Spirit AeroSystems Announces Furloughs
WICHITA, Kan., Oct. 18, 2024 /PRNewswire/ -- Spirit AeroSystems (NYSE: SPR) today announces employee furloughs in response to the ongoing strike by Boeing employees represented by the International Association of Machinists and Aerospace Workers that began on September 13.
CFO Irene Esteves shared the news with employees this morning.
Effective October 28, Spirit will implement a 21-day furlough for approximately 700 employees working on the 767 and 777 programs. These furloughs are in combination with a series of other cost savings measures, including a hiring freeze and travel and overtime restrictions.
The Company has built up a significant inventory buffer on the 767 and 777 programs and does not have room for additional storage.
If the strike continues beyond November, financial pressures will require the Company to implement additional cost savings measures including layoffs and additional furloughs.
"This difficult step was necessary given our limited storage capacity for 767 and 777 units," said Pat Shanahan, CEO of Spirit AeroSystems. "We recognize the impact this has on our valued teammates and their families, and we are committed to supporting them through this period."
Despite these challenges, Spirit remains committed to maintaining the highest quality and safety standards. The company will continue to meet its obligations to customers, regulators, and the aerospace industry.
Cautionary Statement Regarding Forward-Looking Statements
This communication includes "forward-looking statements" that involve many risks and uncertainties. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "aim," "anticipate," "believe," "could," "continue," "ensure," "estimate," "expect," "forecast," "goal," "intend," "may," "might," "model," "objective," "outlook," "plan," "potential," "predict," "project," "seek," "should," "target," "will," "would," and other similar words, or phrases, or the negative thereof, unless the context requires otherwise. Forward-looking statements are based on circumstances as of the date on which the statements are made and they reflect management's current views with respect to future events and are subject to risks and uncertainties, both known and unknown. Actual results may vary materially from those anticipated in forward-looking statements. Investors should not place undue reliance on any forward-looking statements.
Important factors that could cause actual results to differ materially from those reflected in forward-looking statements include, but are not limited to, the following:
-- the continued fragility of the global aerospace supply chain including
our dependence on our suppliers, as well as the cost and availability of
raw materials and purchased components, including increases in energy,
freight, and other raw material costs as a result of inflation or
continued global inflationary pressures;
-- our ability and our suppliers' ability and willingness to meet stringent
delivery (including quality and timeliness) standards and accommodate
changes in the build rates or model mix of aircraft under existing
contractual commitments, including the ability or willingness to staff
appropriately or expend capital for current production volumes and
anticipated production volume increases;
-- our ability to maintain continuing, uninterrupted production at our
manufacturing facilities and our suppliers' facilities;
-- our ability, and our suppliers' ability, to attract and retain the
skilled work force necessary for production and development in an
extremely competitive market;
-- the effect of economic conditions, including increases in interest rates
and inflation, on the demand for our and our customers' products and
services, on the industries and markets in which we operate in the U.S.
and globally, and on the global aerospace supply chain;
-- the general effect of geopolitical conditions, including Russia's
invasion of Ukraine and the resultant sanctions being imposed in
response to the conflict, including any trade and transport
restrictions;
-- the recent outbreak of war in Israel and the Gaza Strip and the
potential for expansion of the conflict in the surrounding region, which
may impact certain suppliers' ability to continue production or make
timely deliveries of supplies required to produce and timely deliver our
products, and may result in sanctions being imposed in response to the
conflict, including trade and transport restrictions;
-- our relationships with the unions representing many of our employees,
including our ability to successfully negotiate new agreements, and
avoid labor disputes and work stoppages with respect to our union
employees;
-- the impact of significant health events, such as pandemics, contagions
or other public health emergencies (including the COVID-19 pandemic) or
fear of such events, on the demand for our and our customers' products
and services, the industries and the markets in which we operate in the
U.S. and globally;
-- the timing and conditions surrounding the full worldwide return to
service (including receiving the remaining regulatory approvals) of the
B737 MAX, future demand for the aircraft, and any residual impacts of
the B737 MAX grounding on production rates for the aircraft;
-- our reliance on The Boeing Company ("Boeing") and Airbus SE and its
affiliates for a significant portion of our revenues;
-- the business condition and liquidity of our customers and their ability
to satisfy their contractual obligations to us;
-- the certainty of our backlog, including the ability of customers to
cancel or delay orders prior to shipment on short notice, and the
potential impact of regulatory approvals of existing and derivative
models;
-- our ability to accurately estimate and manage performance, cost,
margins, and revenue under our contracts, and the potential for
additional forward losses on new and maturing programs;
-- our accounting estimates for revenue and costs for our contracts and
potential changes to those estimates;
-- our ability to continue to grow and diversify our business, execute our
growth strategy, and secure replacement programs, including our ability
to enter into profitable supply arrangements with additional customers;
-- the outcome of product warranty or defective product claims and the
impact settlement of such claims may have on our accounting assumptions;
