Spirit Aerosystems has announced that it will maintain its current delivery rate on the Boeing 737 program of 52 shipsets per month.
This follows Boeing’s announcement that it will reduce its own production rate of the aircraft to 42 aircraft per month.
“Previously, we had planned to increase production to 57 aircraft per month on the Boeing 737 program beginning in approximately June 2019. Now, we will be maintaining production at our current rate of 52 aircraft per month. With this schedule, we will produce fewer 737 Max aircraft this year than we previously forecasted, by five units per month beginning in June, for as long as we remain at a production rate of 52 aircraft per month,” said Tom Gentile, Spirit’s president and chief executive officer.
He continued: “Given the reduction in production units and corresponding revenue, we have begun taking immediate actions to reduce expenses, defer capital investments, and redouble our efforts on working capital improvements to mitigate the financial impact of the production rate change. After spending $75 million in the first quarter on share repurchases, we will pause our share repurchases pending further clarity surrounding the 737 Max.”
Meanwhile, Spirit’s first quarter 2019 revenue grew to $2 billion, up 13% from the same period in 2018, the company says this increase was primarily driven by higher production volumes on the Boeing 737 and 787 programs, favourable model mix on the Boeing 737 program and higher revenue recognized on the Boeing 787 program.
Spirit’s backlog at the end of the first quarter of 2019 was approximately $48 billion, with work packages on all commercial platforms in the Boeing and Airbus backlog.
Operating income for the first quarter of 2019 was $233 million, up compared to $160 million in the first three months of 2018. This increase was primarily due to higher production volume and model mix on the Boeing 737 program, the absence of forward losses recognised on the Boeing 787 program during the first quarter of 2018 and higher margin recognized on the Airbus A350 program.