Aviation

Boeing chief offers details on taking back Spirit’s parts sales

Spirit AeroSystems employees in August 2015 look over the first completed fuselage of the 737 Max, Boeing’s next generation single-aisle airliner and 70 percent of which is built by Spirit.
Spirit AeroSystems employees in August 2015 look over the first completed fuselage of the 737 Max, Boeing’s next generation single-aisle airliner and 70 percent of which is built by Spirit. File photo

The top executive of aircraft-maker Boeing talked on Wednesday about programs relevant to Wichita, including why it took back parts sales from Spirit AeroSystems, the city’s largest private employer and a major supplier to Boeing.

Boeing president and CEO Dennis Muilenburg, speaking with financial analysts Wednesday morning following the company’s release of its first quarter 2016 earnings, said Boeing sees a “significant opportunity” in the sales of spare parts to its airline customers. In late February, Boeing did not renew Spirit’s contract to sell spare parts to airlines, although Spirit continues to manufacture those parts for Boeing.

Muilenburg said the combined market for commercial and defense spare parts is worth $4 trillion in the next 20 years.

“We’d like to take some of the prowess that we have in production capacity and move that into the life-cycle support element of the fleets,” he said.

Muilenburg also spoke favorably of manufacturing a smaller version of its next-generation 737.

“We continue to have very good dialogue with our customers” about the 737 Max 7, he said, although “it’s too early to give details” about potential plans for such an airplane.

It’s an “airplane that’s viewed very favorably by our customers,” Muilenburg added.

Spirit manufactures 70 percent of Boeing’s narrowbody 737 jetliner, including the current NG version as well as the new Max variant.

Boeing announced as part of its earnings during the three-month period ended March 31 that it took a $156 million after-tax charge on the KC-46, which is the new air refueling tanker Boeing is manufacturing for the Air Force. McConnell Air Force base in southeast Wichita will be the first base to receive the new tankers.

Muilenburg said the charge stems from engineering changes the company made and certified during Boeing’s flight testing of the KC-46. Those changes have been made to tankers Boeing has already built, he said.

“We remain on part to meet the commitment we made to our customer … (and) deliver the first 18 tankers by August 2017,” Muilenburg said.

The tanker is based off of Boeing’s 767 widebody jet, the forward section and other parts of which are also manufactured by Spirit.

In the first quarter, Boeing made a profit of $1.2 billion on revenue of $22.6 billion. That compares with profit of $1.3 billion on revenue of $22.1 billion in the first quarter of 2015.

Spirit is set to report its first quarter 2016 earnings on Friday.

Jerry Siebenmark: 316-268-6576, @jsiebenmark

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