Spirit AeroSystems, a major supplier to Boeing and Airbus, announced a significant operating loss of $577 million for the fourth quarter of 2024, a stark contrast to the $215 million operating income reported a year earlier. This substantial loss underscores the company’s ongoing financial challenges and its need for additional funding to sustain operations.
The company reported a staggering $2.1 billion net loss for the full year 2024. In its earnings announcement, Spirit acknowledged the need for further financial support, stating that it “will need to obtain additional funding to sustain operations, as we expect to continue generating operating losses for the foreseeable future.” This announcement follows a November warning of “substantial doubt” regarding the company’s ability to continue as a going concern.
To address immediate liquidity concerns, Spirit secured advance payments of $350 million from Boeing and up to $107 million in non-interest bearing credit from Airbus during the fourth quarter. These cash infusions provide temporary relief, but the company’s long-term financial stability remains uncertain. Boeing’s planned acquisition of Spirit, its former subsidiary, is expected to close by mid-year, according to Spirit President and CEO Pat Shanahan. This acquisition could potentially provide a more permanent solution to Spirit’s financial woes.
Despite the financial difficulties, Spirit reported positive free cash flow of $91 million for the quarter, up from $42 million a year earlier. However, revenue declined 9% to $1.65 billion. The company attributed the revenue decline to ongoing production challenges and lower than expected aircraft production rates.
Spirit, a key manufacturer of aerostructure components for both Boeing and Airbus, reported increased deliveries across several aircraft programs. Deliveries of 737 components doubled, A220 deliveries rose by 37%, and A350 deliveries increased by 15% compared to the previous quarter. Chief Financial Officer Irene Esteves highlighted this progress, stating that “with the right customer support, we are able to meet current demands while also investing for future production rate increases.”
Looking ahead, Spirit declined to provide specific guidance for 2025 but anticipates “significant reductions” in both revenue and cash flow. These reductions are attributed to production adjustments at Boeing, lower 737 production rates, and the absence of price increases on Airbus programs. The company’s fourth-quarter losses included $440 million in net forward losses, primarily driven by production performance issues, increased labor costs, and higher supply chain expenses impacting programs like the Boeing 787, Airbus A220, and Airbus A350. Specifically, the 787 program recorded $167 million in forward losses, the A220 program $73 million, and the A350 program $64 million. These forward losses reflect the ongoing challenges Spirit faces in managing costs and maintaining profitability in a demanding aerospace market.
In conclusion, Spirit AeroSystems faces significant financial headwinds despite increased deliveries and positive free cash flow. The company’s substantial fourth-quarter loss and the need for additional funding highlight the urgent need for a long-term solution. The pending acquisition by Boeing offers a potential path to stability, but the company’s future remains uncertain. Spirit’s ability to navigate these challenges and return to profitability will depend on its ability to address production issues, manage costs, and secure the necessary financial support.
