Spirit AeroSystems announces $590m write-down

Washington DC
This story is sourced from Pro
See more Pro news »

Spirit AeroSystems shares dropped more than 20% in early trading after announcing a $590 million write-down on four aerospace programmes, including the Boeing 787.

Forward-loss charges of $590 million will be included in the Wichita-based company's pre-tax earnings for the third quarter.

The write-downs are led by a $184 million charge on the 787 programme, which includes the Section 41 nose section designed and manufactured by Spirit AeroSystems.

After being divested by Boeing in 2005, Spirit AeroSystems dramatically expanded its business from being an aerostructures supplier exclusively to Boeing to working on programmes for a variety of manufacturers, including Airbus.

Jeff Turner, Spirit AeroSystems chief executive, explains that the write-downs came after the supplier quickly expanded its customer base, manufacturing sites and design capabilities.

The write-downs mean Spirit AeroSystems expects to produce certain components and aircraft sections in its backlog at a loss through the next six years. Its core business, which includes building the 737 fuselage, will continue at higher margins.

Meanwhile, Spirit AeroSystems also reached a final settlement of $235 million on insurance claims for damages sustained on 14 April, when a major tornado struck its factory complex in southeast Wichita. The company previously estimated that it may submit claims up to $400 million.