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Spirit AeroSystems Faces Challenges Including Political Conflicts and Increased Costs
Spirit AeroSystems Holdings (NYSE: NYSE:SPR) foresees a growing net loss in 2023 due to several challenges including the conflict between Russia and Ukraine, a decrease in orders, rising labor costs and supply chain disruptions. Furthermore, an additional annual decrease in its share value is anticipated. Nevertheless, an agreement with Boeing (NYSE:BA) has provided a glimmer of hope for the company's future.
Spirit Announces Agreement With Boeing
On Monday, Spirit AeroSystems announced a new agreement with Boeing involving an instant payment of $100 million to accelerate the production of 737 and 787 aircraft. The agreement is projected to rake in an additional revenue of $455 million for Spirit by 2025. Despite this boost, the company predicts a dip in revenue of $265 million from 2026 to 2033.
Spirit's Stock Value Rises After Boeing Deal
Consequent to the announcement of this deal, Spirit's shares jumped up by 23%, bringing the stock value to $21.16.
Strategies for Financial Recovery
Financial recovery for Spirit AeroSystems include enhancing its operations and relationships with both Boeing and Airbus. It needs to maneuver through sustaining revenue growth and cutting down costs while simultaneously decreasing its outstanding debt balance of $3.9 billion.
Interim President & CEO Prepares for First Earnings Call
Patrick Shanahan, the recently appointed Interim President & CEO of Spirit AeroSystems, is set to host his inaugural earnings call on November 1st. Predictions made by analysts include a revenue increase of 17% year-over-year and a net loss per share reaching $1.35.
Mixed Reactions From the Financial Industry
The Spirit-Boeing agreement has sparked mixed responses within the financial sector. TD Cowen highlighted that long-term execution risks could eclipse short-term benefits while Deutsche Bank elevated Spirit to a buy status with a price target of $30.00. Meanwhile, J.P. Morgan displayed positivity citing the CEO changeover and anticipated growth prospects for the future.
