expecting to come together has finally come together. And as I've mentioned many times, there are four things that need to happen before you start to see shares of Boeing potentially move. This was one of the four. Obviously, the big one is naming a new CEO. And when that happens, that might be the start of a catalyst towards seeing where Boeing shares go, let's say, six months, 12 months down the road. Hey, Phil. There were so many questions around Boeing's safety credentials that have been raised. And I know people look at Spirit Aero Systems and say, OK, that was a big part of the problem. Does it fix it to simply bring that back in house or, you know, just the idea of a company that's already questioned? Yeah, sure. You're, you're hitting right at the at the main question that many investors have, which is how quickly can they correct the problems at Spirit. And oh, by the way, they've got their own problems so that the company with problems is trying to fix another company with its own set of problems related but separate to a certain extent. That's the big question. How quickly can Boeing do this? I have seen some reports where the airlines and and most notably Ryanair has said some of the planes that are being delivered, albeit at a much lower production rate, there seems to be an improvement in terms of when they're delivered, perhaps fewer issues that the airlines have to shake out when they take delivery of new aircraft. But it's going to take time. It will take time before Boeing can say, look, we think that we are in a place where production can move substantially higher because the quality controls are in place.