Hit by Boeing strike, supplier Spirit Aero to furlough 700 employees

Spirit says it does not have additional space to store the 767 and 777 fuselages it builds for Boeing planes.

Spirit AeroSystems has told employees that it will furlough 700 workers for 21 days as a more than one-month strike at United States-based plane maker Boeing eats into the supplier’s cash and inventory space.

The furloughs, announced on Friday, will affect Spirit Aero employees working on Boeing’s 767 and 777 wide-body jet programmes. Production of those jets was halted when more than 33,000 factory workers on the US West Coast went on strike on September 13.

The furloughs follow other Spirit efforts to cut costs, including a hiring freeze and travel and overtime restrictions.

Spirit said in a statement on Friday that it does not have room for additional storage of the 767 and 777 fuselages it builds.

“We recognize the impact this has on our valued teammates and their families, and we are committed to supporting them through this period,” Spirit CEO Pat Shanahan said.

Boeing suppliers, who invested heavily in materials and tooling to support the plane maker’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, Spirit spokesperson Joe Buccino said.

Boeing declined to comment.

Sprawling problems

Boeing and its supply chain have weathered a series of crises over the past 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 AeroSystems makes airplane fuselages for Boeing’s 737 MAX [File: Nick Oxford/Reuters]

Boeing furloughed thousands of salaried employees on a rolling basis after the strike began but cancelled those last week after it announced plans to cut 10 percent of the company’s workforce, or about 17,000 jobs.

Spirit Aero’s second-quarter losses have 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 fully drawn a $350m bridge term loan facility set up when Boeing agreed to acquire its supplier, and it is expected to be asking for additional help from the plane maker, 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 factory in Renton, Washington.

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.

Spirit Aero shares dipped 0.6 percent in morning trading but are on pace for a weekly gain.