Spirit AeroSystems Faces Production Setbacks Following Strike

Strike impacts Spirit AeroSystems' fuselage delivery projections for 2023

  • A two-week strike in Spirit AeroSystems' Wichita production facility will result in reduced delivery of 737 fuselages in 2023.
  • Spirit encountered significant financial setbacks in the second quarter, absorbing losses from Boeing and Airbus programs.
  • CEO Tom Gentile acknowledges the strike's impact on production, deliveries, earnings, and cash flow.


WICHITA — Spirit AeroSystems, an integral supplier for Boeing and Airbus, reported a reach forward loss of $104.7 million on its programs during the second quarter. This significant financial setback is attributed to a two-week strike halting operations from June 22 to July 5 at the company's Wichita, Kansas facility. The strike, orchestrated by the International Association of Machinists and Aerospace Workers (IAM), adds to the existing challenges faced by the aerostructures manufacturer.

As a direct consequence of the production hiatus, Spirit AeroSystems announced a downward revision in its delivery forecast for 2023. The company expects to provide Boeing with 370 to 390 narrowbody 737 fuselages, a dip from the previously projected 390 to 420 fuselages.

CEO Tom Gentile stated, "We quickly resumed negotiations after the initial vote resulted in a work stoppage and reached a consensus. However, the production and delivery timelines were affected, mirroring in our earnings and cash flow metrics."

The new labor pact, resulting from the strike, will increment Spirit's yearly expenses by $80 million. During the second quarter, this translated to $28.3 million due to the labor agreement and an additional $7.3 million related to strike disruption. Comparatively, the net forward loss charges for Spirit witnessed a 64% increase relative to the same timeframe in the preceding year.

Furthermore, Spirit incurred additional costs, including $37.5 million on Boeing's 787 Dreamliner program, $27.5 million on Airbus A350, and $27.4 million on Airbus A220, each arising from varying factors like new labor contracts and escalated supply chain expenses. The company noted an adverse $21.6 million adjustment associated with the 737, attributing it to amplified labor and supply chain outlays.

Despite the revenue growth of 8%, amounting to $1.37 billion, Spirit's cash burn escalated to $211 million for the quarter ending in June, a significant rise from $79 million the prior year. Analyst Rob Stallard from Vertical Research Partners remarked on Spirit's predicament, "These figures, although distressing, might have been anticipated by the investors." Contrarily, J.P. Morgan's Seth Seifman opined that the cash flow remained as per expectations for the quarter.

In another development, Spirit disclosed having rectified improperly installed fixtures connecting the aft fuselage to the vertical tail on 737 aircraft. However, this led to a recorded $23 million revenue shortfall, accounting for potential claims from Boeing for reparations. As per Spirit's estimates, Boeing has managed to address around half of the requisite modifications. Earlier in May, Spirit predicted these disruptions to reduce its annual profit by $31 million and foresaw additional impending costs.


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