Industrials

By Sharon Terlep Under fire for production snafus, Boeing is overhauling how it pays employee bonuses to emphasize quality and safety over meeting financial targets. The move, one of many to address quality issues following the door-plug blowout on an Alaska Air flight, applies to Boeing’s nonunion workforce of more than 100,000 employees, managers and executives, according to a memo sent to employees and reviewed by The Wall Street Journal. The biggest shift will be in the company’s commercial unit, its largest, where safety and quality metrics will now account for 60% of annual bonuses. Previously, financial incentives comprised 75% of the annual award, while the remaining 25% was tied to operational objectives including quality and safety. Metrics that will determine the rewards include employee safety, work done out of sequence on the assembly line and so-called rework required to fix problems. Regulators have criticized the company’s quality controls and

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: Our 12-month target remains $194 on P/E analysis. The WSJ reported today that BA is in discussions to acquire key supplier Spirit AeroSystems Holdings (SPR 33 ***). Should a deal occur, it would bring BA’s relationship with SPR full circle, since SPR was spun off from Boeing in 2005. We believe the motivation for any such deal is quality control, as an in-house SPR would likely be easier for BA management to monitor. Given the recent history of manufacturing snafus in both enterprises, as well as the Federal Aviation Administration’s requirement that BA deliver a go-forward plan to address safety deficiencies in 90 days, we think BA is turning over every stone to prevent more defects from occurring. We note possible complications for Airbus (AIR FP EUR153

Boeing (BA) and Spirit Aerosystems (SPR) late Friday confirmed the companies were talking about a possible merger, almost two decades after the aircraft manufacturer spun out its former components unit. “We have been working closely with Spirit AeroSystems and its leadershp to strengthen the quality of the commerical airplanes that we build together,” Boeing said in a statement. “We confirm that our collaboration has resulted in preliminary discussions about making SpiritAeroSystems a part of Boeing again.” Spirit, which builds fuselage and other parts used by Boeing and other aircraft companies, also confirmed the discussions without providing additional details. Spirit said it would not issue updates about the negotiations until “further disclosure is appropriate or required.” Spirit shares were more than 2% higher in after-hours trading, adding to a 15% advance during Friday’s regular session. The Wall Street Journal and other news outlet earlier reported the companies were discussing a potential