Spirit AeroSystems has reduced its full-year forecast for 737 fuselage deliveries as it continues to work through the production defect involving improperly drilled holes on the aft pressure bulkhead.
The airframe manufacturer reported revenue of $1.4bn for the third quarter, up 13% over the year-ago period. This increase was primarily due to higher production deliveries on most Commercial programs as well as higher Defense and Space and Aftermarket revenue.
Spirit AeroSystems’ operating loss for the third quarter of 2023 was $133.7 million, compared to operating income of $4.5 million in the same period of 2022. The change was primarily driven by higher changes in estimates and excess capacity costs recognized during the third quarter of 2023.
Earnings per share dropped to $(1.94); $(1.42) on an adjusted basis.
“Our priority is to strengthen Spirit financially. The signing of the memorandum of agreement with Boeing was an important step forward. In parallel, the Spirit team is focused on meeting our customer commitments, improving operational performance and commercial conversations with Airbus,” said Pat Shanahan, President and Chief Executive Officer, Spirit AeroSystems.
Changes in estimates in the third quarter of 2023 included net forward loss charges of $101.1 million and unfavourable cumulative catch-up adjustments for periods prior to the third quarter of $64.0 million. Forward losses were primarily comprised of $47.3 million on the Boeing 787 program and $22.7 million on the Airbus A350 program, and were driven by higher estimates of supply chain, labour and other costs. Unfavorable cumulative catch-up adjustments were primarily comprised of $49.3 million on the Boeing 737 program and $10.6 million on the Airbus A320 program, reflecting increased factory performance costs and, to a lesser extent, rework costs related to the quality issue on the Boeing 737 aft pressure. Excess capacity costs during the third quarter of 2023 were $56.4 million. In comparison, during the third quarter of 2022, Spirit recognized $49.1 million of net forward loss charges, $4.9 million of unfavourable cumulative catch- up adjustments and excess capacity costs of $31.4 million.
Full-year 2023 cash used in operations is expected to be between $150 and $200 million; full-year 2023 free cash flow is expected to be a usage between $275 and $325 million. This outlook reflects lower projected Boeing 737 deliveries of 345 to 360 units for the year.