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Spirit Aero's supply issues cloud profit beat, shares drop

* Reaffirms 2018 adj EPS, revenue forecast

* Co says still has challenges with few suppliers

* Shares down ~5 pct (Adds details from the conference call, shares)

By Arunima Banerjee

Aug 1 (Reuters) - Spirit AeroSystems Holdings Inc topped analysts' estimates for quarterly profit on Wednesday as it delivered more parts for the world's best-selling aircraft, Boeing Co's 737, but concerns about its supplies lingered.

Spirit, which had faced supply disruptions earlier this year causing delays for 737, said some of its suppliers were still facing challenges, although it had ironed out most of the issues. The company makes some 70 percent of the 737's structure.

"A lot of them are common suppliers with Boeing and the 737 program, and Boeing has been helping us quite a bit with that as well. But there are still a handful, where they're experiencing disruptions," Chief Executive Officer Tom Gentile said on a call with analysts.

Spirit's shares fell about 5 percent in afternoon trading on Wednesday, erasing all the gains it made in early session.

Ship-set deliveries — or complete sets of parts for each aircraft — to Boeing, its biggest customer, jumped 14 percent in the second quarter ended June 28, while those for 737 surged about 24 percent.

"The key message in today's release implies deliveries are now back on track...," Berenberg analyst Ross Law said.

But, some of those deliveries may have come at a higher cost as Spirit made up for smaller delays with expedited freight.

The company hopes to improve the consistency and efficiency of these deliveries in the second half of the year.

"We have to do it more efficiently, by getting the overtime down, with reduced contractors, and with no expedited freight," Gentile said.

Planemakers are ramping up production to keep pace with robust air travel demand, which in turn is also helping Wichita, Kansas-based Spirit.

However, Spirit has scrambled to meet the soaring demand.

Spirit is now comfortable with both Airbus Group SE and Boeing programs, Gentile said.

"We have sufficient capacity, to go up to whatever rates that they might be considering,"

Deliveries to Airbus, its second-biggest customer, rose 2.5 percent in the quarter.

Spirit, which makes sections of the fuselage, wing frame work and structural components, reaffirmed its full-year adjusted earnings forecast of $6.25-$6.50 per share and revenue of $7.1 billion-$7.2 billion.

Since Spirit spun off from Boeing in 2005, it has gone from being a Boeing factory to making parts for Airbus, Mitsubishi Heavy Industries Ltd, Bombardier Inc, Textron Inc's Bell Helicopter, and Lockheed Martin Corp's Sikorsky.

On an adjusted basis, Spirit earned $1.63 a share in the quarter, beating analysts' estimate of $1.52, according to Thomson Reuters I/B/E/S.

Revenue rose slightly to $1.84 billion, compared with analysts' estimate of $1.83 billion. (Reporting by Arunima Banerjee in Bengaluru; Editing by Shailesh Kuber)