Spirit AeroSystems reported a profitable third quarter 2017 on Wednesday with slightly higher sales — despite a 42 percent decrease in deliveries of Boeing 777 shipsets.
On a conference call with analysts to discuss the company’s quarterly financial results, Spirit CEO Tom Gentile and chief financial officer Sanjay Kapoor also praised reaching a new pricing agreement with Boeing in the quarter that ended Sept. 30.
“This will allow for growth and stability into the future,” Kapoor said on the hourlong call Wednesday morning about the agreement with its largest customer.
Here are five takeaways from the Wichita-based aircraft supplier’s call with analysts and quarterly financial performance.
▪ Even with the decline in 777 shipsets, overall shipset deliveries to aircraft manufacturers increased by 20 due largely to increases for the Airbus A320 Family, A330 and A350, and the Boeing 737 and 787 Dreamliner. Spirit delivered 404 shipsets compared with 384 in the third quarter of 2016. A shipset is all the parts Spirit manufactures for one airplane. The decline in 777 shipset deliveries is tied to Boeing’s decreasing production rate on the 777 as it transitions to manufacturing the next-generation 777X, which began earlier this month.
▪ Spirit has established a new program office that will focus on developing new technologies for the next generation of commercial aircraft.
▪ Gentile said the company is “actively evaluating multiple potential” merger and acquisition deals, but added that such deals have to meet a specific set of criteria, including whether an acquisition candidate has contracts with Airbus or defense contractors that would add to Spirit’s current work.
▪ Spirit saw a decrease in its aftermarket parts business in the quarter. When asked by analysts about the decline, Gentile said it’s because of Boeing’s move last year to bring that business in-house. Previously, Spirit sold spare aircraft parts directly to airlines. But Boeing early last year opted to cancel its agreement allowing Spirit to sell parts to end users of its aircraft. Now, Spirit manufactures the parts and delivers them directly to Boeing, which sells them to airlines.
▪ Spirit’s revenue was $1.75 billion in the three-month quarter, up from $1.71 billion in the same quarter last year. Net income was $147 million compared with $145 million in the third quarter of 2016.