Posted on Fri, Nov. 06, 2009

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Spirit CEO concerned about Airbus, Boeing

Potential 737 cuts cause worry

BY MOLLY McMILLIN

The Wichita Eagle

Spirit AeroSystems CEO Jeff Turner says he's concerned that Boeing and Airbus might cut production on single-aisle, narrow-body jetliners.

There are sign that rates should be trimmed, Turner said Thursday during a conference call after the company reported its third-quarter results.

"I felt terrible three months ago and six months ago — terribly worried I should say," Turner said in response to whether he feels better than he did three or six months ago on whether rates will hold. "And I remain that way."

Turner noted that there has been some stabilization in the global economic outlook.

However, "we remain cautious regarding the outlook of the commercial aerospace market," Turner said.

So far, Boeing and Airbus have been able to hold production steady.

Analysts, however, are forecasting that production rates will have to be reduced as airlines struggle to cut expenses. Some have delayed delivery of new aircraft.

So far, single-aisle production has "defied the accumulated wisdom of analysts," Turner said.

Boeing's 737 airliner is important to Spirit, which builds the jet's fuselage. Seventy-five percent of all Boeing deliveries are 737s. Half of Spirit's revenue is from the 737, the company said.

"We look... at a lot of different scenarios about what we need to do if we need to trim production," he said.

Boeing already has cut production on its larger, twin-aisle airliners. But so far, it's been able to move around orders on the 737 to keep production stable.

Turner also said that 787 forward fuselage fabrication is expected to restart by the end of the year.

Spirit AeroSystems' revenue for the third quarter was better than expected.

Revenue totaled $1.05 billion, up 2 percent from $1.03 billion the same time a year ago.

Net income totaled $87 million, up 18 percent from $74 million.

Revenue for the first nine months of 2009, however, has fallen 4 percent to $3 billion, while net income has fallen 42 percent to $142 million.

Spirit's backlog at the end of the quarter was $28.2 billion, the same as the previous quarter, the company said.

Spirit calculates its backlog based on contractual prices for products and volumes from published firm order backlogs of Boeing and Airbus, along with firm orders from other customers.

Spirit shares closed 5.5 percent higher Thursday at $17.54, up 91 cents. Shares have traded between $7.14 and $19.28 in the past year.

Reach Molly McMillin at 316-269-6708 or mmcmillin@wichitaeagle.com.