Spirit Aero to furlough 700 workers for 21 days due to Boeing strike

US Aerospace

18/10/2024 13:30

* 
      Furloughs affect employees on Boeing's 767 and 777
programs
    

        * 
      Spirit Aero warns of further layoffs if strike continues
past
November
    

  
    By Allison Lampert and Mike Stone
       Oct 18 (Reuters) - Spirit AeroSystems  SPR.N  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
 BA.N  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.
    “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.
    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.
    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.
    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. 
    Spirit declined to comment on its loan facility and output. 
    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. 
    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. 

 (Reporting By Allison Lampert in Montreal and Mike Stone in
Washington
Editing by Marguerita Choy)
 ((Allison.Lampert@thomsonreuters.com; 514-796-4212; Reuters
Messaging: allison.lampert.reuters.com@reuters.net))