The Federal Trade Commission cleared The Boeing Company's $8.3 billion acquisition of Spirit AeroSystems Holdings but imposed substantial divestiture requirements to address antitrust concerns in the commercial and military aircraft markets. The FTC's proposed consent order mandates that Boeing sell key Spirit assets to preserve competition among aircraft manufacturers.
Under the settlement announced by the FTC, Boeing must divest Spirit businesses that currently supply aerostructures to Airbus SE, including all necessary assets and personnel. These divested assets will be sold directly to Airbus, Boeing's primary competitor in the commercial aircraft market. Additionally, Boeing must sell Spirit's Subang, Malaysia aerostructures business, which supplies components to both Boeing and Airbus, to Composites Technology Research Malaysia Sdn. Bhd.
"American commercial travelers and our military deserve to fly on dependable aircraft, manufactured with reliable components," said David J. Shaw, Principal Deputy Director of the FTC's Bureau of Competition. Shaw emphasized that the action protects aircraft manufacturing competition to ensure Americans can access high-quality aircraft.
The proposed merger combines Boeing, one of the world's largest manufacturers of commercial and military aircraft, with Spirit, the world's largest independent supplier of aerostructures. Spirit manufactures critical structural components including fuselages and wings that are essential for both commercial and military aircraft production.
The FTC's investigation revealed concerns that Boeing's acquisition of Spirit would give the company both the ability and incentive to raise costs or degrade Airbus' access to essential inputs for competing aircraft. By requiring the divestiture of Spirit's Airbus-supplying operations, the FTC aims to prevent Boeing from potentially disrupting its competitor's supply chain or increasing production costs.
The consent order includes several protective measures to ensure the divestitures proceed smoothly. Boeing must provide transitional services to both Airbus and Composites Technology Research Malaysia to assist them in manufacturing various products during the transition period. The FTC has appointed an independent monitor to oversee the divestitures and ensure both Boeing and Spirit comply with the order's requirements.
For military aircraft markets, the order imposes additional restrictions to maintain competition. Boeing and Spirit must continue providing aerostructures and related services to competing contractors for military aircraft programs. Spirit is required to honor existing contracts with other contractors and remain available as a supplier for future competitors. The company cannot discriminate in favor of Boeing when dealing with competing military aircraft manufacturers.
The deal represents a significant consolidation in the aerospace supply chain, bringing together two companies with intertwined histories. Spirit was originally part of Boeing before being spun off in 2005. The company has faced financial challenges in recent years, partly due to production issues and reduced aircraft demand during the COVID-19 pandemic.
For consumers, the FTC's action aims to preserve competitive dynamics that help ensure aircraft safety, reliability, and innovation. Competition between Boeing and Airbus in commercial aircraft markets has historically driven technological advances and competitive pricing that benefit airlines and passengers.
The aerospace industry has faced increased scrutiny from regulators following safety incidents and production quality concerns. The FTC's careful review of this merger reflects the agency's focus on maintaining competitive markets in sectors critical to national security and public safety.
Industry observers note that the required divestitures may actually strengthen Airbus' position by giving the company direct control over key supply chain components previously controlled by an independent supplier. This vertical integration could provide Airbus with greater supply chain security and potentially lower costs.
The proposed consent order must still receive final approval from federal court. However, such FTC settlements typically receive judicial approval when the agency and merging parties have reached agreement on terms.
The transaction is expected to close following court approval and completion of the required divestitures. Boeing has indicated its willingness to comply with the FTC's requirements to complete the acquisition, which the company views as strategically important for its manufacturing operations and supply chain control.
This merger review demonstrates the FTC's continued focus on preventing anticompetitive consolidation in concentrated industries, particularly those affecting national security and consumer welfare. The agency's approach of allowing the merger while requiring targeted divestitures aims to preserve the benefits of the transaction while maintaining competitive market dynamics.