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Spirit's third-quarter earnings, deliveries rise

Spirit AeroSystems recorded increases in revenue and net income in the third quarter as strong demand for commercial airplanes led to higher deliveries.

Spirit posted revenue of $1.1 billion in the quarter, up from $1 billion in the same period a year ago.

Net income totaled $67.3 million, or 47 cents per diluted share, for the quarter, compared with $46.4 million, or 33 cents per share, a year ago.

Spirit's core business performed well and continued to be the "operating engine" at the company, Jeff Turner, Spirit CEO and president, told analysts Thursday in a conference call about the company's financial results.

Spirit met milestones on its development programs and will benefit by a strong market outlook for commercial planes, Turner said.

Its focus continues to be on the execution and cost management of its programs, Turner said, especially on new programs where Spirit overspent in their development.

The company spent $8 million on research and development during the quarter, down from $13 million a year ago.

Spirit delivered its 49th forward fuselage for Boeing's 787 Dreamliner in the quarter. It also delivered the 50th set of 787 engine pylons.

A Boeing official said Thursday that the company was increasing 787 production from 2.5 per month to 3.5 a month by early spring, with a goal of 10 per month by 2013.

Spirit's goal is to reduce costs on the 787 and get to a predictable "steady drumbeat" on production, Turner said.

"I see that coming," he said, "(but) it's been slow in coming."

The company is paying attention to its labor, its supply chain, its readiness to increase production rates and making improvements to the 787 program, Turner said.

But the plane is certified and has been delivered to a customer, he said.

"We don't have any big major tent poles that we're worried about right now," Turner said.

In addition, Spirit has repaid Boeing the cash advances it received on the 787 and is receiving cash on the deliveries to Boeing, said Spirit chief financial officer Phil Anderson.

During the quarter, Spirit moved some significant pieces of the structure of the Sikorsky CH53 helicopter in-house in order to make the schedule, the company said. That drove some extra costs into the program.

In the meantime, the Airbus A350 program is progressing well, Turner said. The company recently delivered the first fuselage panels to its St. Nazaire, France, plant from Kinston, N.C.

While engineering releases fell behind, the parts went together well, Turner said.

Moving forward, risks will involve whether changes will be needed on the A350 design after testing, Turner said.

In ranking Spirit's new programs by the most dollars at risk, the 787 would be first followed by the Airbus A350 program, Turner said.

When ranked by the risk in managing performance curves on new programs, the 747-8 ranks first because there have been delays on the program, Turner said. That's followed by the Rolls Royce BR725 program. Spirit's contract is to build nacelle systems on the BR725 engine for Gulfstream's new G650 business jet.

Spirit's backlog totals $30 billion, up 4 percent in the third quarter as orders exceeded deliveries, the company said.

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