Spirit AeroSystems (SPR) announced another round of job cuts on Friday citing Boeing’s (BA) recent 737 MAX production rate cut and the ongoing coronavirus crisis. The company plans to lay off 1,100 staff across its commercial program including 450 from its Witchita, Kansas facility.
“The 737 MAX production rate reduction is the third this year, lowering Spirit's production from 125 units to 72 units for 2020, a reduction of more than 80 percent from its 2019 production rates,” Spirit said in a statement. Additionally, the COVID-19 pandemic is hurting the overall airline industry, thereby impacting demand for commercial aircraft, the company said.
Spirit's CEO Tom Gentile said that the recent workforce reduction “action, along with previous actions, is intended to reduce costs, increase liquidity and position Spirit to remain financially healthy while we move through a period of recovery in the commercial aviation market."
On July 8, Bernstein analyst Douglas Harned downgraded Spirit to Sell from Hold on “lower delivery expectations.” Harned said, "the revised delivery outlook reduces revenue, long-term earnings, and free cash flow estimates for Spirit.”