SPR Spirit Aerosystems Holdings Inc

Spirit AeroSystems Holdings Inc. (SPR) on Wednesday became the first company to disclose a deal with Boeing Co. (BA) covering compensation for the three-year delay in its 787 passenger plane.

The terms of the deal agreed to last month weren't disclosed, but Spirit said it would "include any impact of the agreement" when it reports earnings on Feb. 10, two weeks after Boeing's own quarterly release.

Its shares were recently up 10% at $22.53, their highest level since last May..

Spirit, other suppliers and 787 customers have all been in talks with Boeing over compensation and other penalties for the successive delays in the 787 program caused by production and design problems.

Suppliers who built up production of parts for the 787s expected entry into service have been left sitting on inventory, while airline customers were left to continue using older, les efficient planes.

Phil Anderson, Spirit's chief financial officer, said in a statement that the companies "developed a fair and equitable framework that reflects the current program financial realities." The company last year said it was shifting resources to other projects as it awaited further guidance on the 787 production schedule.

Boeing had hoped to wrap up talks with all affected customers and suppliers by the end of last year, but an onboard fire on a test flight in November is expected to lead to another delay in the 787's first delivery to an airline.

The company declined comment Wednesday, but said before the November incident that negotiations continued "in an orderly fashion."

Analysts have speculated that the final bill could run into the billions, but Boeing has sought to minimize the cash impact. Reparations are likely to involve a mix of cash penalties and nonfinancial "credits" such as subsidized freighter conversions or guaranteed future delivery slots, according to a person familiar with the process.

One of the most closely watched negotiations is with International Lease Finance Corp., which remains the largest 787 customer. Observers said could it set a benchmark for reparations with other customers.

Boeing has been insourcing some production work from its array of 787 partners to alleviate quality-control and supply-chain issues. The outsourcing was intended to share the financial burden of the program.

The company has restarted test flights of the 787 as it seeks certification from regulators, but has not officially updated guidance that launch customer All Nippon Airways Co. (ALNPY, 9202.TO) would receive its first plane next month.

A senior European regulator, which is assessing the plane in parallel with its U.S. counterparts, said this week that it was looking for certification by mid-year, if not later.

Boeing shares were recently up 1.9% at $70.28 in a broader market rally.

-By Doug Cameron and Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; matthew.jarzemsky@dowjones.com

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