Spirit AeroSystems reported revenue of $1.3bn for the second quarter of 2022 – up 26% on last year’s result. The company posted an operating loss of $105 million and a net loss of $122 million.
“Like many other companies, this past quarter we experienced challenges with supply chain, staffing and inflation, as well as schedule changes from our customers, all of which put pressure on profitability,” said Tom Gentile, Spirit’s President and Chief Executive Officer. “We remain focused on executing in our factories and meeting the commitments to our customers. Demand for aircraft remains robust but the expected slower increase in production rates should give us more time to stabilize the production system.”
The increase in revenue was attributed primarily to higher production deliveries on the Boeing 737 program as well as increased aftermarket revenue, partially offset by lower production volume on the Boeing 787 program. Overall deliveries increased to 318 shipsets during the second quarter of 2022 compared to 235 shipsets in the same period of 2021. This includes Boeing 737 deliveries of 71 shipsets compared to 35 shipsets in the same period of the prior year and Boeing 787 deliveries of 4 shipsets compared to 11 shipsets in the second quarter of 2021.
Spirit’s backlog at the end of the second quarter of 2022 was approximately $34 billion, with work packages on all commercial platforms in the Airbus and Boeing backlog.
The increase in operating loss was primarily driven by higher changes in estimates and losses related to Russia sanctions recorded during the second quarter of 2022, partially offset by higher production on the Boeing 737 program. Second quarter 2022 earnings included net forward loss charges of $63.7 million and unfavorable cumulative catch-up adjustments of $8.0 million. The forward losses relate primarily to the Boeing 787 and Airbus A220 programs. The forward loss on the Boeing 787 program is driven by the impact of production rate decreases and increased supply chain and other costs. The Airbus A220 program forward loss is associated with the bankruptcy of a supplier and costs to relocate the work. The unfavorable cumulative catch-up adjustments were primarily driven by schedule changes, parts shortages and increased estimates for supply chain, freight and other costs on the Boeing 737 and Airbus A320 programs. In relation to the sanctioned Russian business activities, Spirit recorded losses of $41.9 million as well as the reversal of a previously booked forward loss reserve of $13.8 million. Excess capacity costs recorded during the second quarter of 2022 were $44.9 million. In comparison, during the second quarter of 2021, Spirit recorded $52.2 million of net forward loss charges, favorable cumulative catch-up adjustments of $9.9 million, and excess capacity costs of $47.5 million.
In April 2022, Spirit AeroSystems settled the repayable investment agreement with the U.K. Department of Business, Energy and Industrial Strategy for a payment of $293 million. The payment is comprised of principal of $279 million and interest expense of $14 million, which are included in cash used in financing activities and cash used in operations, respectively.
The cash balance at the end of the second quarter of 2022 was $770 million.