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.
One reason costs have increased is because Spirit is moving management and production of the program from Tulsa to 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.
Moving the G250 wing to North Carolina is the right move as the company manages its growth, Anderson said.
Spirit's Tulsa facility now performs work on two Gulfstream programs, the G250 and G650, and has work on Boeing's 737 and 777 airliners. Boeing is ramping up production of the two aircraft.
"They needed more room, more capacity, to concentrate on other programs," said Spirit spokeswoman Debbie Gann.
Spirit will operate dual production lines in Tulsa and Kinston as the work transitions. That could take a year or so, Gann 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.