Shares in Spirit AeroSystems Holdings Inc (SPR.N) tumbled 13% on Tuesday after the key Boeing Co (BA.N) supplier warned it was seeking relief from its lenders due to Boeing’s move to reduce parts shipments substantially this year.
As Spirit grapples with fallout over Boeing’s 737 MAX production, its chief executive, Tom Gentile, and other company executives were in Seattle this week for discussions with Boeing on production rates and the possibility of further financial assistance from Boeing, a person familiar with the matter said.
A Boeing spokesperson declined to confirm or comment on specific talks between the companies, but said Boeing was “working closely with all of our suppliers to ensure we all emerge from this situation strong, healthy and prepared for the future.”
Earlier this year, Spirit reached a deal with Boeing to make 216 shipsets, as complete sets of parts are known, in 2020, but that was cut down to 125 shipsets in May, as the coronavirus crisis spread and several airlines started deferring deliveries of planes.
Spirit now expects to deliver only 72 shipsets to Boeing. That compares with 606 shipments in 2019, Jefferies told clients Tuesday.
The company has already delivered 37 737 shipsets to Boeing and expects to produce and deliver the remaining 35 shipsets over the rest of the year. But Boeing told Spirit not to deliver any more fuselages through July, the person familiar with the matter said.
Spirit’s profits were already under pressure after Boeing halted production of its once best-selling 737 MAX from January through late May following a safety ban after two fatal crashes.
After the jet’s grounding, Boeing kept production going for nine months and, earlier this year, paid Spirit $225 million to support 737 MAX production while deferring repayment of another $123 million advance.