Spirit AeroSystems, a long-time key supplier to US aerospace manufacturer Boeing, is currently facing serious financial problems. The company warned this week that there are "substantial doubts" about its ability to continue operations.

The situation comes after a month-long strike by US Boeing $BAworkers , which has severely affected production and worsened Spirit Aero $SPR's already weakened financial position . This development threatens both Spirit Aero's stability and the production plans of Boeing, which is seeking to resume production of its popular aircraft such as the 737 MAX.

Spirit AeroSystems, headquartered in Wichita, Kansas, is one of Boeing's main suppliers and primarily produces fuselages for the 737 MAX, one of Boeing's best-selling models. However, in November 2024, Spirit Aero announced that its financial situation was deteriorating, raising questions about its ability to continue as a going concern. At the end of the third quarter of 2024, Spirit Aero had only $218 million in cash reserves, a relatively low amount for a company of its size and strategic importance.

Impact of the strike on Spirit Aero's financial stability

The recent strike by U.S. Boeing employees, which lasted several weeks and only ended on Monday, has significantly impacted both Boeing's production capacity and suppliers like Spirit AeroSystems. The production outage meant Spirit Aero lost revenue from key supplies, worsening its cash position and exacerbating its already existing funding problems. The consequence was that Spirit Aero had to draw down the entire $350 million bridge loan that was provided as part of the deal when Boeing agreed to acquire Spirit Aero in June.

The future of Spirit Aero and Boeing

Spirit Aero said the drawdown of the bridge loan was necessary to maintain core operations. Although Boeing has been trying to increase production of aircraft such as the 737 MAX, Spirit Aero's financial distress may jeopardize its ability to deliver key components in sufficient quantity and quality, which could complicate Boeing's recovery from the strike. If Spirit Aero is unable to improve its financial situation or raise additional capital, it could create long-term problems not only for the company, but also for Boeing itself and other aerospace suppliers.

Disclaimer: You will find a lot of inspiration on Bulios, but stock selection and portfolio construction is up to you, so always do a thorough analysis of your own.

Source.