Boeing (licensed in letters) – Get report has told Spirit AeroSystems (SPR) – Get report, its largest fuselage and parts supplier for its 737 MAX aircraft still on the ground, to cut production for the third time this year, another sign that the aircraft maker continues to struggle with falling demand for new aircraft amid the coronavirus pandemic.
In a regulatory filing, Spirit AeroSystems said it had received a notice from Chicago-based Boeing that it now wants airframes for just 37 planes for the rest of 2020 (35 ships have already been delivered to Boeing) from the 125 that Boeing He said he wanted to. May. The aircraft maker had initially told Spirit to deliver 216 this year.
Boeing, which restarted MAX production in May after a five-month hiatus, ordered Spirit to halt work in early June before updating its expected demand for airframes in the letter last week. Boeing communicated its updated plans in a letter on June 19, Spirit said.
The directive adds additional uncertainty to an already clouded outlook for the MAX, which has been grounded for more than 15 months in the wake of two fatal crashes believed to have been caused by software malfunction.
It also occurs when carriers continue to grapple with the Covid-19 pandemic and dramatically cut demand for air travel, and in turn new planes, a problem that has plagued Boeing since the pandemic seized North America in mid-2015. March.
For Spirit AeroSystems in particular, it could lead to a violation of the financial covenants under its credit agreement if it continues to cut production and delivery of Boeing parts.
Some 14,000 jets, more than half the world’s fleet, have been idle due to unprecedented travel restrictions and now weaker demand for air travel.
Spirit AeroSystems’ shares fell 11.74% to $ 24.02 in trading on Tuesday. Boeing shares fell 1.26% to $ 186.15.