SPR Spirit Aerosystems Holdings Inc

By Doug Cameron 

Spirit AeroSystems Holdings Inc. agreed to buy an aircraft components business from Bombardier Inc., as the supplier works to expand its customer base beyond Boeing Co.'s troubled 737 MAX.

Spirit is paying $1.1 billion for Bombardier facilities in Northern Ireland, Morocco and Texas that make parts for the Airbus SE A320 and A220 jets, helping cushion the disruption from the grounding and slowed production of the MAX.

Spirit is the largest supplier on the Boeing jet. The company is making parts and fuselages for 52 MAX aircraft each month, even though Boeing has cut its production level for the MAX back to 42 a month.

Chief Executive Tom Gentile told analysts it could remain at that rate next year -- and maybe into 2021 -- but would prefer Boeing to freeze output rather than slow production if delays in securing regulatory approval pushed back the return of the MAX.

Boeing is storing finished jets while it works with regulators in the U.S. and around the world to approve changes to the plane.

The MAX was grounded globally in March after the second of two fatal crashes in some five months. Most MAX suppliers have continued to provide parts at Boeing's current 42-a-month assembly rate, even as the company builds up a backlog of more than 300 undelivered planes.

The MAX accounts for an estimated 50% of Spirit's annual sales. A former Boeing unit, Spirit was spun off in 2006 and remains heavily tied to work on the workhorse jet and the 787 Dreamliner.

Buying the Bombardier assets, part of the Canadian company's breakup of its aerospace business, is part of a three-pronged strategy at Spirit to secure more business at Airbus, expand work on military aircraft and helicopters and build up non-U.S. operations.

The purchase of the wing-making facility in Belfast gives Spirit access to the Airbus A220 program bought from Bombardier as well as the potential for work on the next generation of single-aisle jets.

The company said it would continue making fuselages and other parts for the MAX at the same rate of 52 a month, but the grounding derailed plans to boost monthly output to 57 in the summer, weighing on costs and profits.

Spirit said its profit fell to $131 million from $169 million for the latest quarter, shy of analysts' expectations. Sales rose 6% to $1.92 billion.

Spirit shares closed Thursday up 3.5% at $81.82.

--Colin Kellaher contributed to this article.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

October 31, 2019 18:02 ET (22:02 GMT)

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