Boeing Supplier Spirit Aero Expects 737 Max Output To Stay Low

(Bloomberg) -- Spirit AeroSystems Holdings Inc. expects to keep production of Boeing Co. 737 Max aircraft bodies at 31 per month for the rest of the year as the two companies work to improve quality in their factories. 

Boeing’s plans to ramp up production have been delayed, which will have a “material impact” on Spirit’s cash flow throughout 2024, the supplier said in a statement reporting first-quarter earnings on Tuesday. The Wichita, Kansas-based manufacturer also said it has been unable to reach a deal with Airbus SE to raise prices on parts it supplies for the A220 and advanced A350 aircraft models, which resulted in a further drag on cash flow.

Spirit posted a first-quarter adjusted loss of $3.93 per share compared to a 54 cent deficit estimated by analysts. The results underscore how Boeing’s crisis is squeezing the finances of the critical supplier and former unit the planemaker spun off in 2005. 

Spirit shares fell nearly 2.8% before the start of normal trading in New York. 

Boeing in March said it was in discussions to acquire Spirit in an effort to bring more of its aircraft production under its direct control. The planemaker is working to stabilize its supply chain and bolster quality standards under close scrutiny from US regulators after a fuselage panel blew off a 737 Max 9 mid-flight in January.  

Boeing Chief Executive Officer Dave Calhoun has said a deal for Spirit could be reached by the end of the current quarter. However, efforts to sell Spirit’s Airbus-related businesses to the European planemaker have been caught up in protracted negotiations, Bloomberg News reported on April 30. 

Spirit on Tuesday also said it expects incremental losses due to a slower-than-expected increase in production of Boeing’s 787 Dreamliner widebody jet. That model is under fresh scrutiny from the US Federal Aviation Administration  after the planemaker disclosed that workers at its factory in North Charleston, South Carolina, may have falsified records related to tests performed as part of work attaching wings to the aircraft’s body. 

Spirit ended the first quarter with $352 million in cash, according to its release. The supplier said its management has developed plans to improve liquidity, without elaborating. 

The company also said it will not provide financial guidance for 2024 until it had clarity on the acquisition by Boeing and its negotiations with Airbus.

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