Michelle ThompsonSpirit AeroSystems, a supplier facing challenges with Boeing, responsible for constructing fuselages and other components, revealed its first adjusted quarterly profit since the beginning of 2022, aided by increased payments from Boeing. However, persistent quality and safety issues at both Boeing and Spirit AeroSystems led the supplier to refrain from providing profit forecasts for the remainder of the year. Nonetheless, the return to profitability offers a glimmer of positive news for the company, which has been embroiled in recent problems concerning Boeing aircraft.
Spirit manufactured the fuselage for the Alaska Airlines 737 Max 9 jet, which experienced a door plug detachment during a flight on January 5, resulting in a significant rupture in the aircraft’s side shortly after takeoff. Although the plane managed to land safely without casualties, subsequent inspections of all Max 9 jets in operation revealed loose bolts on several planes, suspected to be the cause of the incident on the Alaska aircraft.
Boeing disclosed on Sunday that workers at Spirit AeroSystems identified misdrilled holes on 737 Max fuselages manufactured by the company. This issue necessitates the rework of 50 jets before delivery, further impeding the production of the problematic jet.
Initially intending to boost production of the 737 Max this year, Boeing has paused these plans at the directive of the Federal Aviation Administration, pending investigations into issues at both Boeing and Spirit AeroSystems. Consequently, Spirit AeroSystems stated on Tuesday that it would not provide guidance on 2024 results until it receives more clarity on Boeing’s production plans and finalizes pricing negotiations with Airbus, another major customer.
In October, Spirit AeroSystems struck a deal with Boeing, entailing additional payments totaling $455 million to Spirit by 2025, alongside at least $100 million for additional tooling requirements. The agreement, aimed at enhancing quality and increasing future deliveries from Spirit, contributed to the reported net income of $59 million for the quarter, a notable improvement from the $243 million net loss incurred a year prior. The adjusted profit of 48 cents per share marks the first adjusted income since the first quarter of 2022.
Despite this progress, Spirit still recorded a net loss of $633 million for the year, albeit representing its best quarterly performance since 2019. Spirit has grappled with net losses every quarter since the onset of the pandemic in early 2020, which triggered a significant downturn in airline demand for jets globally and prompted Boeing to temporarily halt 737 Max production—a model that faced a 20-month grounding following two fatal crashes.v
