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Boeing close to funding agreement to help Spirit, considers sale of Jeppesen business, reports say

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Boeing close to funding agreement to help Spirit, considers sale of Jeppesen business, reports say

Boeing is considering the sale of its aviation navigation unit Jeppesen to boost its balance sheet, according to a Bloomberg report. The American OEM is said to be working with an advisor on the potential sale. 

The report, citing a person familiar with the matter, said the business could be attractive to private equity firms along with other companies. The unit could potentially sell for over $6bn. This would help offset Boeing's $58bn debt, which new CEO Kelly Ortberg said was a focus for the company.

In another report from Reuters, Boeing is also close to a funding agreement to provide Spirit AeroSystems with cash support. Spirit said earlier in the month, in its third quarter report, that it had “substantial doubt about the company's ability to continue as a going concern exists”. The filing added it expects to use around $450-550 million of cash over the next three quarters - including the fourth quarter of this year. In April 2024, after signing a memorandum of association, Boeing advanced $425 million to Spirit in order to support its liquidity. 

Boeing maintained in its own third quarter earnings report that it will continue with the acquisition of Spirit, which it had previously sold off in 2005. 

A person familiar with the matter spoke to Airline Economics, said Boeing was “stripping off” parts of the company it no longer needed with the focus on returning to its core values of making aircraft, as well as moving away from an emphasis on profit and margins. The person added that Boeing selling off its space business, including its Starliner programme, was a “no-brainer” - especially considering the performance of the programme. The person added that its NASA contracts and some defence contracts had not uplifted with inflation. 

The company recently reached a 38% general wage increase agreement with machinists in Seattle and Portland, concluding a strike that lasted over a month. With mega-companies such as Microsoft based in Seattle, the person said that Boeing had lost some of its competitive advantage in attracting and retaining staff. Furthermore, the company had apparently expected three-quarters of its staff let go during Covid to return. Instead, only around a quarter had returned, and with that a core level of skill and expertise was lost too, the person explained. 

There is some concern, with other Boeing contracts nearing their end, the strike could cause a “trickle down effect”, further exacerbating Boeing's staffing costs in the future.