Boeing executives apologize for 737 Max crashes
The mandatory four-day work week implemented for thousands of salaried Spirit AeroSystems employees in the wake of problems with the 737 Max ends Aug. 29.
Spirit spokesman Keturah Austin said Wednesday there are “no plans in the works ... at this point” to extend the cuts beyond that date.
The shortened work week started June 21 and affected about 6,000 employees in Kansas and Oklahoma, about 90% of whom work at the Wichita plant. The cut amounted to a 20% reduction in pay for all affected, including management and executives who work on commercial airplane programs.
The cut was due to last up to 10 weeks under Society of Professional Engineering Employees in Aerospace’s contract with Spirit. The labor union, also called SPEEA, represents engineers, technical workers, pilots and other aerospace industry workers.
Spirit reminded employees in an email this week that the 32-hour work week would end as expected. Employees who took an unpaid leave day during the Memorial Day work week will have their final unpaid day clocked by Thursday, the email said.
“Employees’ weekly time will no longer default to 32 hours worked and eight hours of excused absence ... in the appropriate week,” Spirit said in the employee email. Payroll employees plan to review timekeeping records for the 10-week period to ensure all unpaid, excused absences “are accounted for and handled correctly.”
The email went on to thank employees for their support “as we worked to mitigate the impacts of the 737 MAX fleet grounding and to keep the workforce in place for future growth.”
The mandatory 32-hour work week is among cost-saving measures undertaken by Spirit since Boeing’s 737 Max was grounded worldwide in March over safety concerns connected to crashes that killed 346 people in Ethiopia and Indonesia. Spirit has also reduced overtime, cut use of contractors, cut non-Spirit personnel, suspended hiring to fill open positions and put the brakes on a plan to increase 737 Max production from 52 to 57 planes a month.
Austin, the Spirit spokeswoman, said by email that “Spirit continues to work with Boeing to assess the ongoing situation and support our customer as they focus on returning the MAX to service.”
It remains unclear when that might be. The Federal Aviation Administration has said it won’t clear the jet to fly again until it’s deemed safe. And Boeing Chairman and CEO Dennis Muilenburg has said if the Max’s return to flight is delayed beyond this fall, the company would consider temporarily shutting down production.
During an earnings call with investors last month, Spirit CEO Tom Gentile said if Boeing re-evaluates its production plans, Spirit would work with the company to determine how many planes a month Spirit should continue building going forward, or it could decide to shutdown Max production temporarily.
“There is uncertainty as long as the Boeing (Max) continues to be grounded and that uncertainty isn’t going to go away until the FAA and the other regulators around the world re-certify it for flight,” Gentile said during the July 31 call.
Gentile in the call said cost-cutting measures connected to the Max “are tracking to plan” and should be realized during the second half of the year. Spirit sought to cut 5% of its fixed costs to offset the impact of the delayed production boost, which originally was set to happen this summer but now isn’t expected to happened until after 2020 at the earliest.
Earlier this year, Boeing cut its monthly Max production to 42 planes in the wake of the groundings but worked out a deal that allowed Spirit to continue producing at the 52-a-month rate. In exchange, Spirit is storing the extra planes on site until Boeing is ready for them to ship to its Max assembly line in Seattle.
Spirit makes about 70% of the Max 737, including the fuselage. The plane’s production accounts for about half of the company’s revenue.
Gentile in the July 31 call noted that the Max has been “a strong driver of organic growth” for Spirit in recent years and said that he expects it to continue into the future, even with the delayed production increase.
In the meantime, Spirit has not slowed its focus on growing other areas — defense and fabrication are among priorities —and is continuing to seek out acquisition opportunities, Gentile said during the call.
Currently Spirit is working to acquire Belgium-based Asco Industries, a leading supplier of high-lift wing structures, mechanical assemblies and other parts in the global commercial and military aerospace markets. A large-scale cyber attack on Asco in June delayed the acquisition process some months, but Gentile has said the company “remains a compelling strategic fit for Spirit” because it expands Airbus content, adds new defense content and expands Spirit’s fabrication business.
That deal is expected to be finalized later this year, Austin said Wednesday.
Spirit is also developing ideas for a variety of other programs including Boeing’s proposed NMA mid-sized airliner, working on its defense initiatives and focusing on its long-term research and development, Gentile said during the July call.
“We haven’t let the MAX situation impact the work that we’re doing on the next generation programs for Boeing or Airbus,” he said.