Exclusive-Boeing close to funding agreement to help supplier Spirit Aero, source says

By Allison Lampert and Tim Hepher

(Reuters) - Spirit AeroSystems (NYSE:SPR ) and Boeing (NYSE:BA ) are close to reaching a funding agreement that would give a cash lifeline to the struggling Boeing supplier, an industry source familiar with the matter said.

A deal could be announced in the next few days, said the source, who spoke on condition of anonymity about the private talks, although he cautioned that it has not yet closed.

 Spirit Aero is juggling financial and production challenges, having issued a liquidity warning on Tuesday after four years of losses. It expects to burn around $450 million to $500 million in cash over the last three months of 2024 and first half of 2025, according to filings. 

Boeing, which plans to buy its one-time subsidiary, is trying to revive its battered supply chain and jet production after a weeks-long strike halted most of its output.

Spirit could not be immediately reached. Boeing declined to comment.

Spirit said this week it is seeking ways to raise liquidity including possible customer advances. The supplier has previously disclosed it has drawn down a $350-million bridge loan set up when Boeing agreed to acquire the supplier, and previous advances from both the U.S. planemaker and rival Airbus that Spirit has not repaid.

The Wichita, Kansas-based aerostructures company is a key supplier to the world's two major commercial planemakers.

Spirit had been weighing furloughs of workers on its 737 MAX fuselage program after it ran short on storage space and cash, a second source close to the matter said. 

In late October, Reuters first revealed a decision by the supplier to temporarily furlough 700 employees, who produce parts for Boeing's 767 and 777 jets, due to space constraints.

Separate industry sources said cash support from Airbus is also an option, as the European company has warned its A350 deliveries could be disrupted next year due to concerns over the timely delivery of fuselage parts from Spirit. 

“Spirit is a cash story now,” a third source said.

Airbus declined to comment.

All the sources spoke about private conversations on condition of anonymity.

Boeing CEO Kelly Ortberg reiterated the planemaker's commitment to an all-stock deal to acquire the supplier in 2025 during a recent call with analysts.

Spirit Aero's finances suffered further when Boeing MAX production slumped after a Jan. 5 mid-air blowout on a near-new model. A new process for vetting fuselages for flaws introduced in March further delayed Spirit's deliveries, leading to a pile-up of fuselages inside and outside the supplier's sprawling Kansas factory.



Spirit Aero is also weighing some asset sales, such as U.S. defense composites maker Fiber Materials, a fourth source said. The supplier said in January 2020 it acquired FMI for $120 million.   

The supplier had a cash balance of $218 million at the end of the third quarter, according to October filings.

Source: Investing.com