Spirit AeroSystems sees $31M hit to full-year gross profit from 737 issue

In earnings presentation slides, Spirit AeroSystems (SPR) commented on notified Boeing (BA) of a quality issue on the vertical fin attach fittings of certain models of the 737 fuselage and having supported Boeing and the FAA for "their confirmation that it was not an immediate safety of flight issue." Based on preliminary financial assessment, disruptions and rework within Spirit’s factory is expected to have a negative impact of $31M to full-year gross profit, of which $17M is reflected in Q1 financial results, the company stated. The rework cost on available units in Wichita is expected to average $100K-$150K per unit, approximately $5M in total, though "additional costs are expected but cannot be reasonably estimated at this time," the company stated in its slides. Spirit adds that it revised its assembly process and "have started to build and deliver new conforming fuselages," while implementing "additional protocols to reinforce our quality systems to prevent similar occurrences in the future."