Spirit AeroSystems and Boeing Funding Agreement

By Allison Lampert and Tim Hepher

(Reuters) – Spirit AeroSystems (NYSE:SPR) and Boeing (NYSE:BA) are nearing a funding agreement that aims to provide a financial lifeline to the struggling Boeing supplier, according to an industry source familiar with the talks.

The source, who spoke on condition of anonymity, indicated that an announcement could come within days, although caution was advised as the deal has not yet been finalized.

Spirit Aero is confronting both financial and production difficulties, having issued a liquidity warning after four consecutive years of losses. The company anticipates a cash burn of approximately $450 million to $500 million over the last quarter of 2024 and the first half of 2025, based on recent filings.

Boeing, which aims to reacquire its former subsidiary, is working to revive its compromised supply chain and jet production following a strike that halted most of its output.

Spirit was not immediately reachable for comment, and Boeing declined to provide statements.

This week, Spirit expressed its intentions to boost liquidity by exploring options such as potential customer advances. The company has previously revealed that it has utilized a $350-million bridge loan associated with Boeing's acquisition commitment and has received advances from both Boeing and rival Airbus, which remain unpaid.

Based in Wichita, Kansas, Spirit AeroSystems is a crucial supplier for the leading global commercial aircraft manufacturers.

A secondary source reported that Spirit is considering furloughing employees within its 737 MAX fuselage program due to insufficient storage space and cash issues. In late October, it was reported that the supplier decided to temporarily furlough 700 employees involved in creating parts for Boeing's 767 and 777 jets due to space constraints.

Industry sources have also noted that Airbus could potentially provide cash support, as the European company has cautioned that its A350 deliveries might be disrupted next year due to concerns about the timely supply of fuselage components from Spirit.

"Spirit is a cash story now," remarked a source.

Airbus has opted not to comment.

All sources referenced were speaking under anonymity due to the private nature of the discussions.

During a recent analysts' call, Boeing CEO Kelly Ortberg reaffirmed the company's commitment to an all-stock deal to acquire Spirit Aero in 2025.

Spirit Aero's financial difficulties worsened following a decline in Boeing MAX production after a mid-air incident on a nearly new model on January 5. In March, a new inspection process for fuselages was introduced, leading to additional delays in Spirit's deliveries and resulting in a backlog of fuselages at the company's expansive Kansas facility.

Additionally, Spirit Aero is contemplating asset sales, including Fiber Materials, a U.S. defense composites manufacturer it acquired for $120 million in January 2020, according to a fourth source.

As of the end of the third quarter, Spirit reported a cash balance of $218 million in its October filings.