Spirit AeroSystems is warning that its business viability remains in doubt, saying its cash reserves are drying up due to Boeing’s sharply reduced production rates and to other factors driving steep losses on its Airbus and Boeing programme work.
The Wichita company made the dire prediction in its third-quarter regulatory filing, released on 5 November. Meanwhile, Spirit continues working to close a deal under which it intends to be acquired by Boeing in mid-2025.
“We have incurred significant operating losses in the last few years and have identified conditions or events that raise substantial doubt about our ability to continue as a going concern,” says Spirit’s filing.
The company held $218 million in cash and cash equivalents on 26 September but anticipates its cash deficit will be $450-500 million between the current quarter and the second quarter of 2025.
“We will need to obtain additional funding to sustain operations, as we expect to continue generating operating losses for the foreseeable future,” Spirit’s third-quarter financial filing says.
The company has “developed a plan designed to improve liquidity” and may need to lay off or furlough workers, its filing says without elaborating.
But the success of that plan is uncertain.
“There can be no assurance with respect to the outcomes of such discussions or that these plans or strategies will sufficiently improve the company’s liquidity needs to enable continuation of operations for at least the next twelve months,” Spirit says.
The company did not respond to a request for comment. Boeing declined to comment, referring questions to Spirit.
Spirit’s warning comes two weeks after it disclosed its third-quarter financial performance, which included a $477 million loss. That loss reflected $243 million in forward losses and other adjustments related to slower-than-planned production and to higher costs affecting Spirit’s production of components for Boeing 767s and 787s, and Airbus A220s and A350s.
In the financial filing, Spirit notes it lost $1.5 billion in the first nine months of 2024, adding to losses of $616 million last year, $546 million in 2022 and $541 million in 2021. Since 2021, its operation has burned through $1.9 billion in cash.
At the same time, the company’s reserves of cash and cash equivalents have dried up, dwindling from $824 million at the end of 2023 to $218 million as of 26 September.
Meanwhile, Spirit holds $4.4 billion in debt, including $426 million in short-term debt.
The company attributes its financial distress to factors including “production and delivery process” changes implemented by Boeing. It notes that on 2 March Boeing said it would stop accepting deliveries of parts that required rework or that need to be installed “out of sequence” – also known as “travelled work”.
At the time, Boeing was attempting to shore up its production quality after a manufacturing error resulted in the 5 January in-flight failure of a 737 Max 9’s mid-cabin door plug. That incident led Boeing to haul back 737 production rates.
Then on 13 September, Boeing halted 737, 767 and 777 production altogether when its machinists went on strike. The strike just ended on 5 November, but weeks are likely to pass before Boeing’s production is back up to speed.
Spirit “has experienced higher levels of inventory and contract assets, and lower operational cash flows due to the inability to physically ship and invoice end-items to Boeing in a timeframe aligned with production activities,” Spirit says.
The company says its operations and finances are also suffering due to slower-than-planned production rates.
“Boeing’s ability to increase production rates is governed by the FAA, and the production rates which were anticipated are now limited,” Spirit’s filing says. “The company continued to experience delays and realised higher-than-anticipated costs with respect to these production and delivery processes.”
Boeing has lent some financial assistance to Spirit, agreeing in April to advance the supplier $425 million; in June, Boeing agreed to amend that agreement to provide Spirit with another $40 million.
Spirit says it has approached Boeing about a further cash advance, adding, “There can be no assurance that such amendment will be entered into on acceptable terms, if at all”.
