Spirit AeroSystems provides update on new contract with IAM

The collective bargaining agreement with the IAM, which represents approximately 55% of Spirit’s U.S. employees, had an expiration date of June 24, 2023. On June 21, 2023, IAM-represented employees voted to reject the Company’s first contract offer and to strike. In response, the Company suspended its Wichita factory production on June 22, 2023. The Company and IAM representatives engaged in further negotiations, which resulted in a revised four-year contract offer, which was ratified by IAM-represented employees on June 29, 2023. The Company began restoring operations on June 30, 2023, and fully resumed operations on July 5, 2023. The IAM negotiations impacted all programs at the Wichita, Kansas site, including the 737 program. Based on the current estimates of future production rates, Spirit’s labor costs will be higher than the previous IAM contract by approximately $80 million annually. Financial impacts in the second quarter of 2023 include $28.3 million of changes in estimates primarily related to higher wages and other employee benefits resulting from the new contract and strike disruption charges of $7.3 million recorded to other operating expense on the Consolidated Statements of Operations. The work stoppage from the IAM strike will reduce full-year 737 deliveries to the range of 370 to 390 units, which will negatively impact expected revenue, earnings and cash flow for 2023.