WICHITA, Kan. (KSNW) – In a new filing with the government, Spirit Aerosystems said this week there is “substantial doubt about the Company’s ability to continue as a going concern.”
Aviation analysts are giving some perspective on the filing and what it means.
“Put it this way, the factory in Wichita is not going away. Right?” said Bruce McClelland with Teal Aviation. “And because they (Spirit) make a vital piece of Boeing’s product line, which is the fuselages for the 737, nobody else does it. Boeing can’t do it by themselves.”
In the Spirit filing with the government, the statement goes on to say Spirit is considering additional strategies, including customer advances, issuing securities or debt financing subject to any contract conditions, and restructuring operations to increase efficiency and decrease costs. That may include layoffs or additional furloughs.
On Wednesday, some analysts said it could be too early to talk about possible layoffs or furloughs.
“That notice was made when they were looking, you know, this was functionally done before the (Boeing workers) strike was ended. And they (Spirit) didn’t know how the strike would be impacting them going forward,” said McClelland. “Now that it’s over, I’m sure the prospects for renewed production are much better than they were.”
KSN reached out to Spirit for comment on Wednesday:
“There is a universe of options in regard to cost-cutting measures. So we are reviewing those options at this time,” said spokesperson Joe Buccino.
McClelland said there is reason for optimism for the Wichita aviation market.
“I think Boeing’s next concern is going to be raising production of the 737. The 737 is currently capped at 38 per month by the Federal Aviation Administration. Boeing would eventually like to get that up to fifty,” said McClelland. “My expectation is they will be stuck at pretty much 38 for the rest of next year. And if they don’t have any more doors fall of planes or anything like that, then they likely are able to negotiate a higher production rate with the FAA.”
McClelland says that means job stability. He also says as Boeing and Spirit both look at cash reserves, they will continue to look at ways to save money. But he believes Spirit in Wichita has a future.
“It’s a major part of Boeing’s business going forward. It is basically the foundation on which anybody who has any faith in Boeing is, going forward, is betting on,” said McClelland. “Over time, you could see scenarios where Boeing might come in and say, ‘Hey, we can automate certain lines. We can do things. Maybe we don’t need as many people. But that’s farther down the road?’ I don’t think Boeing wants to go there right now. I think there’s too much at stake. So lets not rock the boat, let’s get the business stabilized. And that’s the biggest thing, is for Boeing to stabilize their business at this point.”