Spirit uncertain about jobs impact from 787 jet rate hike

Spirit AeroSystems is prepared for Boeing to increase the monthly production rate of the 787 Dreamliner passenger jet, the company said Thursday.

Boeing plans to increase the 787’s production rate to 14 airplanes a month in 2019, CEO Dennis Muilenburg said Wednesday in a presentation at the Morgan Stanley Laguna Conference for investors.

The current rate for the composite airliner is 12 a month.

Wichita-based Spirit said it will be ready to adjust to the higher rate, which will affect it and other 787 suppliers in 2018 since they manufacture major parts of the airplane. Spirit alone manufactures the composite forward fuselage of the airplane, which includes a finished flight deck, as well as its wing leading edges and struts that hold the engines to the wing.

“We work very closely with our customers on rate adjustments, and we anticipate we will be able to accommodate this rate increase in our existing physical facilities with some modifications,” Spirit said in the statement.

Spirit said it’s not clear whether the rate increase will prompt it to add jobs.

Spirit employs about 10,800 people in Wichita.

Muilenburg’s rate hike confirmation surprised some analysts, including Scott Hamilton of Leeham News. They’ve been skeptical that Boeing would follow through on the planned rate increase given demand for the 787 has been tepid, with fewer new orders coming in for the airplane.

But Canaccord Genuity aviation analyst Ken Herbert said in a research note to investors late Wednesday that he thinks the rate increase “was driven more by accounting and FCF (free cash flow) considerations … rather than by market demand.”

“From a supplier perspective, moving to 14/month is incrementally positive, although margins on the program as a result of the PFS (Partnering for Success) initiatives do create uncertainty for suppliers,” Herbert wrote.

Partnering for Success is Boeing’s program to reduce the costs of its airplanes by reducing the prices it pays suppliers for the parts to build those airplanes.

This story was originally published September 14, 2017 at 2:44 PM with the headline "Spirit uncertain about jobs impact from 787 jet rate hike."