Item
7.01 Regulation FD Disclosure.
On June 19, 2020, Spirit AeroSystems,
Inc. (“Spirit”), a wholly owned subsidiary of Spirit AeroSystems Holdings, Inc. (the “Company”) received
a letter (the “June 19 Letter”) from The Boeing Company (“Boeing”). Based on the June 19 Letter and further
communications between the parties on June 22, 2020, Boeing has directed Spirit to reduce its 2020 B737 production plan (applicable
to MAX and P-8 shipsets) from 125 to 72 shipsets, which includes 37 shipsets to be produced and delivered over the balance of
the year and 35 shipsets that have already been delivered to Boeing as of June 19, 2020. Boeing indicates in the June 19 Letter
that the reduction is due to COVID-19’s impact and accumulated inventory of Spirit’s B737 products; such inventory
was accumulated pursuant to the parties’ prior production rate agreements.
The B737 MAX grounding coupled with the COVID-19 pandemic is a challenging,
dynamic and evolving situation for Spirit. During this time, Spirit plans to work with Boeing to manage the B737 production
system and supply chain.
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. Spirit is in communication with its lenders regarding this matter, and intends
to work with them expeditiously to obtain appropriate relief from its covenants.
For
further information regarding the impact of the production plan reduction on our business,
financial condition, results of operations and cash flows, please refer to the risk
factors discussion in our Quarterly Report on Form 10-Q for the Quarterly Period Ended April 2, 2020, including the following risk
factors:
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The COVID-19 pandemic has had and is expected to continue
to have a material negative impact on our industry and business.
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The COVID-19 pandemic along with the B737 MAX grounding
presents significant challenges to our liquidity. The COVID-19 pandemic presents the potential for impairment charges and increased
bad debt expense provisions or credit losses, which could negatively impact the Company’s results for the 2020 First Quarter
or future quarterly periods. Further, our factoring arrangements may expose us to additional risks in light of the pandemic.
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Our business depends, in large part, on sales of components
for a single aircraft program, the B737 MAX. Further suspensions or reductions in our production rates for the B737 MAX as well
as our other programs, as a result of the COVID-19 pandemic may have a material adverse impact on our business, financial condition,
results of operations, and cash flows.
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Please
also refer to the risk factors discussion in our Annual Report on Form 10-K for the Year Ended December 31, 2019.
Cautionary
Statement Regarding Forward-Looking Statements
This
Current Report on Form 8-K contains “forward-looking statements” that may involve many risks and uncertainties. Forward-looking
statements generally can be identified by the use of forward-looking terminology such as “aim,” “anticipate,”
“believe,” “could,” “continue,” “estimate,” “expect,” “goal,”
“forecast,” “intend,” “may,” “might,” “objective,” “outlook,”
“plan,” “predict,” “project,” “should,” “target,” “will,”
“would,” and other similar words, or phrases, or the negative thereof, unless the context requires otherwise. These
statements reflect management’s current views with respect to future events and are subject to risks and uncertainties, both
known and unknown. Our actual results may vary materially from those anticipated in forward-looking statements. We caution investors
not to place undue reliance on any forward-looking statements. Important factors that could cause actual results to differ materially
from those reflected in such forward-looking statements and that should be considered in evaluating our outlook include, without
limitation, the timing and conditions surrounding the return to service of the B737 MAX and any related impacts on our production
rate; our reliance on Boeing for a significant portion of our revenues; our ability to execute our growth strategy, including our
ability to timely complete and integrate our announced Asco and Bombardier acquisitions; our ability to accurately estimate and
manage performance, cost, and revenue under our contracts; demand for our products and services and the effect of economic or geopolitical
conditions in the industries and markets in which we operate in the U.S. and globally; our ability to manage our liquidity, borrow
additional funds or refinance debt; the impact of the COVID-19 pandemic on our business and operations, including on the demand
for our and our customers’ products and services, on trade and transport restrictions, on the global aerospace supply chain,
on our ability to retain the skilled work force necessary for production and development and generally on our ability to effectively
manage the impacts of the COVID-19 pandemic on our business operations; and other factors disclosed in our filings with the Securities
and Exchange Commission. These factors are not exhaustive and it is not possible for us to predict all factors that could cause
actual results to differ materially from those reflected in our forward-looking statements. These factors speak only as of the
date hereof, and new factors may emerge or changes to the foregoing factors may occur that could impact our business. Except to
the extent required by law, we undertake no obligation to, and expressly disclaim any obligation to, publicly update or revise
any forward-looking statements, whether as a result of new information, future events, or otherwise.