Boeing's decision to replace the engines of its popular 737 jetliner rather than replace it with an all-new airplane is a "dream scenario" for Spirit AeroSystems, a Spirit analyst said.
Spirit also will benefit from American Airlines' record-setting order announced Wednesday for 450 narrowbody aircraft placed with Boeing and Airbus.
Spirit builds the 737 fuselage in Wichita.
It also builds parts of all Airbus aircraft at its plants in the United Kingdom.
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"The American order is good news for us all the way around," said Spirit spokeswoman Debbie Gann said.
Shares of Spirit jumped 7.3 percent Wednesday, gaining $1.50 to close at $22.07. Shares have traded between $17.93 and $26.49 in the past year.
The plan to replace the engines on the 737 with more fuel-efficient engines called the Leap X is subject to approval from Boeing's board of directors. A Boeing official said Wednesday that the program is expected to be launched sometime this fall.
American's order to Boeing includes 100 737 Next Generation aircraft with options for 40 more. It also committed to buy 100 of the planes with the new engines with an option for 60 more.
American's order to Airbus is for 260 single-aisle aircraft, including 130 of A320 family of aircraft with new engines, called the A320neo, for new engine option.
Boeing's decision to go with 737 engine replacement rather than replacing the 737 with an all-new design is good for Spirit, said Teal Group analyst Richard Aboulafia.
A new airplane would present a major risk, he said.
Boeing would put work on the new plane out for bid, he said. And there are no guarantees whether or how much work Spirit would win.
The 737 program accounts for half of Spirit's revenue and keeps thousands of its 10,400 Wichita employees busy.
Without the program, "the big risk is keeping people working," he said.
In addition, Boeing officials have said that a replacement plane would likely be a composite aircraft. A composite fuselage would require fewer workers than the aluminum 737.
Aboulafia called the 737 a "relatively labor intensive fuselage" by comparison.
Spirit would also face extra costs with an all-new airplane.
"Building the same tube you've built for decades is very different from having to collaborate the design work and new equipment needed to build something new," Aboulafia said.
Adding new engines to the 737 is not a major change to the design.
"It's a minor derivative," he said.
The re-engining project will keep the 737 in production for many more years, Aboulafia said.
For its part, Spirit is digesting the news of Boeing's decision, Gann said.
"We'll be obviously working closely with Boeing to support the re-engine," she said. "We've been talking with Boeing about all kinds of possibilities trying to stay in a position where we can support our customer whatever they decide."
The decision came months earlier than expected.
Last month at the Paris Air Show, Boeing officials said they would not rush a decision, which would likely be made toward the end of the year.
Boeing has had separate teams studying the two options. Customers seemed to be leaning toward an all-new aircraft, officials have said.
Airbus outshined Boeing at the air show with announcements of hundreds of orders for the A320neo.
In addition, Boeing had to compete vigorously with Airbus for the American Airlines order.
In the end, the decision against launching an all-new plane came down to production worries, said Jim Albaugh, head of Boeing's commercial aircraft division.
The challenges of producing a new composite airplane at the high production rates necessary to meet demand was a big stumbling block, he said.
"While the technology was there to do a new airplane, the production system is not understood how to build some 60 composite airplanes a month," Albaugh said.
A new airplane would not be ready in the short time frame customers desired.
"They wanted more airplanes now," Albaugh said.
In making the decision, Boeing was able to "stave off a disaster," Aboulafia said.
"In 10 years, it (production) might be solvable," he said. "I think they knew volume production of a composite tube is quite problematic given what we know about production today."