Boeing's (BA.US) major strike caused by its U.S. workers has dealt a heavy blow to the financial status of its suppliers, with its key supplier Spirit AeroSystems (SPR.US) reporting on Wednesday that the company's losses have deepened and it is continuously consuming its cash reserves. The data shows that Spirit AeroSystems' third-quarter revenue was $1.471 billion, which did not meet market expectations, and the adjusted loss per share was $3.03, also failing to meet market expectations. After the release of the earnings report, Spirit's stock fell by 4% in after-hours trading.
In the earnings report, Spirit stated that it had used up all of the $350 million bridge loan that Boeing agreed to acquire from the supplier in June, confirming earlier reports from foreign media. The supplier said that, according to the memorandum of understanding signed in April, it has not yet received a $425 million cash advance from Boeing, so at the end of the third quarter after obtaining the loan, its reserves were only $218 million.
Boeing did not immediately respond to requests for comment on the cash advance. Earlier on Wednesday, Boeing CEO Kelly Ortberg stated on the earnings call that the plan to acquire and integrate Spirit is "unchanged."
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Headquartered in Wichita, Kansas, Spirit said this month that due to the five-week strike at Boeing, which consumed the supplier's cash and inventory space, the company would impose a 21-day leave for 700 employees. Boeing's suppliers have invested heavily in materials and molds to support Boeing's plan to increase aircraft production. Due to the strike, these suppliers have been laying off workers in recent weeks and have postponed investments.
Spirit AeroSystems stated that its leave would take effect from October 28th and warned that if Boeing's strike continues, it may lead to layoffs and additional leaves.
Due to production performance and the increase in labor and supply chain costs, Spirit's net forward losses in the third quarter reached $217 million, compared to $101 million in the same period last year, mainly due to losses of $109 million and $64 million from the Boeing 787 and Airbus A220 programs, respectively.
Boeing agreed in July to repurchase Spirit AeroSystems, which was spun off in 2005, for $4.7 billion in stock, while Airbus began to take over the supplier's loss-making European business. Spirit reiterated on Wednesday that Boeing's acquisition would still be completed as planned by mid-2025.
Spirit stated that as of the end of the third quarter, the company's backlog was $48 billion, including orders for commercial aircraft for Boeing and Airbus manufacturers.