Spirit AeroSystems reports a $110 million loss

Spirit AeroSystems Holdings reported a hefty $110m loss in reach-forward charges on Airbus and Boeing jet production. The company also expects a further hit of $31m to full-year gross profit due to disruptions related to a Boeing 737 MAX fuselage production problem.

In addition to the Airbus A220 loss, the company took an $18 million A350 charge prompted by additional costs related to production schedule changes, and an $8 million loss on the 787 Dreamliner due to increased labor and supply-chain issues.

Analysts had expected a tough quarter for Spirit due to the ongoing 737 problem, but “it looks like the cost of 737 rework could be below some of the most dire estimates,” said J.P. Morgan analyst Seth Seifman in a note to investors.

These losses come a month after Boeing paused deliveries of some 737 MAXs due to a problem involving two fittings that join the aft fuselage made by Spirit to the vertical tail. Spirit’s first-quarter profit decreased by $17m as a result of the 737 issue, and “additional costs are expected” beyond the $31m headwind to profit expected this year.

Spirit now expects a cash burn of about $100m to $150m in 2023 due to the risk of lowered 737 fuselage deliveries. The company initially projected 420 deliveries this year, but may only deliver up to 390 fuselages for 737s. Repair work to fuselages in Spirit’s factory is expected to be completed by the end of July.

The company has also started to build and deliver production-conforming 737 fuselages under a revised process. Spirit expects to receive a $180m cash advance from Boeing in Q2, which would provide “additional surplus and cushion.”