© Reuters. FILE PHOTO: Airplane fuselages bound for Boeing’s 737 Max production facility sit in storage behind Spirit AeroSystems Holdings Inc headquarters, in Wichita, Kansas, U.S. December 17, 2019. REUTERS/Nick Oxford
By Abhijith Ganapavaram
(Reuters) -Spirit AeroSystems Holdings Inc said on Tuesday the process of retrofitting stored fuselages for Boeing (NYSE:) Co’s 787 jets was taking longer than expected as the process requires more labor than usual.
The U.S. Federal Aviation Administration last year cleared the way for 787 deliveries to resume after approving Boeing’s inspection and retrofit plan needed to meet certification standards in July.
Spirit said it found more labor per 787 unit was needed after completing a few units “with the new process”.
“With this new fit and finish, the set of requirements in the build process, is resulting in some more hours, which is creating some further drag in terms of the overall 787 program,” Spirit CEO Thomas Gentile said during an investor call.
“We now believe we have incorporated what is needed for the 787 fit-and-finish requirements in the new-build process and rework,” Gentile added.
Spirit has targeted producing 787 shipsets between 40 and 45 this year. A shipset refers to sets of structural fuselage components produced or delivered for one aircraft.
The aerospace industry is struggling with labor and parts shortages, which has capped jet production at planemakers Boeing and Airbus SE (OTC:).
High levels of attrition were seen even in new hires, Spirit executives said.
Shares of the company rose 7.4% in mid-day trade as the company outlined a goal of producing 420 shipsets this year for the lucrative 737 program, higher that what it produced in 2022.
However, it reported a higher-than-expected cash burn for the fourth quarter.
Suppliers such as Spirit have been left holding on to more parts due to a fractured supply chain, hurting cash flow and crimping their recovery from the COVID-19 pandemic.
Spirit reported a quarterly cash burn of $66 million, compared with analysts’ estimates of $42.64 million, according to Refinitiv data.