BA Boeing Co

By Doug Cameron 

The biggest supplier of parts for the Boeing Co. 737 MAX plans to restart limited production in March, regardless of the plane maker's ability to win backing from regulators for the jet to resume commercial service.

Spirit AeroSystems Holdings Inc. plans a gradual resumption of making fuselages, engine pylons and other parts for the jet, which has been grounded world-wide since last March following the second of two fatal crashes that claimed 346 lives.

Spirit, based in Wichita, Kan., derives more than half of its revenues from the MAX, and last month announced plans to cut almost 3,200 jobs in Kansas and Oklahoma, and suspend its dividend to save money.

Spirit's plan to resume production comes alongside a raft of financial support from Boeing, which has said it could resume assembling MAX jets at its Renton facility near Seattle some two months before the hoped-for receipt of regulatory approval for the plane by "midyear."

"Boeing has decoupled production from recertification," said Spirit Chief Executive Tom Gentile on an investor call after the company reported a drop in quarterly profits.

Its biggest supplier has a deal to provide parts for 216 planes this year, with monthly output rising to around 30 by the end of the year. It halted production at the end of December, and has 120 MAX fuselages stored by its main Wichita facility.

Spirit plans to ship these by rail to Boeing over time, but keep around 25 as a "buffer" to support the plane maker's own production ramp.

Mr. Gentile said Spirit and Boeing had established a joint task force to support their suppliers dealing with the freeze in MAX production. "Many suppliers are distressed," said Spirit in a regulatory filing.

The two companies are exploring options including building additional inventory, financial support and eased payment terms, he said.

Spirit's decision to cut a big part of its 18,000-strong workforce isn't expected to derail future planned production increases, though it would take until 2022 to reach the monthly output of 52 planes achieved last year, when it sent Boeing 606 shipsets.

"Our preference would be to bring back the people we laid off," said Mr. Gentile.

He said that while some workers may choose to leave the state, he was confident in the large pool of experienced aerospace-related labor in Kansas.

The company plans a bond issue this year to bolster its balance sheet, having drawn down an $800 million revolver and lined up another loan. It expects cash flow to be negative in 2020, but turn positive in the second half of the year.

(END) Dow Jones Newswires

February 28, 2020 14:29 ET (19:29 GMT)

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