-- competitive conditions in the markets in which we operate, including
in-sourcing by commercial aerospace original equipment manufacturers;
-- our ability to successfully negotiate, or re-negotiate, future pricing
under our supply agreements with Boeing, Airbus SE and its affiliates
and other customers;
-- the possibility that our cash flows may not be adequate for our
additional capital needs;
-- any reduction in our credit ratings;
-- our ability to access the capital or credit markets to fund our
liquidity needs, and the costs and terms of any additional financing;
-- our ability to avoid or recover from cyber or other security attacks and
other operations disruptions;
-- legislative or regulatory actions, both domestic and foreign, impacting
our operations, including the effect of changes in tax laws and rates
and our ability to accurately calculate and estimate the effect of such
changes;
-- spending by the U.S. and other governments on defense;
-- pension plan assumptions and future contributions;
-- the effectiveness of our internal control over financial reporting;
-- the outcome or impact of ongoing or future litigation, arbitration,
claims, and regulatory actions or investigations, including our exposure
to potential product liability and warranty claims;
-- adequacy of our insurance coverage;
-- our ability to continue selling certain receivables through the
receivables financing programs;
-- our ability to effectively integrate recent acquisitions, along with
other acquisitions we pursue, and generate synergies and other cost
savings therefrom, while avoiding unexpected costs, charges, expenses,
and adverse changes to business relationships and business disruptions;
and
-- the risks of doing business internationally, including fluctuations in
foreign currency exchange rates, impositions of tariffs or embargoes,
trade restrictions, compliance with foreign laws, and domestic and
foreign government policies; and
-- risks and uncertainties relating to the proposed acquisition of Spirit
AeroSystems Holdings, Inc. ("Spirit" and, together with its consolidated
subsidiaries, the "Company") by Boeing (the "Merger") pursuant to
Spirit's agreement and plan of merger with Boeing (the "Merger
Agreement") and the transactions contemplated by Spirit AeroSystems,
Inc.'s binding term sheet with Airbus SE (the "Airbus Business
Disposition" and, together with the Merger, the "Transactions"),
including, among others, the possible inability of the Company to
negotiate and enter into definitive agreements with Airbus SE and its
affiliates with respect to the Airbus Business Disposition; the possible
inability of the parties to a Transaction to obtain the required
regulatory approvals for such Transaction and to satisfy the other
conditions to the closing of such Transaction (including, in the case of
the Merger, approval of the Merger Agreement by Spirit stockholders) on
a timely basis or at all; the possible occurrence of events that may
give rise to a right of one or more of the parties to the Merger
Agreement to terminate the Merger Agreement; the risk that the Merger
Agreement is terminated under circumstances requiring Spirit to pay a
termination fee; the risk that Spirit is unable to consummate the
Transactions on a timely basis or at all for any reason, including,
without limitation, failure to obtain the required regulatory approvals,
failure to obtain Spirit stockholder approval of the Merger Agreement or
failure to satisfy other conditions the closing of either of the
Transactions; the potential for the pendency of the Transactions or any
failure to consummate the Transactions to adversely affect the market
price of Spirit common stock or the Company's financial performance or
business relationships; risks relating to the value of Boeing common
stock to be issued in the Merger; the possibility that the anticipated
benefits of the Transactions cannot be realized in full or at all or may
take longer to realize than expected; the possibility that costs or
difficulties related to the integration of the Company's operations with
those of Boeing will be greater than expected; risks relating to
significant transaction costs; the intended or actual tax treatment of
the Transactions; litigation or other legal or regulatory action
relating to the Transactions or otherwise relating to the Company or
other parties to the Transactions instituted against the Company or such
other parties or Spirit's or such other parties' respective directors
and officers and the effect of the outcome of any such litigation or
other legal or regulatory action; risks associated with contracts
containing provisions that may be triggered by the Transactions;
potential difficulties in retaining and hiring key personnel or arising
in connection with labor disputes during the pendency of or following
the Transactions; the risk of other Transaction-related disruptions to
the business, including business plans and operations, of the Company;
the potential for the Transactions to divert the time and attention of
management from ongoing business operations; the potential for
contractual restrictions under the agreements relating to the
Transactions to adversely affect the Company's ability to pursue other
business opportunities or strategic transactions; and competitors'
responses to the Transactions.
These factors are not exhaustive, and it is not possible for us to predict all factors that could cause actual results to differ materially from those reflected in our forward-looking statements. These factors speak only as of the date hereof, and new factors may emerge or changes to the foregoing factors may occur that could impact our business. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. Except to the extent required by law, we undertake no obligation to, and expressly disclaim any obligation to, publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Refer to the sections captioned "Risk Factors" in Spirit's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the "SEC") on February 22, 2024, and in Spirit's Quarterly Report on Form 10-Q for the quarterly period ended June 27, 2024, filed with the SEC on August 5, 2024, for a more complete discussion of the factors described above and other factors that may affect the Company's business or the Transactions.
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