Spirit says new programs will lead to 3rd quarter losses
BY MOLLY MCMILLIN The Wichita Eagle
Friday, October 26, 2012
10/26/12 at 5:42 AM
Spirit AeroSystems expects to take $590 million in losses in the third quarter on multiple new programs that increased costs in its supply chain, factory support and labor, the company said.
"The execution of our diversification and growth strategy has proven very complex," Spirit AeroSystems CEO and President Jeff Turner said in a statement.
The company rapidly expanded its customer base, manufacturing sites and product design capabilities while it managed multiple development programs with significant design changes and schedule delays, Turner said.
"It is unfortunate that we have struggled on these development efforts," he said. "As we move forward, our focus is on applying our lessons learned in strong program management, change control and shop-floor disciplines to drive performance on these programs and continue the solid performance on our core production programs."
The company plans to record pre-tax charges of about $184 million on the 787 program; $163 million on the Gulfstream G650 wing program; $151 million on the G650 engine nacelle package called BR725; $88 million on the Gulfstream G280 wing program; and $4 million on other combined programs.
In addition, the company reached a final settlement with its insurers for claims related to the tornado that hit its Wichita plant in April. Spirit received a settlement of about $235 million, lower than the $400 million in damage that had been estimated earlier.
The settlement resolves all property damages, cleanup, recovery and business interruption costs, the company said.
It will be recognized as a gain in the third quarter.
The company received a $105 million cash advance in the second quarter and will receive a cash settlement of $130 million during the fourth quarter.
Original Print Headline: Spirit reports 3rd-quarter losses