Spirit AeroSystems lost $135 million in the second quarter of 2021, reflecting reduced production of aircraft components and a $46 million forward loss on the company’s Boeing 787 work.
The results are an improvement from the second-quarter of 2020, when Spirit lost $256 million. The company anticipates taking another $40-60 million forward loss on the 787 programme in the third quarter, it reports on 4 August.
Despite operating in the red, Spirit chief executive Tom Gentile says the company’s second-quarter financials are improving amid “strong recovery in narrowbody production rates”.
Spirit took the $46 million forward loss on the 787 programme after identifying “an additional issue in the forward section” of 787 fuselages, Gentile says. “We continue to coordinate with Boeing to ensure that we are performing all necessary rework.”
Spirit does not provide details, but the issue appears to be the one identified by Boeing in July. The aircraft maker said it found gaps in 787 forward pressure bulkheads that did not meet specifications. The issue, which Boeing said did not risk flight safety, came atop a separate 787 problem involving the flatness of 787 fuselage sections.
In response, Boeing has halted 787 deliveries and slowed production.
Also in the second quarter, Spirit logged $47.5 million in costs related to excess capacity, a result of adjustments to the rate at which it produces components for 737 Max and Airbus A220s and A320s.
Spirit’s second-quarter expenses increased 9% year-on-year to $1.1 billion; its revenue jumped 55% year-on-year to $1 billion.
The revenue gain reflects an increase, compared to the second quarter of 2020, in the number of 737 Max and A320 components Spirit delivered, and the contribution of Spirit’s A220 wing manufacturing plant in Belfast, Northern Ireland. Spirit acquired that site from Bombardier in October 2020.
Spirit delivered components for 243 aircraft in the second quarter, up 53% from 159 in the same period of 2020. Those included components for 35 737 Max, up from just 19 in the second quarter of 2020, and for 96 A320s, up from 69 one year earlier. Spirit’s widebody product deliveries slipped in the second quarter. It handed over components for 11 787s, half as many as one year prior.
On 2 August, Spirit received a “preliminary assessment of the latest 787 programme demand” from Boeing, the company says.
As a result, Spirit is warning it will take another $40-60 million charge against its 787 work in the third quarter. It says reduced production rates will leave fewer components to absorb fixed costs, driving up per-unit expenses.