Aviation

Spirit doesn’t owe Boeing pension, medical costs from 2005 Wichita sale, court rules

Spirit AeroSystems facilities on MacArthur between K-15 and Oliver is seen. Boeing will take a $124 million charge to its earnings related to the 2005 sale of its Wichita commercial aircraft operations.
Spirit AeroSystems facilities on MacArthur between K-15 and Oliver is seen. Boeing will take a $124 million charge to its earnings related to the 2005 sale of its Wichita commercial aircraft operations. Eagle file

Boeing will take a $124 million charge to its earnings related to the 2005 sale of its Wichita commercial aircraft operations.

On Friday Boeing said the charge was related to pension and retiree medical obligations of Boeing Wichita employees. In 2014 Boeing filed a lawsuit seeking to collect those pension and medical costs from Spirit AeroSystems, the aircraft supplier created by the 2005 sale.

The Delaware Supreme Court ruled Thursday against Boeing, upholding a lower court’s ruling.

“We are pleased the court ruled in Spirit’s favor,” Spirit said in a statement on Friday. “We were confident that Spirit met all of its contractual obligations under the asset purchase agreement at the time of divestiture and thereafter, and the court agreed with us. We look forward to putting this issue behind us and continuing our long business relationship with Boeing.”

Boeing said it will recognize the charge in its second quarter 2018 earnings, which are expected to be released July 25. It doesn’t expect the charge to affect its revenue or cash flow.

The charge shouldn’t hurt Boeing’s financial performance, Baird Equity Research analyst Peter Arment said in a note to investors on Friday.

“We still expect BA (Boeing) report a very strong operational result in 2Q18,” Arment wrote.

Spirit is Boeing’s largest supplier. It manufactures 70 percent of the 737 airplane and large parts for all of Boeing’s other commercial airplanes.

Jerry Siebenmark: 316-268-6576, @jsiebenmark
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