BA Boeing Co

By Doug Cameron 

The biggest Boeing Co. 737 MAX supplier said it is planning an initial 2,800 layoffs, the first announced job cuts since the plane's grounding that is having a widespread impact across the aerospace industry.

Spirit AeroSystems Holdings Inc. makes the fuselage and engine parts for the MAX and had been producing enough for 52 jets a month before Boeing announced plans to freeze assembling the planes later this month.

The layoffs, announced by the company on Friday, will make it harder for Boeing to follow through with planned increases in MAX production later this year if Spirit and other suppliers shed workers.

Boeing has said it doesn't plan to lay off any of its own workers, transferring 3,000 staff to other tasks, but Spirit's move will intensify the ripple effect on the broader economy as a network of 600 main suppliers tackle the impact and uncertainty of halting MAX production for an indeterminate time.

Spirit derives more than half its sales from the MAX and works on other Boeing programs, but the job cuts focused on its Wichita, Kan., plants came much earlier than analysts expected as Spirit had ample cash and worked on programs for other companies including Airbus SE and Lockheed Martin Corp.

Around 13,000 staff work at Spirit's Wichita facilities, which had been storing parts for 100 surplus MAX jets while Boeing continued to assemble the plane, building up an inventory of around 400 aircraft.

The layoffs are expected to start on Jan. 22, and Spirit said it planned smaller job cuts at two plants in Oklahoma. The company has been working with Kansas Gov. Laura Kelly on potential retraining of affected staff.

Wichita has a big aerospace cluster of suppliers and plane makers, including the Cessna arm of Textron Inc. The labor market for aerospace engineers has been tight, and layoffs from big suppliers could make it tougher for Boeing to restart MAX production and increase output in future, said analysts.

Spirit shares were recently down 2%, with other MAX suppliers sharply lower.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

January 10, 2020 12:56 ET (17:56 GMT)

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