Spirit working through Boeing plans for rate increases, cuts

Spirit AeroSystems said Thursday it is working through Boeing’s plans to increase production of the 737 single-aisle airliner but slow the manufacturing rate of its 777 twin-aisle jetliner.

Boeing officials said in a conference call Wednesday that they plan to raise production on the 737 to 57 aircraft a month by 2019. Currently, Boeing is producing 42 737s a month. Next year, it plans to increase the rate to 47, followed by another increase to 52 in 2018.

In a statement to The Eagle, Spirit – which manufactures 70 percent of the fuselage for the Next Generation 737 and the next iteration, the 737 Max – said it is accustomed to dealing with production rate increases.

“Spirit has a strong history of managing rate increases on a variety of programs,” the statement said. “We will be working with our customer to ensure we transition smoothly to 57 shipsets per month to meet our customer’s needs.”

Spirit also is gearing up for a previously announced rate increase on another Boeing airplane, the 787 Dreamliner, set to take effect this spring. The company’s adding 100,000 square feet to the Composite Fuselage Facility at its South Oliver plant in preparation for the increase, from a rate of 10 787 forward fuselages a month to 12.

Boeing also is set this year to slightly raise the production rate of its 767 this year, from 1.5 planes per month to 2 a month this year, and 2.5 a month in 2017. Spirit manufactures the 767’s forward fuselage, wing leading edges, struts and pylons.

The increases on three Boeing aircraft programs come at the same time the Chicago-based planemaker is pulling back on the build rate of two of its largest aircraft, the 747-8 and the 777. Spirit builds the forward fuselage of both planes as well as the wing leading edges, struts and pylons.

Last week, Boeing said it was reducing production of its already slow-selling 747-8 from 1.3 airplanes to 1 airplane a month beginning in March. And in September it will be further lowered from one airplane a month to 0.5 – roughly half an airplane – a month. Boeing said it was reducing production of the jumbo jet because of a sluggish air cargo market.

And then on Wednesday, Boeing said it would cut back on production of the 777, the forward fuselage of which and other parts Spirit manufactures. Boeing plans to trim the rate from 8.3 777s a month to seven a month beginning in 2017.

Like the 747 rate cut, Spirit said Thursday it is studying the effect of the rate cut and what it will mean for its Wichita operations and 11,000 employees.

“Spirit is still analyzing the impact of the slowing rate on 777,” the statement said. “We will be working closely with Boeing to ensure that we are delivering product to meet their customer commitments.”

Spirit is set to announce its fourth quarter 2015 earnings next Wednesday. A conference call between Spirit executives and financial analysts may reveal more information about the rate increases and cuts.

This story was originally published January 28, 2016 at 6:20 PM with the headline "Spirit working through Boeing plans for rate increases, cuts."