Several Boeing suppliers face uncertainties about their own production plans and overall financial outlook, because of Boeing’s recent woes.
Boeing’s list of troubles doesn’t seem to be getting any smaller. We have already seen how Spirit AeroSystems is under the same intense scrutiny as Boeing, after the MAX-9 door plug blowout last January.
But these issues cause production delays, and the delays trigger financial burdens for Boeing suppliers. Investors and market observers were expecting Spirit’s Q1 results to be bad – but they were much worse than expectations.
Spirit supplies “shipsets” for both the 737 and the 787. And with both of these programs facing delays, Spirit’s liquidity is coming under threat. The company’s free cash dropped from $824 million last December, to $352 at the end of Q1.
Head Scratching for Boeing Suppliers
These and other bad results also impact Spirit’s value. And this matters, since the company is in discussions with Boeing and Airbus, with each due to acquire the operations that are relevant to their supply chains.
But beyond Spirit AeroSystems, other Boeing suppliers are also feeling the pressure. Leonardo in Italy is one of the key suppliers in the Boeing 787 program. Leonardo is also a supplier for Airbus and ATR, with other civil and military activities, including a partnership with Lockheed Martin.
Boeing’s problems with the 787 mean that its production rate is slowing down. The manufacturer was making 5 787s per month on average in Q4 2023. It is making fewer 787s than this now.
This is a problem for Leonardo, who is also complaining that it is getting little information from Boeing, about what the production rate of the 787 will look like in the immediate future. But the company says that a reduction in production could cost it €50 million ($53.7 million) in 2024.
Even before this week’s 787 production revelations, Boeing suppliers had been hit by different production delays, involving supply chain issues. After the latest issues, plus complications with the Spirit takeover and a management reshuffle, estimating the amount of time that Boeing will need to get its house in order, seems impossible.
