Spirit AeroSystems chief executive Patrick Shanahan believes the company will remain a partner to Airbus even as Boeing negotiates a potential acquisition of the aerostructures firm.
The Boeing discussions complicate Spirit’s relationship with Airbus, given that the European airframer has been immersed in pricing talks with Spirit, as well as intensified supply chain monitoring as it seeks to ramp-up A350 and A220 production.
Speaking during a first-quarter briefing, Shanahan said, without elaborating, that discussions with Boeing over a possible re-acquisition of Spirit “continue” – a situation over which Airbus chief Guillaume Faury has expressed reservations.
Faury has disclosed that the two sides are holding preliminary talks on a “variety of options” to secure sourcing in the event of a Boeing takeover.
Airbus has already moved to re-integrate aerostructures facilities in France and Germany which it had previously established as standalone divisions. But Faury has yet to reveal the airframer’s thinking regarding Spirit’s Airbus activity.
Spirit’s relationship with Airbus dates back nearly two decades, following Boeing’s decision to divest its Wichita and Tulsa commercial aircraft manufacturing facilities to Canadian private equity firm Onex in 2005.
The divested plants were rebranded with the Spirit AeroSystems name, and the newly independent company courted Airbus to supplement its activity with aerostructures work – although Airbus’s initial reaction was to suggest Spirit’s proposals were too expensive.
But Spirit persisted and became a supplier to Airbus in 2006 with the acquisition of UK-based BAE Aerostructures, giving it work on items including wing components.
When Airbus sought to divest some of its own aerostructures operations under a restructuring plan designated Power8 – among them French, German and UK sites such as Saint-Nazaire, Nordenham and Filton – Spirit was keen to participate, particularly as Airbus had embarked on its A350 XWB programme.
Spirit was unsuccessful with its bid for the plants but subsequently achieved a breakthrough in 2008 when it secured the centre fuselage package for the A350, for which it would establish a new facility at Kinston in North Carolina.
The company’s efforts to diversify from Boeing work proved difficult, however, and Spirit endured several years of problematic operations battling cost overruns on development programmes including business jets.
But Spirit has demonstrated its capabilities, with some 600 A350s delivered, and has managed to reinforce its collaboration with Airbus. It took over the former Bombardier plant in Belfast, which produces wings for the A220, in 2020 and Spirit remains a supplier of components for other Airbus models.
Shanahan indicates that he believes the two sides will maintain co-operation.
“We’ve explored other economics and different relationship in our production system,” he says. “There’s a path forward on all fronts and we’ll continue to partner with Airbus.”
Airbus is concerned about supply chain reliability as it looks to raise production of the A350 and A220, and is supporting Spirit with its own personnel to ensure quality is maintained. Pressure to address quality issues with 737 Max production had spurred Boeing’s acquisition discussions with Spirit.
“We have lots of conversations with Airbus on many different levels,” says Shanahan. “The majority of the conversations tend to focus on the integrity of supply, given the significant ramp-ups on the A350 and the A220.”
He points out that the A350 ramp-up amounts to a 43% increase this year, with production set to include the first A350 freighter, while the A220 will have a 52% hike – resulting in an “intensity” of discussions with the airframer.
The two sides have been trying to reach an agreement on pricing, but progress has been slow and has yet to lead to a result.
“We have never stopped talking about price with Airbus,” says Shanahan. “We haven’t made the progress we want, but we’ve never stopped talking about price.”
He says this “impasse” as well as “continued pressure” on meeting delivery targets for the A350 and A220 has led to Spirit’s booking “significant losses” for the first quarter, the result of reversing previously booked price assumptions combined with net incremental losses for anticipated future performance obligations beyond 2026.
First-quarter forward losses on the A350 and A220 programmes amounted respectively to $281 million and $167 million.
Shanahan says that financial risk “ultimately manifests itself as operational risk”, and the company needs to reach agreements with Airbus as it has with Boeing, although he resists the idea of using hardball tactics to resolve the pricing issue.
He also stresses that the company has “risen to the challenge” of strain on the supply chain, and that it will continue to work with Airbus to “ensure that quality and safety remain the foremost considerations”.
Shanahan says he is “confident” of reaching “some kind of conclusion”, adding: “We have to have financially strong business and partnerships are the only way to do this. But we’ll probably have to have a few more family meetings.”
