Spirit AeroSystems (Spirit), has asked both Boeing and Airbus to soak up a greater percentage of the financial problems created by inflation which has made current contracts “not sustainable,” Spirit CEO Tom Gentile said on Thursday this week.
Spirit is a major supplier of parts for jetliners/ In H1 2023, Spirit took approximately US$215 million in charges on the Boeing 787 Dreamliner and Airbus A220 and A350 programmes, primarily due to wage inflation, parts shortages and greater regulatory scrutiny, Gentile added. “All of those programs are under pressure,” he noted. “And it really is not sustainable for Spirit. So, we are having discussions with our customers, with Boeing and Airbus, about these pressures that we’re facing and how we address them.”
As a consequence, on Thursday, Spirit shares closed down 7.3%.
Spirit AeroSystems executives had first touched on the subject of to the need to reopen contract negotiations with Airbus and Boeing back in the beginning of August, seeing its shares then plummet 27%. Gentile also pointed to “disappointing” Airbus A220 production rates, pointing out that only 65 to 70 jets are likely to be made this year as opposed to the 100 planes Spirit had expected to build wings and other parts for.
According to Reuters news agency, Spirit had originally forecast the programme would break even or become profitable in 2025 after hitting a production target of 14 A220s per month.
That timeframe appears to have been delayed “and we need to have that discussion with Airbus,” he said, noting similar talks about the A350.
Spirit is also discussing the Dreamliner program with Boeing, Gentile said, as the parts maker has logged US$1.4 billion in reach-forward losses and needs relief to ramp up 787 production to Boeing’s target of 10 per month by 2026.
“With both Boeing and Airbus, we’ve been an open book in terms of sharing all of the cost data so they understand and know that we’ve been working on different opportunities (to cut costs) and have exhausted those,” he said. (£1.00 = US$1.27 at time of publication.)