Spirit AeroSystems to Furlough 700 Workers

By Allison Lampert and Mike Stone

Reuters – Spirit AeroSystems announced on Friday that it will furlough 700 employees for 21 days due to a strike at Boeing that has extended for over a month, disrupting the supplier's cash and inventory flow.

The furloughs, first reported by Reuters, will impact Spirit workers involved with Boeing's 767 and 777 widebody jet programs. Production of these jets has been suspended since more than 33,000 U.S. West Coast factory workers initiated a strike on September 13.

These workforce reductions follow other cost-cutting measures by Spirit, which include a hiring freeze and restrictions on travel and overtime.

In a statement, Spirit CEO Pat Shanahan acknowledged the difficulty of the situation, promising to support affected employees and their families. The company highlighted the inability to store the 767 and 777 fuselages it produces.

Boeing suppliers, having heavily invested in materials and tools for their ramp-up plans, are now facing layoffs and reduced spending as a result of the ongoing strike.

Spirit Aero has also warned that if the strike persists past November, further layoffs and additional furloughs may be necessary, according to spokesperson Joe Buccino. Boeing, however, chose not to comment on the matter.

Over the last six years, Boeing and its supply chain have struggled with various crises, including the 737 MAX grounding, the global pandemic, and quality issues following a door plug failure last January.

While Boeing laid off thousands of salaried staff since the strike began, it recently canceled these plans after announcing intentions to reduce its workforce by 10%, equating to around 17,000 jobs.

Spirit Aero's losses in the second quarter have more than doubled, with reports of production for 737 MAX fuselages dropping from 31 to 21 per month in August, September, and October. There are concerns about further reductions. Boeing has reportedly been in frequent consultation with Spirit regarding its financial situation.

Spirit has tapped into a $350 million bridge term loan facility, set up when Boeing indicated plans to acquire the supplier, and is expected to seek more assistance from Boeing.

Boeing has been conducting inspections of the new fuselages at Spirit’s Kansas facility, although the vetting process has extended beyond initial expectations, leading to delays in fuselage deliveries to Boeing's Renton factory.

These complications, alongside the strike, have diminished the likelihood of Boeing meeting its goal to increase production to 38 MAX jets a month by the end of 2024, from 25 jets in July.

Amid the strike, Spirit Aero has ramped up inspections of its 737 MAX fuselages to ensure readiness once the work stoppage concludes, Buccino stated.

In morning trading, Spirit Aero shares fell 0.6% but are trending toward a weekly gain.