Airbus says to get $559 million compensation under Spirit Aero deal

PARIS (Reuters) – Europe’s Airbus on Monday set out the terms under which it plans to buy certain loss-making activities of Spirit AeroSystems (NYSE:) as part of a planned wider break-up of the supplier between Airbus and rival Boeing (NYSE:).

The deal involves Airbus taking over work at loss-making plants that supply key parts for its A220 and A350 passenger jets.

Airbus will be compensated for agreeing to take on the work by a payment of $559 million from Spirit, while it will pay a nominal sum of $1 for the assets, depending on the final outline of the deal, it said in a statement.

The European planemaker did not specify the mechanism of compensation, which stems from the financial condition of activities it is acquiring as a result of Spirit’s decision to sell the rest of the company back to its one-time owner Boeing.

Airbus, which last week trimmed delivery and production forecasts, said the deal would “ensure stability of supply for its commercial aircraft programmes through a more sustainable way forward, both operationally and financially”.

Confirming a Reuters report, it said it would take over activities at four Spirit plants in the United States, Northern Ireland, France and Morocco that carry out work for the A350 and A220 jets. It will also take on minor activities carried out for the A220 in Wichita, Kansas, where Spirit is based.

The agreement is subject to due diligence, Airbus said.