Spirit says 787 profitability threatened if ramp slows

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Spirit AeroSystems chief executive Jeff Turner says his company's contribution to the Boeing 787 is at risk for unprofitability if the airframer slows its planned production ramp up.

Speaking during Spirit's third quarter earnings call on 2 November, Turner addressed the 1 November Flightglobal report regarding a potential further slip in the 787's first delivery due to required post-certification rework.

Turner, who called the report "chatter", says any slippage in first deliveries would likely not impact Spirit; however, any change in the planned 787 production rate ramp up "would put pressure on us and our planning block".

The "planning block" Turner referenced, is an accounting plan for the first 500 airframes, and how the aerostructures manufacturer gauges a programme's profitability.

Spirit is responsible for the forward fuselage, fixed leading edge and pylons for each 787.

After nearly three years of programme delays, says Turner, spiralling costs associated with engineering changes and the slower than anticipated production ramp up have eroded the profit potential for the first block.

"We've gone through substantial elongation of that planning block, and that has taken us from a decent margin on the first block down to a pretty thin margin on the first block of airplanes. So if that block were to elongate, then we'd have a fair amount of pressure on our ability to keep that block in the green zone, if you will, the positive side of the ledger."

Boeing maintains its target for mid-first quarter 2011 first delivery to Japan's All Nippon Airways remains intact, along with reaching its 10 787 per month production rate by the end of 2013.

Spirit has delivered 28 forward fuselages and 29 sets of pylons to Boeing, with forward fuselage 29 awaiting delivery. Currently, it is stored inside Boeing's Dreamlifter large cargo freighter at the company's Everett, Washington facility.

Boeing imposed a 25 October delivery hold on new structural shipments to final assembly as the airframer worked to resolve issues with the Alenia Aeronautica-built composite horizontal stabiliser.

The hold could be lifted as early as this week, though it may stretch to the middle of November, say programme sources.