Covid-19 impact and 737 MAX grounding lead to Spirit AeroSystems 3Q loss of US$156 million

Spirit AeroSystems

Spirit AeroSystems – which completed the acquisition of Bombardier’s aerostructures business on 30 October – has reported a US$156 million net loss in the third quarter.

Revenues fell 58 per cent compared to the year-before period, to US$806 million.

This was primarily attributed to significantly lower 737 MAX production resulting from the grounding of the programme and the impact of Covid-19.

Spirit AeroSystems 3Q key figures. Click to enlarge.

Deliveries decreased to 206 shipsets during the quarter compared to 437 in the same period of 2019, including 737 MAX deliveries of 15 shipsets compared to 154 last year.

Spirit’s backlog at the end of the third quarter of 2020 was approximately US$40 billion, with work packages on all commercial platforms in the Boeing and Airbus backlog.

Assessing the results, Spirit AeroSystems’ president and chief executive officer Tom Gentile commented: “We have made substantial progress on stabilising our liquidity position and driving cost reduction actions to align with lower levels of production resulting from the MAX grounding and Covid-19 pandemic.

“Our recent capital raise of US$900 million, the mutual termination of the Asco acquisition and the significant purchase price reduction on the Bombardier acquisition improves our cash position and enhances our ability to address future challenges.

“The Bombardier acquisition also accelerates our strategic transformation by securing a significant amount of Airbus work, boosting our aftermarket business, and enhancing our competitiveness with the addition of low-cost operations in Morocco.”

Segment results

Revenue in the company’s Fuselage Systems segment decreased 58 per cent compared to the same period in 2019, to US$421 million. The drop was attributed to lower production volumes on the 737, 787 and A350 programmes.

Operating margin decreased to -23 per cent, compared to 10.5 per cent in the year-before period. This was primarily due to forward losses recognised on the 787 and A350 as well as lower profit recognised on the 737 due to excess capacity costs of US$42.0 million with significantly less deliveries, and restructuring expenses of US$6.6 million for cost-alignment and headcount reductions.

Spirit AeroSystems segment 3Q results. Click to enlarge.

Propulsion Systems revenue decreased 67 per cent to US$171 million, primarily due to lower production volumes on the 737.

Operating margin decreased to -9.1 per cent, compared to 21.4 per cent in 3Q 2019, primarily due to lower margin recognised on the 737 due to excess capacity costs of US$17.5 million with significantly less deliveries and restructuring expenses of US$3.8 million for cost-alignment and headcount reductions.

Wing Systems revenue decreased 57 per cent from the same period last year to US$168 million, primarily due to lower production volumes on the 737 and A320 and A350 programmes.

Operating margin decreased to -13.8 percent, compared to 13.8 per cent during the same period of 2019. This was due to forward losses recognised on the 787 and A350 as well as lower margin recognised on the 737 due to excess capacity costs of US$13.1 million with significantly less deliveries and restructuring expenses of US$9.1 million for cost-alignment and headcount reductions.

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