Spirit AeroSystems, the supplier of Boeing 737 MAX fuselages, experienced larger financial losses in the first quarter than analysts had anticipated. Negotiations with both Boeing and Airbus contributed to these losses during this period.
By Avinash Vj
Boeing is considering acquiring Spirit, while talks with Airbus persist amid substantial net losses. The company is grappling with challenges in its Airbus programs, including the potential sale of its Belfast plant and discussions for financial compensation.
Spirit AeroSystems, a key provider for Boeing, manufactures the forward fuselage for all Boeing aircraft and the entire fuselage for the 737 MAX family. Formerly a part of Boeing until its sale in 2005 for $900 million, Spirit has seen ongoing speculation about a potential repurchase by Boeing. During the first quarter, discussions regarding this acquisition gained momentum. Additionally, an incident involving an Alaska Airlines Boeing 737 MAX 9, where a door plug blew out mid-flight, led to rapid depressurization and a diversion. While no fatalities occurred, the incident triggered significant repercussions. The Federal Aviation Administration (FAA) consequently imposed a cap on the monthly production rate of the 737 MAX, significantly impacting Spirit. In the first quarter, Spirit experienced a cash burn of $444 million, up from $69 million the previous year. The operating loss exceeded that of 2023, primarily due to adverse changes in estimates during the period, compounded by Boeing's schedule adjustments in March, which had a significant impact on Q1.
On the Airbus side, Spirit faced challenges with the A350 and A220 programs, resulting in a net forward loss of $495.4 million. Negotiations with Airbus have been ongoing, but no agreement has been reached yet. The losses were driven mainly by pricing negotiation impasses with Airbus, lack of additional firm orders, and production cost escalation.
While Spirit also incurred losses from the Boeing 787 program, they were comparatively minimal, amounting to $34.1 million. In early March, reports surfaced that Spirit was in talks to sell its Belfast plant, which produces wings for Airbus A220s. Though Airbus initially declined to comment on rumours, subsequent reports confirmed ongoing negotiations. Recently, it was revealed that Airbus is seeking financial compensation from Spirit due to these losses. Industry sources suggest that more than $1 billion would be required to recover losses at the UK Airbus plant operated by Spirit.
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