Spirit’s fourth quarter 2019 revenue was US$2.0 billion, up from the same period of 2018. This increase was primarily driven by higher production volumes on the Boeing 737, 787 and Airbus A350 programs, higher revenue recognized on the Boeing 787 program, and increased Global Customer Support and Services (GCS&S) activity, partially offset by lower revenue recognized on the Airbus A350 program in accordance with pricing terms. Revenue for the fullyear increased to US$7.9 billion, primarily due to higher production volumes on the Boeing 777, 787 and Airbus A350 programs, higher revenue recognized on the Boeing 787 program, increased GCS&S activity, and favorable model mix on the Boeing 737 program.
Spirit’s backlog at the end of the fourth quarter of 2019 was approximately US$43 billion, with work packages on all commercial platforms in the Boeing and Airbus backlog. Earnings Operating income for the fourth quarter of 2019 was US$96 million, down compared to US$244 million in the same period of 2018, primarily driven by the forward loss recognized on the Boeing 787 program as a result of Boeing’s recently announced production rate decrease from 12 APM to 10 APM, performance on the Boeing 737 program, lower margin recognized on the Airbus A350 program in accordance with pricing terms and higher acquisition-related expenses.
Operating income for the full-year was $761 million, down compared to US$843 million in 2018, primarily due to higher acquisition-related expenses, reduced profitability on the Boeing 737. Non-GAAP financial measure, largely resulting from the 737 MAX grounding, and the forward losses recognized in the third and fourth quarter driven by Boeing’s announcements to decrease the 787 production rate, partially offset by higher production volume on the Boeing 737 and 777 programs.
On January 30, 2020, Spirit announced it had agreed on a production rate with Boeing to produce 216 Boeing 737 MAX shipsets in 2020. On February 6, 2020, Boeing and Spirit executed a Memorandum of Agreement (MOA) that memorialized the production rate agreement, subject to any changes in requirements by Boeing. In addition, the MOA provides that Boeing will pay US$225 million to Spirit in the first quarter of 2020, consisting of US$70 million in support of Spirit’s inventory and production stabilization, of which US$10 million will be repaid by Spirit in 2021, and US$155 million as an incremental pre-payment for costs and shipset deliveries over the next two years. Other terms include extending the repayment date of the US$123 million advance received by Spirit under the 2019 MOA to 2022, and extending the 737 MAX pricing terms through 2033 (previously, pricing was through December 31, 2030).
