Spirit AeroSystems (Spirit) has announced plans to resume operations at its Wichita, Kansas plant on June 30, after union workers voted in favour of a new contract, ending a week-long strike. According to REUTERS news agency, the International Association of Machinists and Aerospace Workers (IAM), representing the union employees, agreed to a four-year deal, prompting Spirit to coordinate with suppliers and customers for a full production restart on July 5. The rejection of a previous offer on June 21, had a significant impact on the aviation industry as Spirit plays a crucial role in the U.S. aerospace sector, manufacturing aero structures for Boeing (BA.N) and Airbus (AIR.PA).
Boeing heavily relies on Spirit AeroSystem's Wichita plant, where workers produce the entire body of the popular 737 MAX and the forward fuselage of most other Boeing aircraft. Additionally, the plant manufactures pylons for the Airbus A220. The acceptance of the new contract, endorsed by union leaders earlier this week, includes wage increases, the retention of current healthcare plans and the elimination of mandatory weekend overtime, addressing key priorities for the workers.
The contract approval comes as Boeing prepares to increase MAX production from 31 to 38 jets per month. Stan Deal, CEO of Boeing Commercial Airplanes, announced the production ramp-up plans and acknowledged the potential impact of the strike on production or deliveries. While Boeing maintains some buffer inventory, analysts had warned that an extended strike could have disrupted MAX production. The resolution of the strike provides stability for Boeing, especially as negotiations with its Seattle-area machinists union loom in the coming year.
The agreement also resolves financial pressure for Spirit AeroSystems, which anticipates cash burn this year. The company has faced scrutiny due to high-profile production defects on Boeing aircraft, such as the incorrect installation of a bracket on the 737's vertical tail. The new contract and the subsequent resumption of operations mark a positive step forward for both Spirit and Boeing, ensuring continuity in production and addressing the concerns of union workers.
