Spirit says it may breach financial covenants after deeper 737 production cut By Reuters

Spirit says it may breach financial covenants after deeper 737


© Reuters. FILE PHOTO: A Boeing logo is seen at the company’s facility in Everett

(Reuters) – Spirit AeroSystems Holdings (N:) said on Monday it was at a risk of breaching its financial covenants, as top customer Boeing Co (N:) has asked the aero parts maker to substantially reduce 737 production this year due to the coronavirus crisis.

Spirit said is it now expects to deliver only 72 shipsets – or complete sets of parts – to Boeing, compared with 125 planned earlier.

“Given the substantial production plan reduction, Spirit could breach the financial covenants under its credit agreement in the fourth quarter of 2020 without an amendment or waiver,” the company said in a regulatory filing.

Earlier this year, Boeing had asked Spirit to produce 216 shipsets, but that was cut down to 125 in May as the coronavirus crisis spiraled, and several airlines started deferring deliveries of planes.

“Spirit is in communication with its lenders regarding this matter, and intends to work with them expeditiously to obtain appropriate relief from its covenants.”

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