Boeing Strike Hits Spirit AeroSystems Hard: Financial Losses and Workforce Challenges Mount
1min read The recent strike by Boeing's US workers has severely impacted its supplier, Spirit AeroSystems, as reported in their third-quarter financial results. Spirit AeroSystems' revenue for the quarter was $1.471 billion, missing market expectations, with an adjusted per-share loss of $3.03, which fell short of forecasts. Consequently, Spirit's stock dropped by 4% in after-hours trading.
Spirit disclosed that it utilized the entire $350 million bridge loan agreed upon with Boeing in June for acquisition purposes. Despite this, Spirit has not received the $425 million cash advance from Boeing as per the memorandum signed in April, leaving its cash reserves at $218 million at the end of the third quarter.
The strike is taking a toll on Spirit, which announced a 21-day furlough for 700 employees, scheduled to begin on October 28. The ongoing labor dispute has also led many Boeing suppliers to idle workers and defer investments due to cash and inventory constraints.
The financial strain on Spirit was evident, with a net forward loss of $217 million for the quarter, exacerbated by losses from Boeing 787 and Airbus A220 projects totaling $109 million and $64 million, respectively. As Boeing seeks to acquire Spirit for $4.7 billion, the plan to complete the deal by mid-2025 remains on track.
As Spirit faces challenges, its backlog reached $48 billion, comprising orders for Boeing and Airbus aircraft. However, continued disruption due to the strike could lead to further workforce reductions and operational setbacks.
Boeing's recovery has been hampered by the strike, with union representatives highlighting workers' rejection of a proposed 35% pay increase over four years. This labor unrest has pressured Boeing financially as it halted production on several models, impacting Boeing’s credit rating outlook.
