WICHITA, Kan., September 25, 2017 /PRNewswire/ — Spirit AeroSystems (NYSE: SPR) announced that it has entered into negotiations and final agreements with Boeing to resolve commercial issues by 2022 regarding the production of several Boeing programs, including the 737 MAX and 787 Dreamliner. Boeing attributes the cut “to the influence of Covid-19 and the accumulated inventory of Spirit`s 737 products,” the aerospace construction company said. “Such an inventory was carried out in accordance with… Former production collective agreements. Spirit said in the agreement that they will slowly resume production and boost deliveries later this year to reach a total of 216 Max ship parts delivered to Boeing in 2020. The tariff agreement is based on several assumptions, including Boeing`s expected production rate and the successful return of 737 MAX to service. As previously announced, the 737 MAX contract agreement is a “requirement contract” between Boeing and Spirit, and the fare may change at any time. Also in January, Spirit said it had reached an agreement with Boeing to supply components for 216,737 in 2020. In May, Spirit reduced that number to 125 hulls, and on June 10, the number of others was reduced to no more than 104. On the Internet: www.spiritaero.com on Twitter: @SpiritAero “The new agreement brings stability to Boeing and Spirit, and it focuses on cost reduction and improved efficiency,” said Kevin Schemm, Chief Financial Officer of Boeing Commercial Airplanes and senior vice president of supply chain, finance and business management.
This is the heart of our partnership efforts for success. Spirit AeroSystems announced that it has reached an agreement with Boeing on the 737 MAX production rate. The agreement allows Spirit to save at least part of its grand diversification plan for the former Boeing (NYSE:BA) company, which should be positive for the company in the long run. But that doesn`t make much difference to the short-term prospects of a company that will struggle to gain altitude as long as the airlines are on the ground. “We are pleased that all final documents have been finalized to consolidate the terms of sale with our largest customer by 2022,” said Spirit President and CEO Tom Gentile. “We can now focus 100% on meeting our existing commitments and growing our business. This agreement reduces great uncertainty, strengthens our relationship with Boeing and positions us to achieve our long-term financial goals. “Given the substantial reduction in the production plan, Spirit could break the financial obligations arising from its credit contract in the fourth quarter of 2020 without modification or waiver,” the company said in an administrative notification.