The ongoing strike at Boeing (BA) has led Spirit AeroSystems (SPR, Financial), a key supplier, to furlough 700 employees for 21 days. This action primarily affects those working on the Boeing 767 and 777 wide-body jet projects. The production of these jets has been suspended since September 13 due to a strike involving over 33,000 West Coast plant workers.
In response to the strike, Spirit AeroSystems has implemented various cost-cutting measures, including a hiring freeze and restrictions on travel and overtime. Due to limited storage space, they cannot store additional 767 and 777 fuselages. CEO Pat Shanahan acknowledged the impact on employees and pledged to support them during this period.
Originally, Spirit AeroSystems had invested significantly in anticipation of Boeing's production increases. However, the strike has forced them to furlough workers and delay investments. The company warned that if the strike extends beyond November, layoffs and additional furloughs might be necessary.
Boeing and its supply chain have faced numerous challenges over the past six years, including the 737 MAX safety grounding, the global pandemic, and quality crises. After announcing a 10% job cut, equating to approximately 17,000 positions, Boeing canceled plans for salaried furloughs.
In the second quarter, Spirit AeroSystems' losses more than doubled, and production of the 737 MAX fuselages decreased from 31 to 21 per month, with potential for further reductions. Boeing has been closely monitoring Spirit's financial health and has fully drawn on a $350 million bridge loan provided by Boeing. Boeing might need to extend more financial help to Spirit AeroSystems.
Since March, Boeing has been inspecting new fuselages at Spirit's Kansas plant, taking longer than expected and delaying Spirit's delivery of 737 MAX fuselages to Boeing's Renton, Washington facility. These delays, along with the strike, jeopardize Boeing's goal of producing 38 MAX planes per month by the end of 2024. During the strike, Spirit AeroSystems increased fuselage inspections to have more planes ready once the strike concludes.
