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AIRBUS CALLED FOR COMPENSATION TO TAKE ON MONEY-LOSING SPIRIT OPERATIONS,
SOURCES SAY

By Allison Lampert and Mike Stone
May 3, 20241:01 AM GMT+2Updated a day ago
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Item 1 of 2 The logo of Airbus is pictured outside the Airbus facility in
Saint-Nazaire, France, November 7, 2023. REUTERS/Stephane Mahe/File Photo
[1/2]The logo of Airbus is pictured outside the Airbus facility in
Saint-Nazaire, France, November 7, 2023. REUTERS/Stephane Mahe/File Photo
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May 2 (Reuters) - Airbus (AIR.PA)New Tab, opens new tab has called for financial
compensation to take on money-losing operations from Spirit AeroSystems
(SPR.N)New Tab, opens new tab, a demand that has emerged as one obstacle to a
tie-up deal between the supplier and its main customer Boeing (BA.N)New Tab,
opens new tab, people familiar with the matter said.
Spirit and Airbus executives are holding talks in New York, first reported by
Bloomberg, to try and work through issues such as the European planemaker's
demands for financial compensation to take on the supplier's loss-making
operations. They also include the mechanics of separating Airbus' business from
Spirit, said two of the sources who spoke on condition of anonymity.
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It was not clear how the talks progressed or whether any of the obstacles were
resolved.
The world’s dominant aircraft makers have been exploring how to untangle their
respective ties with Spirit through a carefully timed "framework" deal to split
operations, Reuters reported in April.
The sources did not give financial details, but industry sources have said a UK
Airbus plant run by Spirit needs a $1 billion-plus re-investment to dig it out
of losses.
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Boeing is focused on acquiring its key aerostructures supplier, which produces
the fuselage for its 737 MAX jet. In order for Boeing to regain control, it has
to deal with its arch-rival Airbus, which accounts for roughly one-fifth of
Spirit revenues.
Boeing is seen likely to oppose payments to Airbus to take operations. It wants
to close the deal to focus on ramping-up slumping MAX production, one of the
sources said.

"They want it done so that things can be stabilized and prepare the entire
production system to go up in rate," he said.
Separating Spirit's Airbus business involves both transferring plants and
extracting part of the work from others, a second source said. Spirit's
money-losing Belfast plant is one of the sticking points currently being worked
through, two of the sources said.
Spirit reports earnings on May 7.
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An Airbus spokesperson reiterated it was engaged in talks over its Spirit-based
operations and declined further comment. Boeing also declined comment.
Spirit Aero spokeman Joe Buccino said "irrespective of negotiations, we are and
will always lock in on quality, safety, and the highest engineering rigor."
Airbus CEO Guillaume Faury told Reuters last month it was “not unlikely” that
Airbus would assume control of Belfast and the Kinston, North Carolina, plant
where Spirit makes part of the A350.

Spirit was spun off from Boeing in 2005 and quickly set about diversifying to
supply Airbus, which is now its second-biggest customer behind Boeing. It still
makes about 70% of Boeing's best-selling 737, including the fuselage, and
supplies large parts of the 787.
The saga has revived concerns over the future of Northern Ireland’s largest
manufacturing employer and its 3,400 staff after Spirit stepped in to acquire it
from struggling Bombardier in 2019.
As well as building wings for the Airbus A220 it has been expanding into defence
and space.

Coming soon: Get the latest news and expert analysis about the state of the
global economy with Reuters Econ World. Sign up here.

Reporting By Allison Lampert in Montreal, Mike Stone in Washington. Additional
reporting by Tim Hepher in Paris; Editing by David Gregorio

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