Spirit Aero to furlough 700 workers for 21 days due to Boeing strike
Furloughs follow other Spirit efforts to cut costs, including a hiring freeze and travel and overtime restrictions
Boeing strike is a big blow, but it has bigger challenges to face: Peter McNally
Third Bridge global head of analysts Peter McNally discusses how the Boeing factory workers strike is impacting business on 'The Big Money Show.'
Spirit AeroSystems will tell employees on Friday that it will furlough 700 workers for 21 days as an over month-long strike at U.S. planemaker Boeing eats into the supplier's cash and inventory space, a spokesperson told Reuters.
The furloughs will affect Spirit Aero employees working on Boeing's 767 and 777 widebody jet programs. Production of those jets was halted during the strike by more than 33,000 U.S. West Coast factory workers since Sept. 13.
The furloughs follow other Spirit efforts to cut costs, including a hiring freeze and travel and overtime restrictions.
BOEING STRIKE: WHAT AIRCRAFT ARE AFFECTED?
"These furloughs are necessary as we’ve run out of storage space for 767 and 777," spokesperson Joe Buccino said.
Boeing suppliers, who invested heavily on materials and tooling to support the planemaker's planned ramp-up of jets, have been furloughing workers in recent weeks and holding off on investments due to the strike.
Spirit AeroSystems Holdings Inc. signage on a Boeing 737 fuselage outside the Boeing Co. manufacturing facility in Renton, Washington, US, on Monday, Feb. 5, 2024. (Photographer: David Ryder/Bloomberg via Getty Images / Getty Images)
Wichita, Kansas-based Spirit Aero also warned it would have to lay off workers and announce additional furloughs if the strike continues past November, Buccino said.
Boeing declined to comment.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SPR | SPIRIT AEROSYSTEMS | 31.92 | +0.08 | +0.25% |
| BA | THE BOEING CO. | 146.11 | +0.70 | +0.48% |
Boeing and its supply chain have weathered a series of crises over the last six years, including a 737 MAX safety grounding after two fatal crashes, the global pandemic, and a quality crisis since the blowout of a door plug in January.
BOEING PLANS TO RAISE UP TO $35B TO SHORE UP FINANCES AS STRIKE CONTINUES
Spirit Aero's second-quarter losses more than doubled. One industry source familiar with the matter said the company has scaled back production of 737 MAX fuselages from 31 a month to 21 a month in August, September and October, and may have to reduce further. Boeing has been checking in regularly with Spirit Aero over its finances, a second source said.
Spirit has also already fully drawn a $350 million bridge term loan facility set up when Boeing agreed to acquire its former supplier, and it is expected to be asking for additional help from the planemaker, the source said.
The headquarters of Spirit AeroSystems Holdings Inc. is seen in Wichita, Kansas, U.S. December 17, 2019. (REUTERS/Nick Oxford / Reuters Photos)
Spirit declined to comment on its loan facility and output.
BOEING TO CUT 10% OF WORKFORCE, HALT MOST 767 PRODUCTION AMID LABOR UNION
Since March, Boeing has been inspecting the new fuselages at Spirit's Kansas factory and vetting has taken longer than expected, a third industry source said. The delays had already slowed deliveries of 737 MAX fuselages from Spirit to Boeing's Renton, Washington, factory.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The delays and the strike have made it less likely that Boeing will meet its goal to produce 38 MAX jets a month by the end of 2024, up from 25 jets a month in July.
During the strike, Spirit Aero has increased inspections of 737 MAX fuselages at its factory so more will be ready when the stoppage ends, Buccino said.