Spirit AeroSystems today disclosed a new, $112 million forward loss on the fuselage sections that it supplies for the Airbus A350 programme.
The disclosure is the latest in a string of forward losses reported by Spirit AeroSystems over the past seven financial quarters totalling more than $1 billion, while chief executive Jeff Turner resigned and was replaced by former Lockheed Martin executive Larry Lawson.
“We are making progress but there is more work to be done,” Lawson says in a press release.
The A350 write-downs includes a $79 million forward loss due to “early development discovery and changes and associated production efficiencies”, according to the press release. The programme also faces higher test and transportation costs.
Spirit AeroSystems blames another $33 million forward loss on engineering efforts for the A350-1000 version.
The Wichita-based supplier delivers the Section 15 centre fuselage section for the A350 from a factory in Kinston, North Carolina, and completes the assembly at a factory in Saint Nazaire, France. European regulators suspended the Saint Nazaire facility’s production certificate for about four months earlier this year due to concerns about quality.
More forward loss charges included another $6 million on the Gulfstream G280 wing programme, a $ 1 million charge on the Boeing 767 engine nacelle and a $5 million charge on the 747-8 fuselage, according to the press release.
Despite the charges Spirit AeroSystems reported a net income of $94 million in the third quarter. The company recorded a $134 million loss in the same period a year ago.
“We had a productive quarter as we reduced costs and remained on track for our rate increases,” Lawson says.
As the company re-orients its growth strategy from business jets to large commercial aircraft and defence programmes, Spirit AeroSystems plans to complete a strategic financial review in the fourth quarter. It will release financial guidance for 2014 when the company reports full-year and fourth quarter results in late January or early February.
Another factor in the company’s guidance for next year will be concluding pricing negotiations with Boeing on future 787 deliveries. Spirit AeroSystems builds the composite Section 41 nose section of the 787 and large components of the wing.
The negotiations are still working to “achieve acceptable shipset pricing” on the 787-9 and 787-10 derivatives, Spirit AeroSystems says in the press release.
Spirit AeroSystems also in the third quarter agreed to sell its ownership in a Russian joint venture with the Moscow-based Progresstech Group of Companies.
Meanwhile, Spirit AeroSystems is still seeking a buyer for its Oklahoma factories in Tulsa and McAlester, which produce wings for Gulfstream business jets and components for a variety of business and commercial aircraft.
Source: Cirium Dashboard
