Furloughs loom at Spirit as Boeing strike continues
September 26, 2024
Britain’s Financial Times reported on Wednesday 25 September that major Boeing supplier Spirit Aerosystems is planning to begin furloughs in three weeks if the ongoing strike at Boeing continues.
The FT’s Claire Bushey in Chicago and Sylvia Pfeifer in London judged that Boeing’s supply chain is already “shuddering” as production slows down, and reported that Spirit Aerosystems will begin furloughs in three weeks’ time if the strike at Boeing (Spirit’s biggest customer) continues.
The Boeing Company is responsible for spending about $1bn per month with companies in its airliner supply chain, providing parts and sub-assemblies for the 737, 767 and 777. But following the strike last week, Boeing’s Brian West, the chief financial officer and executive vice president of Finance announced that the company was: “planning to make significant reductions in supplier expenditures…, specifically for the non-787 programmes.” West told the supply chain that: “if you’re not behind, and we have safety stock, don’t deliver any more.”
Major aerostructures providers and cabin interior manufacturers were always going to be the most vulnerable to disruption caused by industrial action by the unions, and this has certainly been the case for Spirit Aero, which was once part of Boeing until the manufacturer ‘spun-off’ its Wichita division to an investment firm in 2005.
Today, Spirit produces fuselage sections for the 737 and 787, and flight deck sections for the majority of Boeing airliners. Spirit also provides Airbus with fuselage sections and front wing spars for the A350 and wings for the A220. Spirit was initially insulated from the strike, as it was reportedly behind schedule, and so used the strike to ‘catch up’ on 737MAX fuselage production.
Before the strike, in July, Boeing entered into a definitive US $4.7 billion agreement to acquire Spirit AeroSystems in an all-stock transaction. Spirit had been reporting losses since 2020. The total transaction value was reported as being roughly $8.3 billion, including the Wichita and Tulsa plants Boeing previously operated, along with the MRO facility in Dallas, and Spirit’s net debt. Boeing’s acquisition of Spirit will essentially include all Boeing-related commercial operations, as well as additional commercial, defence and aftermarket activities. As part of the transaction, Boeing will work with Spirit to ensure the continuity of operations supporting the US Department of Defense and Spirit’s other defence customers.
Concurrently with the conclusion of the Boeing-Spirit merger, Airbus will acquire certain commercial work packages that Spirit performs for Airbus receiving a reported $559 million in return for taking on Spirit’s unprofitable European operations, including the facilities in Casablanca, Kinston and St. Nazaire, along with A220 production assets in Belfast. Spirit is also proposing to sell its operations in non-Airbus operations in Belfast, Northern Ireland, and its operations in Prestwick, Scotland, and Subang, Malaysia.
