Spirit AeroSystems has announced a series of additional actions the company is taking to reduce costs and preserve liquidity in light of the economic impacts of the COVID-19 pandemic and continued uncertainty in the industry.
On April 6, Spirit AeroSystems received notice from Boeing that all deliveries to Boeing’s Washington state and South Carolina facilities are suspended until further notice due to Boeing’s indefinite production suspension at the sites. As a result, Spirit has halted production for Boeing programs, subject to certain exceptions, performed at its facilities in Wichita, Kansas, and in Tulsa and McAlester, Oklahoma for an indefinite period of time. Spirit Defense work as well as Airbus and other non-Boeing work will continue at such facilities.
In light of the 737 MAX production suspension that began on January 1, 2020, Spirit initiated the following actions to reduce costs: the company implemented workforce reductions of 2,800 employees in Wichita, Kansas and 400 employees in Oklahoma and initiated a voluntary retirement program for 850 hourly and salaried workers. Furthermore, Spirit deferred over US$120 million of capital expenditures and extended union contracts for employees represented by the IAM and IBEW for three years.
The company negotiated an amendment to its credit facility providing for covenant relief into 2021 and secured a US$375 million short-term delayed draw term loan facility. Spirit reduced its cash dividend to a penny per share .
Spirit negotiated a new production agreement with Boeing and extended the MAX contract three years to 2033. The company received US$225 million advance from Boeing and deferred repayment of US$123 million advance from Boeing to 2022.
