Spirit AeroSystems has a good plan to increase Boeing 737 fuselage production from 31 to 35 a month, CEO Jeff Turner said Tuesday after the company reported its second-quarter results.
However, Boeing is now considering whether to increase rates even further, to 40 a month, and reportedly will make a decision in September.
If the rates go higher, "we'll have to look at those as they come," Turner said, answering an analyst's question during a conference call.
Incremental increases don't translate into major reconfigurations of the plant, he said. The company tries to get maximum production out of existing assets.
"We look for constraint-relieving equipment," he said. And it puts in processes to help relieve bottlenecks, Turner said.
But how quickly the company bumps up production has a large impact, he said.
"Changes in production drives instability," he said. "You have to get through that instability point and get a drumbeat again."
Spirit reported that revenue was flat in the second quarter compared with a year ago, but net income rose.
The Wichita-based supplier recorded $1.056 billion in revenue in the second quarter, compared with $1.060 billion last year. Net income for the quarter was $55 million. Spirit recorded a net loss of $8 million a year ago.
"We generated solid operating performance across the company," Turner said in a release.
Spirit shares closed at $21.53, up 43 cents — a 2 percent increase over Monday's close.
The company's order backlog at the end of June was $27.2 billion, down about 3 percent, as deliveries exceeded orders in the quarter.
Spirit's revenue guidance for 2010 is unchanged and expected to total between $4.0 billion and $4.2 billion.
Looking forward, the commercial aerospace market continues to strengthen, and demand for Spirit's core products is growing, the company said.
Spirit's largest challenges lie in its many new programs and with various issues that typically arise during the development phase, Turner said during the conference call.
The company also is concerned about the business jet market, especially the midsize market.
Spirit won work to design and build the wing of Gulfstream's new G250 super-midsize business jet.
"We think we're on a very good airplane for that part of the market," Turner said. "But clearly we need the market to improve there."
The company's forecast for the jets assumes an improving market. The question is when, he said.
As the project moves into production, "if it doesn't improve, then we have issues we have to deal with," Turner said.
Spirit celebrated the opening of its new plant in Kinston, N.C., during the quarter.
The company chose Kinston because of its proximity to a port, Turner said.
Spirit will ship fuselage panels built there to Saint-Nazaire, France, where it is opening a facility, for final assembly before delivery to nearby Airbus.
But Wichita remains a "key node," Turner said.
The plants, along with sites in Oklahoma, Scotland and Malaysia, give the company options when it chooses where to build future products, Turner said in answer to an analyst's question.
Several of the sites have design capabilities as well.