Now Reading
Key Boeing Supplier Says There is ‘Significant Concern’ About Ability to Continue as Going Concern After Racking Up Huge Losses

Key Boeing Supplier Says There is ‘Significant Concern’ About Ability to Continue as Going Concern After Racking Up Huge Losses

a group of airplanes on a runway

A key supplier of aircraft parts to aerospace giant Boeing said on Tuesday that there was “significant concern” about its ability to continue as a going concern after racking up huge losses over the last four years and warned that it would need additional liquidity to stay in business over the next 12-months.

The warning came in the form of an SEC filing from Spirit AeroSystems, which was created by Boeing in 2005 in a strategic move to outsource the production of parts for its 737 and 787 Dreamliner aircraft models.

Spirit was created when Boeing sold its own factories in Kansas and Oklahoma, but the company quickly expanded and opened plants in several other countries, including Malaysia.

The company has grown to become one of the largest non-OEM (original equipment manufacturer) aircraft parts designers and manufacturers, and it supplies rival aircraft manufacturer Airbus with parts of its A220 and A350 lines.

Spirit has, however, been embroiled in controversy over quality control issues that have plagued Boeing and seriously dented the aircraft manufacturer’s reputation, including its links to the door plug that explosively blew out of an Alaska Airlines 737MAX jet in January.

Earlier this year, Boeing announced that it would buy back Spirit AeroSystems in a $8.3 billion deal, which includes $4.7 billion in equity and all of Spirit’s debts.

Months before the acquisition was announced, Boeing advanced $425 million to Spirit to support the company’s liquidity, and while $40 million has been paid back, Spirit says it is trying to negotiate an extended repayment schedule.

Spirit said on Tuesday that it had been hit by changes made to the production and delivery process implemented by Boeing, which had prevented it from shipping and invoicing inventory to the embattled aircraft manufacturer.

The company also said that a strike by tens of thousands of Boeing machinists in Portland and Seattle had forced it to furlough 700 of its employees because it had reached “maximum storage capacity” on parts produced for Boeing’s 767 and 777 programs.

Given the fact that Boeing intends to buy back Spirit, Tuesday’s liquidity warning could prove relatively academic, although the deal isn’t expected to close until mid-2025 at the earliest.

View Comment (1)
  • What is kind of interesting about Spirit Aerosystems is that people like to point out bad quality from Boeing South Carolina non-union work sites but Spirit is union and also has quality issues. Spirit in Wichita is basically just like the old Boeing factory there.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

© 2024 paddleyourownkanoo.com All Rights Reserved.

Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to paddleyourownkanoo.com with appropriate and specific directions to the original content.