Spirit AeroSystems Estimates Boeing 737 MAX Issue to Incur Costs of at Least $31 Million

Spirit AeroSystems revealed that the latest issues related to a Boeing 737 MAX fuselage production problem will have a negative impact of at least $31 million.

The Tier 1 supplier revealed the sum in its Q1 2023 financial results report, providing an update on the manufacturing issue that was identified in April 2023. The company’s President and Chief Executive Officer (CEO) Tom Gentile said during the Spirit Aerosystems’ latest earnings presentation that “Spirit notified Boeing of a quality issue identified on the vertical fin attach fittings of certain models of the 737 fuselage.”

“After identifying the quality issue, our top priority was to work with Boeing and the FAA for their confirmation that it was not an immediate safety of flight issue. Once confirmed, we turned our attention to ensuring that our ongoing production meets manufacturing standards,” added Gentile, noting that the company has begun implementing additional protocols to assure quality and prevent such events from happening in the future.

Spirit AeroSystems identified the affected fuselages that are located in Wichita, Kansas, United States (US) and has begun to repair them on site. It estimated that all of the fuselages will be repaired by July 2023.

Following a preliminary financial assessment, the company “expects disruptions and rework within Spirit’s Wichita factory to negatively impact full-year gross profit by $31 million, of which $17 million is reflected in the first quarter 2023 financial results.” Additional expenses are also expected, the company noted, as Boeing may decide to repair already-delivered fuselages “in their factory and warranty costs related to affected 737 units in service”.

The financial impact of repairing the already delivered fuselages will be assessed on a case-by-case basis, Spirit AeroSystems added.

In Q1 2023, the aerospace supplier earned $1.4 billion in revenue, ending the year with a net loss of $281 million, compared to a net loss of $53 million in Q1 2022. It delivered 95 Boeing 737 shipsets during the quarter, 35 more than in Q1 2022.

Previously, Boeing’s Chief Financial Officer (CFO) and Vice President of Finance Brian West, stated that “roughly 75% will require the fuselage rework and the number of inventoried airplanes will likely increase” in Q2 2023. West’s comments were made during Boeing’s Q1 2023 financial results presentation on April 24, 2023.