Boeing supplier Spirit AeroSystems to suspend production of 737 MAX parts

[December 20, 2019]  (Reuters) - Boeing Co's <BA.N> biggest supplier, Spirit AeroSystems Inc <SPR.N>, said on Friday it would temporarily halt production of 737 MAX parts beginning Jan. 1.

Airplane fuselages bound for Boeing's 737 Max production facility sit in storage at their top supplier, Spirit AeroSystems Holdings Inc, in Wichita, Kansas, U.S. December 17, 2019. REUTERS/Nick Oxford/File Photo

Spirit said the move, which comes after Boeing said earlier this week it would halt production of the grounded jet in January, would hurt its financial condition and cash flow.

"Because revenue from 737 aircraft components represents more than 50 percent of Spirit's annual revenue, this suspension will have an adverse impact on Spirit's business, financial condition, results of operations, and cash flows," the company said.

Spirit, which makes the MAX fuselage, pylons, thrust reverser, wing leading edges and engine nacelles, has continued to churn out parts for the jet at a rate of up to 52 units per month, even as Boeing cut its own production to 42 per month earlier this year.

The aero parts maker said in October it will not produce 737 MAX parts at a rate higher than 52 per month through 2020, 2021 and possibly into 2022, but several analysts raised doubts about that prediction following Boeing's announcement of a production cut.

Spirit said on Friday it was evaluating "all potential actions to align its cost base with lower production levels expected in 2020".

(Reporting by Ankit Ajmera in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)

[© 2019 Thomson Reuters. All rights reserved.]

Copyright 2019 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.