Spirit AeroSystems Holdings Inc shares surged 25% to $21.46 in late-morning trading on Wednesday after the manufacturer of large aircraft structures announced a tentative agreement with Boeing that would involve Spirit receiving a cash advance and include some price increases for the production of the 787 aircraft.
The deal is aimed at enabling production increases and enhancing quality and predictability in Spirit AeroSystems’ operations, which would strengthen the strategic relationship between Spirit and Boeing for the long term to fulfill operational commitments and airline expectations, according to the company.
As a result, Spirit is expected to record $455 million in extra sales between 2023 and 2025, although its revenue from 2026 to 2033 is projected to decline by $265 million, Reuters reported.
The media outlet noted that Spirit has struggled with cash flow problems over the past few quarters and quality issues surrounding the fuselages it makes for Boeing's 737 narrowbody jets.
In September, former Spirit CEO Tom Gentile stated that the company's contracts with Boeing and Airbus were "not sustainable" due to inflationary pressures that contributed to $215 million in losses over the first half of 2023.
Boeing has also agreed to provide an extra $100 million in the next 10 days for tooling needed for future 787 and 737 production rate increases.
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