WICHITA, Kan., April 8, 2020 /PRNewswire/ -- Spirit
AeroSystems [NYSE: SPR] is announcing today a series of additional
actions the company is taking to reduce costs and preserve
liquidity in light of the economic impacts of the COVID-19 pandemic
and continued uncertainty in the industry.
"Spirit has enacted a robust crisis management and response
process as part of our enterprise risk management program to help
us navigate the challenges we face due to the COVID-19 pandemic,"
said Tom Gentile, President and CEO,
Spirit AeroSystems. "We are proactively taking steps to ensure the
safety of our team as we maintain operations to support our
customers, including the critical work we do on national security
programs."
On April 6, Spirit AeroSystems
received notice from Boeing that all deliveries to Boeing's
Washington state and South Carolina facilities are suspended until
further notice due to Boeing's indefinite production suspension at
the sites. As a result, Spirit has halted production for Boeing
programs, subject to certain exceptions, performed at its
facilities in Wichita, Kansas, and
in Tulsa and McAlester, Oklahoma for an indefinite period
of time. Spirit Defense work as well as Airbus and other non-Boeing
work will continue at such facilities.
Focusing on the Safety of our Team
Spirit has acted proactively to support the health and safety of
employees by assembling its global crisis management team that has
focused on creating and implementing processes to mitigate the
exposure to and spread of COVID-19 in the workplace. The processes
Spirit has established adhere to the guidelines provided by the
U.S. Centers for Disease Control and Prevention (CDC) and other
government and health agency guidelines. Measures Spirit has taken
to date include:
- Restricted travel for employees
- Implemented social-distancing standards throughout
workspaces
- Initiated consistent and ongoing cleaning of high touch
areas
- Began deep cleaning and sanitization of any work spaces
potentially exposed
- Established processes aligned with CDC guidelines to work with
any exposed individual on the necessary quarantine period and the
process to return to work
Cost Reductions
In light of the 737 MAX production suspension that began on
January 1, 2020, Spirit initiated the
following actions to reduce costs:
- Implemented workforce reductions of 2,800 employees in
Wichita, Kansas and 400 employees
in Oklahoma
- Initiated a voluntary retirement program for 850 hourly and
salaried workers
- Deferred over $120 million of
capital expenditures
- Extended union contracts for employees represented by the IAM
and IBEW for three years
- Negotiated an amendment to its credit facility providing for
covenant relief into 2021 and secured a $375
million short-term delayed draw term loan facility
- Reduced its cash dividend to a penny per share
- Continued the suspension of its share repurchase program
- Negotiated a new production agreement with Boeing; extended the
MAX contract three years to 2033; received $225 million advance from Boeing; deferred
repayment of $123 million advance
from Boeing to 2022
To further reduce costs due to the economic impact of the
COVID-19 pandemic and related production suspension, Spirit has
taken the following additional actions:
- Reduced pay for all U.S.-based executives by 20 percent until
further notice. The company will address non-U.S. executive pay in
accordance with local law and statutory requirements
- Initiated a 21 calendar-day furlough of production workers and
managers supporting Boeing programs in Wichita, Kansas and Oklahoma
- Implemented a four-day work week for its salaried workforce at
its Wichita, Kansas facility until
further notice
If OEM production rates decline in the future, Spirit will
evaluate further cost reduction actions, including additional
workforce actions.
Balance Sheet and Liquidity
Spirit has taken the actions highlighted above to reduce costs
and preserve its liquidity in this unprecedented time, while also
working to maintain the health and viability of its supply chain to
support operations post-production suspension. Spirit maintains a
strong balance sheet. As of December 31,
2019, Spirit's cash balance was $2.35
billion and total debt balance was $3.03 billion. As of April
2, 2020, Spirit's cash balance was approximately
$1.83 billion and total debt balance
was approximately $3.04 billion.
Spirit's $800 million revolver
remains fully drawn. The reduction in cash in the first quarter of
2020 was in line with internal plans and included the price paid
for the FMI acquisition as well as the negative impacts of working
capital requirements and does not fully reflect the benefit of
recent actions that Spirit has taken to further reduce costs and
preserve liquidity. In addition, Spirit believes that due to its
variable cost structure, it has the ability to take further actions
to address future market developments. Based on current business
conditions, Spirit believes that it is well positioned to manage
its liquidity through this challenging and unprecedented
situation.
On the web: www.spiritaero.com
On Twitter: @SpiritAero
About Spirit AeroSystems Inc.
Spirit
AeroSystems designs and builds aerostructures for both commercial
and defense customers. With headquarters in Wichita, Kansas, Spirit operates
sites in the U.S., U.K., France and Malaysia. The company's
core products include fuselages, pylons, nacelles and wing
components for the world's premier
aircraft. Spirit AeroSystems focuses
on affordable, innovative
composite and aluminum manufacturing solutions to support customers
around the globe. More information is available
at www.SpiritAero.com.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains "forward-looking statements" that
may involve many risks and uncertainties. Forward-looking
statements generally can be identified by the use of
forward-looking terminology such as "aim," "anticipate," "believe,"
"could," "continue," "estimate," "expect," "goal," "forecast,"
"intend," "may," "might," "objective," "outlook," "plan,"
"predict," "project," "should," "target," "will," "would," and
other similar words, or phrases, or the negative thereof, unless
the context requires otherwise. These statements reflect
management's current views with respect to future events and are
subject to risks and uncertainties, both known and unknown. Our
actual results may vary materially from those anticipated in
forward-looking statements. We caution investors not to place undue
reliance on any forward-looking statements. Important factors that
could cause actual results to differ materially from those
reflected in such forward-looking statements and that should be
considered in evaluating our outlook include, without limitation,
the timing and conditions surrounding the return to service of the
737 MAX and any related impacts on our production rate; our
reliance on Boeing for a significant portion of our revenues; our
ability to execute our growth strategy, including our ability to
timely complete and integrate our announced Asco and Bombardier
acquisitions; our ability to accurately estimate and manage
performance, cost, and revenue under our contracts; demand for our
products and services and the effect of economic or geopolitical
conditions, or other events, such as the COVID-19 pandemic, in the
industries and markets in which we operate in the U.S. and
globally; the length of the Boeing production suspension affecting
its Washington and South Carolina facilities; our ability to
manage our liquidity, borrow additional funds or refinance debt;
and other factors disclosed in our filings with the Securities and
Exchange Commission. These factors are not exhaustive and it is not
possible for us to predict all factors that could cause actual
results to differ materially from those reflected in our
forward-looking statements. These factors speak only as of the date
hereof, and new factors may emerge or changes to the foregoing
factors may occur that could impact our business. Except to the
extent required by law, we undertake no obligation to, and
expressly disclaim any obligation to, publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise.
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SOURCE Spirit AeroSystems