According to an industry source, Boeing is reportedly on the verge of finalizing a funding agreement to provide a financial lifeline to its key supplier, Spirit AeroSystems. This development comes at a critical time as Spirit AeroSystems, a former subsidiary of Boeing, has been facing significant financial and production challenges. The agreement aims to bolster Spirit's liquidity, which has been a pressing concern following years of operational losses and a recent liquidity warning.
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Spirit AeroSystems, based in Wichita, Kansas, is one of the world's leading manufacturers of aerostructures for commercial airplanes, including those for Boeing and Airbus. The company has struggled with cash flow problems, exacerbated by quality issues with the fuselages it supplies for Boeing's 737 narrowbody jets. This led to a situation where Spirit was on the brink of furloughing workers due to space constraints for storing completed fuselages and a cash shortage. Boeing, planning to reacquire Spirit in a deal valued at approximately $8.3 billion, recognizes the strategic importance of keeping its supply chain robust. The aerospace giant's decision to provide financial support reflects its commitment to not only stabilize Spirit but also to ensure the continuity of its own production lines, especially after a weeks-long strike that halted much of its jet production.
This funding agreement is expected to provide immediate relief to Spirit, allowing it to manage its cash burn projected at $450 to $500 million over the last quarter of 2024 and into the first half of 2025. Spirit had previously drawn on a $350 million bridge loan arranged when Boeing agreed to the acquisition, along with advances from both Boeing and Airbus that it has yet to repay. The deal, if announced soon, would be a significant move for Boeing as it navigates its own recovery from production setbacks and aims to restore investor confidence.
It also underscores the interdependence between Boeing and its suppliers, highlighting the steps Boeing is willing to take to secure its supply chain, especially for critical components like the 737 MAX fuselages. This financial support is not just about aiding Spirit but is also about ensuring Boeing's aircraft production remains on track amidst global supply chain volatilities. As of now, neither Boeing nor Spirit AeroSystems has officially confirmed this funding arrangement, but the industry is closely watching for an announcement that could signal a new chapter in their storied relationship.