Spirit AeroSystems Reports Losses Amid Declining 737 Shipments

Spirit AeroSystems announced on Monday that its quarterly losses more than doubled, primarily due to a significant drop in 737 fuselage shipments to its main customer, Boeing, and escalating losses on its Airbus A220 program.

Financial Performance Highlights:

• Net Loss: The net loss for the second quarter increased to $415 million, up from $206 million in the same period last year. This increase highlights Spirit’s fragile financial state and underscores the significance of Boeing’s ongoing support.
• 737 Fuselage Shipments: Spirit delivered 27 737 fuselages in the quarter ending June 27, a substantial decrease from the 74 units delivered in the same quarter of the previous year.
• Revenue and Earnings: The company reported quarterly revenue of $1.49 billion, falling short of analysts’ expectations of $1.59 billion. The adjusted loss per share was $2.73, significantly wider than the anticipated 90 cents per share.

Impact of Boeing’s 737 MAX Production Issues:

Delivering delays related to Boeing’s 737 MAX jet adversely affected Spirit’s results. Production was slowed following a mid-air panel blowout incident in January, which impacted the overall delivery schedule. As a result, shares of Spirit AeroSystems dropped by 2.2% after the announcement.

Due to higher costs, the U.S. supplier faced additional losses on Airbus’ A220 program. During the second quarter, Spirit recorded $25 million in forward losses on the A220 program, contributing to overall net forward losses of $214 million.

Cash Flow and Liquidity Concerns:

• Cash Burn: Spirit burned $597 million in cash during the quarter, far exceeding the $169 million expected by analysts, according to LSEG data.
• Liquidity Measures: In response to its financial challenges, Spirit borrowed $200 million under a bridge-term loan facility last month. The company is also developing plans to explore various options to improve liquidity.

Future Outlook:

Spirit’s ability to deliver defect-free 737 fuselages will be crucial for Boeing, which aims to ramp up production to 38 jets per month by the end of the year. The company continues to seek solutions to stabilize cash flows and address its ongoing financial difficulties.

In summary, Spirit AeroSystems faces significant challenges, with substantial losses driven by reduced 737 fuselage deliveries and higher costs associated with the Airbus A220 program. The company’s efforts to improve liquidity and manage production quality will be critical in the coming months.