Spirit AeroSystems suspends production for Boeing until further notice

Spirit AeroSystems Holdings Inc. (NYSE:SPR) made a statement on Wednesday that highlighted that the supplier has suspended production for the Boeing Company until further notice. The world’s largest aerostructures manufacturer also said that it plans on furloughing its employees in Oklahoma and Kansas that were working on Boeing projects. Spirit AeroSystems holds the reputation of a key supplier for Boeing.

According to experts, Spirit’s statement stemmed from Boeing’s recent decision to halt production of its wide-body 787 Dreamliner due to the ongoing Coronavirus pandemic.

Spirit Will Continue Production For Airbus SE

Boeing’s narrow-body 737 MAX is already grounded since March 2019 after two fatal crashes in five months that killed 346 people. The largest U.S airplane manufacturer suspended 737 MAX production in January as it awaits FAA’s (Federal Aviation Administration) approval for jetliner’s return to commercial flights.

Spirit had originally suspended production for the plane manufacturer for two weeks. Operations were expected to be resumed on April 8^th. However, the company extended the production shutdown for an indefinite period on Wednesday morning.

The company also highlighted in its statement that production for Boeing’s European rival, Airbus, will continue as normal during this period. Airbus SE is the second-largest client for Spirit AeroSystems. In 2019, its business with Airbus made up 16% of the total sales. Spirit will also continue working on its defense contracts.

FAA had delayed its approval for Boeing’s 737 MAX in January citing multiple safety concerns that pushed the U.S planemaker into suspending production for the jetliner. As a result, Spirit had expressed plans of cutting 2,800 jobs at its marquee facility located in Wichita.

Spirit Announces A 20% Cut On U.S Executives Salaries

In wake of the rising uncertainty ascribed to COVID-19, the aerostructure manufacturer also resorted to a 20% cut on the salaries of its U.S-based executives for an indefinite period. The company also accentuated that the announced furlough related to production for Boeing will remain in place for three weeks.

At the end of 2019, Spirit AeroSystems had 15,900 employees in the U.S and 18,200 in total worldwide.

Spirit climbed 6% in premarket trading on Wednesday. At £16.43 per share, it is still trading around 75% down in the stock market in 2020.

At the time of writing, Spirit AeroSystems Holdings Inc. has a market cap of £1.72 billion and a price to earnings ratio of 4.02.