Dive Brief:
- Spirit AeroSystems is increasing support throughout its supply base as the manufacturer aims to ramp up production rates across multiple programs, according to a May 3 earnings call.
- “We probably got 75 or 80 people out in the field every day working with our most distressed suppliers, helping them fix their plan, helping them buy material or in some cases offloading some work ...,” President and Chief Executive Officer Tom Gentile said on the call.
- In Q2, the Boeing supplier aims to stabilize and complete the rework of the 737 production line to help increase deliveries in the second half of the year, Senior Vice President and Chief Financial Officer Mark Suchinski said.
Dive Insight:
Spirit wrestled with another challenging quarter after the company “continue[d] to encounter shortages and one-off supplier issues,” Gentile told analysts.
For instance, Spirit has been working with Boeing this past quarter to recover production of its 737 program after reporting quality issues with the fuselage section of certain aircraft units.
“Going forward, we were working very closely with Boeing to rework the affected 737 units. This will drive some near-term disruptions, but we’ve identified the process to rework the units in Wichita, and have started producing and delivering conforming units to Boeing,” Suchinski said.
To further help with recovery plans, Spirit expects to receive $280 million in cash advances from customers by the end of the fourth quarter.
He further noted that “receiving these advances will help provide additional cushion, especially as we incur the near-term financial impacts from the disruption and rework of the affected 737 fuselages, potentially lower 737 deliveries, while continuing to receive materials and inventory to support our own supply chain.”
The supplier has also made significant progress on hiring and training new employees ahead of the planned 737 production rate increases.
Spirit’s 737 line wasn’t the only program experiencing hiccups. The aerospace company also noted an $81 million forward loss on its Airbus A220 program, with $46 million related to a distressed supplier.
As Spirit continues to unload or shift work to other suppliers, alongside other different strategies, the company remains optimistic.
“The good news is that the production rates are going up, and there [are] opportunities,” Gentile said. “So, there’s a light at the end of the tunnel, but it’s still fragile and we’re still working [at] it every day.”
Other aerospace companies have also been plagued by supply chain pains. General Dynamics also reported missed deliveries this past quarter, partly due to late shipments from supplier Honeywell
