Spirit AeroSystems has again reduced its expected production of Boeing 737 hulls and other components in 2020 to just 72 shipments, while warning that it could violate financial agreements before the end of the year. WICHITA, Kan., September 25, 2017 /PRNewswire/ — Spirit AeroSystems (NYSE: SPR) announced that it has entered into negotiations and final agreements with Boeing to resolve commercial issues by 2022 regarding the production of several Boeing programs, including the 737 MAX and 787 Dreamliner. (Reuters) – Spirit AeroSystems Holdings SPR. N said Tuesday that it had reached an agreement with Boeing Co BA. N 125,737 MAX PARTS in 2020, compared to the 216 it had previously announced. Under the agreement, Spirit will slowly resume production and boost deliveries later this year to reach a total of 216 MAX parts delivered to Boeing in 2020. Spirit does not expect a production rate of 52 boats per month by the end of 2022. The parties are continuing their negotiations on other conditions. On the Internet: www.spiritaero.com on Twitter: @SpiritAero Spirit AeroSystems announced that it has reached an agreement with Boeing on the 737 MAX production rate.
The tariff agreement is based on several assumptions, including Boeing`s expected production rate and the successful return of 737 MAX to service. As previously announced, the 737 MAX contract agreement is a ”requirement contract” between Boeing and Spirit, and the fare may change at any time. Also in January, Spirit said it had reached an agreement with Boeing to supply components for 216,737 in 2020. In May, Spirit reduced that number to 125 hulls, and on June 10, the number of others was reduced to no more than 104. ”Given the significant reduction in the production plan, Spirit could break the financial obligations arising from its credit contract in the fourth quarter of 2020 without modification or waiver,” a company statement said. ”Spirit is in contact with its lenders on this matter and intends to cooperate quickly with them to obtain an adequate exemption from its alliances.” Spirit announced on August 2 that it had signed a Memorandum of Understanding with Boeing to conclude final agreements by the end of September. Since then, Spirit and Boeing teams have been working cooperatively on the details to finalize the process. Boeing attributes the cut ”to the influence of Covid-19 and the accumulated inventory of Spirit`s 737 products,” the aerospace construction company said.
”Such an inventory was carried out in accordance with… Former production collective agreements. Spirit said in the agreement that they will slowly resume production and boost deliveries later this year to reach a total of 216 Max ship parts delivered to Boeing in 2020. ”We are pleased that all final documents have been finalized to consolidate the terms of sale with our largest customer by 2022,” said Spirit President and CEO Tom Gentile. ”We can now focus 100% on meeting our existing commitments and growing our business. This agreement reduces great uncertainty, strengthens our relationship with Boeing and positions us to achieve our long-term financial goals. ”The new agreement brings stability to Boeing and Spirit and focuses on reducing costs and improving efficiency,” said Kevin Schemm, Chief Financial Officer of Boeing Commercial Airplanes and Senior Vice President supply Chain Management, Finance and Business Operations. ”They are at the heart of our success partnership efforts.” A 737 MAX Schub-Reverser with a composite interior wall In April, Spirit said it had padded its finances with a debt offer of $1.2 billion. This month, Spirit also said that the U.S. military has provided $80 million in funding to strengthen U.S. industrial capacity.
Among Boeing`s various challenges is still getting the 737 Max price – although the decline of coronavirus has undermined the demand for new jets.