Aeronautical component manufacturer Spirit AeroSystems yesterday reported its financial results for the first quarter of 2023.
Changes in estimates for the period included net forward loss charges of 110 million dollars, primarily related to the Airbus A220 programme and, to a lesser extent, the Airbus A350 and Boeing 787 programmes.
In addition, the company expects an additional loss of 31 million in annual profits due to the disruption in deliveries of some 737 MAXs as a result of a defect detected in a manufacturing part.
See also: Boeing halts deliveries of some 737 MAXs after supplier part issues
Spirit AeroSystems’ profits reduced due to 737 MAX component defect
In a press release, the copany based in Wichita, Kansas, said it has begun work on necessary repairs to components already in production. They are expected to be completed by the end of July. In addition, and as a result of the review of the entire process, it has already started to build and deliver new parts without failures.
«After identifying the quality issue, our top priority was to work with Boeing and the Federal Aviation Administration for their confirmation that it was not an immediate safety of flight issue», said Tom Gentile, President and CEO of Spirit AeroSystems.
«Once confirmed, we turned our attention to ensuring that our ongoing production meets manufacturing standards», Gentile said. «We are also implementing additional protocols to reinforce our quality systems to prevent similar occurrences in the future», he added.
According to financial assessments, the disruptions would affect annual gross profit by 31 million dollars. Of that total, 17 million was reflected in the first quarter result.
Spirit AeroSystems also anticipates additional costs, including those that Boeing may assert to repair some previously delivered aircraft, as well as warranty costs related to 737 MAXs currently in service.
However, the company said it is not possible to reasonably estimate the potential remaining figure at this time. It said it will continue to assess the situation and work with Boeing to minimise the impact on the production line.
Higher costs and fewer deliveries
The company is now forecasting cash burn of between 100 million and 150 million dollars this year due to the risk of reduced 737 MAX fuselage deliveries. It initially planned to complete 420 deliveries this year, but that figure could be reduced to 390, according to Gentile.
The cost of repairing affected components at Spirit AeroSystems’ production facility could be as much as 5 million dollars, an expense of between 100.000 and 150.000 dollars per aircraft.
