Spirit AeroSystems reports substantial loss
October 24, 2024
Spirit AeroSystems has reported a loss of $477 million for the third quarter of 2024.
The aerostructures manufacturer, a key supplier to major aerospace companies like Boeing and Airbus, has been hit hard by ongoing difficulties in several of its core aircraft programmes.
These struggles have resulted in substantial charges and write-downs, severely impacting the company’s bottom line.
A combination of rising costs, production delays, and inefficiencies across multiple projects has exacerbated Spirit AeroSystems’ woes. The Wichita, Kansas-based company’s reliance on Boeing, particularly for the troubled 737 MAX programme, has made it vulnerable to fluctuations in the wider aerospace market. Supply chain disruptions, labour issues, and slower-than-expected recovery in commercial aviation have further strained the company’s ability to meet financial targets.
“We remain on track to close the acquisition by Boeing in mid-2025, while also continuing to focus on safety, compliance and quality,” said Pat Shanahan, President and Chief Executive Officer, Spirit AeroSystems.
With mounting losses and a challenging outlook, Spirit AeroSystems now finds itself in a precarious position. There are growing concerns about its long-term stability, especially as it grapples with high debt levels and continued programme challenges. Unless the company can address these issues and stabilise its operations, it risks deeper financial trouble in the months ahead.
“Our process improvement initiatives helped drive our third quarter free cash flow usage in half from the second quarter, and we are demonstrating solid momentum heading into the fourth quarter,” said Irene Esteves, Executive Vice President and Chief Financial Officer, Spirit AeroSystems.
The Boeing strike is having a major impact on the company. Spirit said that from October 28, it will implement a 21-day furlough for approximately 700 employees working on the 767 and 777 programmes due to the buildup of a significant inventory buffer.
If the strike continues beyond November, financial pressures may require the company to implement layoffs and additional furloughs.
However, Spirit’s revenue in the third quarter of 2024 increased from the same period of 2023, primarily due to higher production activities on most commercial programmes and higher defence and space revenues, partially offset by lower production volume on the Boeing 737 programme. Overall deliveries were consistent in the third quarters of 2024 and 2023, with 332 shipsets delivered in both periods.
Spirit’s backlog at the end of the third quarter of 2024 was approximately $48 billion, which includes work packages on all commercial platforms in the Airbus and Boeing backlog.
It comes as Spirit is conducting an extensive review of its record-keeping practices for several aircraft programmes after uncovering instances of missing or duplicate documentation, industry sources told Reuters.
The company has been scrutinising paperwork and inspecting hundreds of thousands of parts, some dating back to 2010—the earliest year for which records are available. The review was triggered last month when irregularities were reportedly found in reports generated by a machine used to measure parts.
