On Monday, Boeing's union machinists voted to accept the company's contract offer and end a strike that stretched for more than seven weeks. As the troubled plane maker gets back to business, the deal couldn't have come at a more crucial time for suppliers—and it's possible it didn't come quickly enough for one key partner.
On Tuesday, Spirit AeroSystems raised flags when it said the company faced "substantial doubt" over its ability to continue operating.
The Boeing strike forced Spirit, which makes fuselages for Boeing's 737 Max aircraft, to burn through cash reserves.
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According to a recent earnings report, Spirit ended Q3 with just $218 million cash on hand. The company previously announced a $425 million advance from Boeing, but that remains unpaid. The company also secured a $350 million bridge loan, and by the end of Q3, the entire amount had been borrowed.
Spirit is still looking for ways to improve liquidity to support operations, like additional customer advances (the ones that are paid), incremental debt financing and further restructuring.
The company has already implemented several cost-cutting measures. On October 18, Spirit announced employee furloughs, a hiring freeze and travel and overtime restrictions as a direct result of the Boeing strike. Beginning last Monday, October 28, Spirit implemented a 21-day furlough for some 700 employees working on the 767 and 777 programs due to the buildup of a significant inventory buffer.
Spirit's Q3 revenue actually improved from the same time last year, but that was due to higher production on other commercial programs and improved defense and space revenues.
Boeing is currently in the process of acquiring Spirit for $4.7 billion. Pat Shanahan, president and CEO of Spirit, says the company is still on track to close the Boeing acquisition by mid-2025. Spirit's backlog stands at approximately $48 billion, with work on the books for both Airbus and Boeing.
Still, Spirit gave no assurance that the company's plans will sufficiently improve liquidity, so other cuts could be in the mix.
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On Monday, Boeing's Union machinists voted to
accept the company's contract offer an end to
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strike that stretched for more than seven weeks.
As the troubled plane maker gets back to
00:10.859 --> 00:17.174
business, the deal couldn't have come at a more
crucial time for and it's
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possible it didn't come quickly enough for one
key partner.
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On Tuesday, Spirit, AEROSYSTEMS raised flags
when it said the company faced quote
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substantial doubt over its ability to continue
operating.
00:30.489 --> 00:37.380
The Boeing strike forced Spirit which makes
fuselages for Boeing's 737 max aircraft to burn
00:37.389 --> 00:40.869
through cash reserves.
According to a recent earnings report,
00:40.880 --> 00:46.229
Spirit ended Q three with just $218 million
cash on hand.
00:46.630 --> 00:50.909
The company previously announced a $425 million
advance from Boeing,
00:51.169 --> 00:56.040
but that remains unpaid.
The company also secured a $350 million bridge
00:56.049 --> 01:00.590
loan and by the end of Q three, the entire
amount had been borrowed.
01:00.599 --> 01:05.510
Spirit is still looking for ways to improve
liquidity to support operations like additional
01:05.519 --> 01:10.919
customer advances, the ones that are paid
incremental debt financing and further
01:10.930 --> 01:14.389
restructuring.
The company has already implemented several
01:14.400 --> 01:20.510
cost cutting measures on October 18th, Spirit
announced employee furloughs a hiring freeze
01:20.519 --> 01:25.430
and travel and overtime restrictions.
All is a direct result of the Boeing strike
01:25.769 --> 01:31.629
beginning last Monday, October 28th, Spirit
implemented a 21 day furlough for some 700
01:31.639 --> 01:38.279
employees working on the 767 and 777 programs
due to the build up of a significant inventory
01:38.290 --> 01:42.080
buffer.
Spirit's Q three revenue actually improved from
01:42.089 --> 01:46.790
the same time last year, but that was due to
higher production of other commercial programs
01:46.800 --> 01:50.379
and improved defense and space revenues.
Pat Shanahan,
01:50.389 --> 01:55.599
President and CEO of Spirit says the company is
still on track to close the Boeing acquisition
01:55.610 --> 02:00.980
by mid 2025.
And Spirit's backlog stands at approximately 48
02:00.989 --> 02:05.059
billion with work on the books for both Airbus
and Boeing.
02:05.349 --> 02:10.050
Still Spirit gave no assurance that the
company's plans will sufficiently improve
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liquidity so other cuts could be in the mix.
I'm David Manti.
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This is manufacturing now.
