BA Boeing Co

By Doug Cameron and Mary de Wet 

The biggest supplier on the Boeing Co. 737 MAX program said Thursday it had reached a new production deal for the plane but also revealed an internal accounting probe that led to the ouster of its chief financial officer.

Spirit AeroSystems Holdings Inc. also pushed back the planned closing of a big acquisition as it announced that CFO Jose Garcia had resigned with immediate effect, replaced by Mark Suchinski. It said its chief accounting officer was also departing.

The company said a continuing probe hadn't so far uncovered anything that would have a material financial impact. Its shares fell more than 6% in pre-open trade.

The executives weren't immediately available for comment via Spirit.

The Wichita, Kan., company was already under pressure after Boeing first cut and then suspended production of the MAX following two fatal crashes. Spirit makes the fuselages and large engine and wing parts, with the grounded MAX accounting for half of sales and profits. It still plans to lay off 2,800 staff, a third of the workforce devoted to the MAX.

Spirit had continued to produce fuselages at a rate of 52 a month even as Boeing slowed assembly of the plane to 42, before halting output earlier this month.

The new deal will see Spirit resume limited production this year and deliver parts for 216 jets. The rate would be increased, though Spirit doesn't expect to reach the previous monthly volume of 52 until late 2022.

Negotiations are ongoing and hinge on Boeing's ability to restart production.

Boeing said this week that it plans to begin "low rate" MAX production around two months ahead of securing regulatory approval for the plane to re-enter commercial service. It has guiding for that to happen by midyear, though said it is up to regulators to determine the final timing, and its own plans could change if that timetable changes.

The new Spirit pact provides the clearest guide to date of how Boeing plans to expand output. The company last year shelved plans to raise monthly output to 57 as it worked through a backlog of 4,500 MAX jets, and the agreement with Spirit implies that won't happen before 2023.

Spirit also said Thursday that it had pushed back the planned purchase of Asco, part of its effort to diversify away from Boeing into more work for Airbus SE and military aircraft. The company said it is still committed to the deal.

The Boeing pact came as Spirit said Mr. Garcia stepped down after the airplane-part manufacturer found in a review that it didn't comply with established accounting processes related to certain potential contingent liabilities received after the end of third quarter 2019.

The review, which is ongoing, was prompted by information the company received in December 2019 through its compliance processes.

Spirit said it doesn't believe the noncompliance would result in a restatement of its third-quarter financial statements nor materially impact its year-end financial statements, but no final conclusions have been made.

John Gilson, vice president, controller and principal accounting officer, has also resigned. Damon Ward has been named interim controller and principal accounting officer.

Mr. Suchinski served as Spirit's controller and principal accounting officer from 2014 to 2018.

Spirit said it is taking steps to strengthen procedures relating to contingent liabilities of this type to ensure they are processed correctly in the future.

(END) Dow Jones Newswires

January 30, 2020 09:21 ET (14:21 GMT)

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