Boeing-Spirit pricing deadlock broken by CEOs who were former GE teammates

Kevin McAllister and Tom Gentile spearheaded talks that have nearly resolved a long-running dispute between Boeing and Spirit AeroSystems, a supplier that used to be part of the planemaker and still gets 80 percent of its work from Boeing.

Two former General Electric colleagues turned sparring partners are close to unraveling aerospace’s Gordian knot: a sprawling, four-year industrial dispute that touches every Boeing commercial jet.

Now on opposing sides, Kevin McAllister and Tom Gentile spearheaded talks that over the past few days broke a contract deadlock pitting Boeing against Spirit AeroSystems, a supplier that used to be part of the Chicago-based plane maker. Spirit surged to a record on news of the tentative pact, which may lead to an even closer tie between the companies.

“The deal with Boeing removes a cloud that has been hanging over Spirit for some time,” Rob Stallard, an analyst at Vertical Research Partners, said in a note to clients. “Boeing has been menacing suppliers across the globe, and with such a large revenue exposure (80%), Spirit looked vulnerable.”

The resolution, reached after the two executives publicly locked horns earlier this year, was characteristic of the old teammates. McAllister, 54, and Gentile, 53, built a reputation as creative dealmakers at GE Aviation, where they had offices down the hall from each other. They worked so closely selling GE’s jet engines and service deals to airlines that Gentile later quipped they were “joined at the hip.”

The stakes could hardly be higher. Boeing needs an agreement that will tamp down costs on the 737 MAX, a crucial source of revenue, and help it avoid writing down a portion of the 787 Dreamliner’s $26.5 billion production losses. For Spirit, which Gentile now leads, the talks will be crucial in determining the company’s financial health, share price and role on Boeing’s next likely jetliner, dubbed the 797.

“I do know Tom Gentile really well, and I think a lot of him,” McAllister, who runs Boeing’s $65 billion Commercial Airplanes division, said when asked about the dispute during a June briefing. “He’s a terrific leader. We’ve made progress in some areas of this negotiation. We have a few pockets where we’re still not there yet. But I can tell you there’s a whole lot of energy on it from both sides of the equation.”

Spirit soared a record 18 percent to $71.72 at the close in New York, after…

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