Spirit AeroSystems will record a pre-tax charge of $53 million, or 26 cents a share, in the second quarter, as costs for the wing program for the Gulfstream G250 business jet grew.
Costs also increased as Spirit established management and production on the program at its facility in Kinston, N.C.
“We have evaluated a variety of options to offset the development cost growth and to improve manufacturing costs on the program, while creating the necessary capacity in our Tulsa, Okla., facility for multiple growth programs,” Phil Anderson, Spirit senior vice president and chief financial officer, said in a statement.
The transition of the G250 wing to North Carolina is the right plan to mitigate costs and “the best long-term solution for our customer and Spirit as we manage the company’s growth,” Anderson said.
The charge was expected, analysts say.
“The company’s comments to us at the Paris Air Show that the G250 remains its most at-risk program would seem to have been a harbinger of this charge,” RBC Capital Markets analyst Robert Stallard wrote in a report.
“The charge provides a sense of deja vu given SPR’s track record of charges on the G250 and other programs, such as the CH-53K (helicopter) program last quarter.”
Now, however, “we think the focus in the quarter will now shift to cash flow and the status of its 737 and 787 ramp,” he said.
Spirit is working to increase production on the two programs as Boeing has increased 737 rates and moves toward first delivery of the 787 in August or September.