Boeing supplier Spirit Aero flags $31 mln hit from 737 fuselage defect

Spirit AeroSystems Holdings Inc (SPR.N) said on Wednesday it expects a $31 million hit to full-year gross profit from disruptions and rework related to a Boeing 737 MAX fuselage production problem, and that more related costs are anticipated.

Boeing last month said it had paused deliveries of some 737 MAXs due to a problem involving two fittings that join the aft fuselage made by Spirit to the vertical tail, which were not attached correctly.

“Additional costs are expected, including costs Boeing may assert to repair certain models of previously delivered units in their factory and warranty costs related to affected 737 units in service,” Spirit said.

“However, the company cannot reasonably estimate the remaining potential costs at this time,” it added.

Rework costs for affected 737 fuselages at Spirit’s Wichita, Kansas-based production facility are projected to amount to $5 million, an expense of about $100,000-$150,000 per plane.

“The implication is that rework is a fraction of the cost, with the bulk being factory disruption,” said J.P. Morgan analyst Seth Seifman in a note to investors. “What is not covered here is the cost of this issue at Boeing’s facility in Renton.”

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