Spirit AeroSystems Holdings Inc. (SPR), a major supplier to Boeing, reported significant operating losses in recent years and raised concerns about its ability to continue as a going concern. The company has identified several conditions and events that cast substantial doubt on its financial stability.
Spirit cited various factors affecting its liquidity, including higher inventory and contract asset levels, reduced operational cash flow due to lower-than-expected deliveries to Boeing, increased factory costs to maintain rate readiness, and Boeing's decision to cease allowing traveled work on the B737 fuselage at Spirit's factories. Additionally, the strike by Boeing employees and limitations on Boeing's ability to ramp up production have further impacted Spirit's financial position.
On October 18, 2024, Spirit announced a 21-day furlough for approximately 700 employees working on the B767 and B777 programs, set to begin on October 28, 2024. The furlough is a direct response to the Boeing strike, which has led to Spirit reaching its maximum storage capacity for these programs.
As of November 5, 2024, Spirit has outlined a plan to improve liquidity, which is contingent on several factors, including ongoing discussions regarding customer advance repayments, meeting forecasted B737 deliveries, and resolving the ongoing strike by Boeing employees. The company is also exploring additional measures to bolster liquidity, such as securing further customer advances, issuing new securities or debt financing (subject to contractual limitations), and restructuring operations to enhance efficiency and reduce costs, which could involve layoffs or additional furloughs.
A nearly two-month strike at Boeing Co. has ended after a majority of around 33,000 frontline workers voted on Monday to approve a new contract that includes a 43.65% compounded wage increase.
In July 2024, Boeing announced that it agreed to acquire Spirit AeroSystems in an all-stock deal at an equity value of approximately $4.7 billion, or $37.25 per share.The total transaction value was around $8.3 billion, including Spirit's last reported net debt.
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