Spirit AeroSystems, a crucial supplier to aircraft manufacturers Boeing and Airbus, filed its year-end 2023 earnings report this week. The report offers some fascinating disclosures that can help analysts understand how Spirit’s performance might be affected by the struggles Boeing is having these days with its 737 jets.
As you probably already know, Boeing ($BA) suffered yet another safety and publicity mishap on Jan. 5, when a door on one of its 737 Max jets blew off the fuselage mid-flight. That fuselage was manufactured by Spirit AeroSystems ($SPR).
Investigators believe the door that flew off this specific flight — an Alaska Airlines ($ALK) flight from Oregon to California — was first delivered intact to Boeing, where technicians then removed it from the fuselage and perhaps re-attached it improperly; so perhaps this specific failure can’t be attributed to Spirit. On the other hand, Spirit shareholders filed a lawsuit against the company in 2023 alleging “widespread quality failures.”
How will all this get resolved by air safety regulators? Calcbench doesn’t know. But we did take a close look at Spirit’s earnings release, which paints a rather detailed picture of the financial ties between Boeing and Spirit.
For example, Figure 1, below, shows the pace of Spirit’s “shipset deliveries” (that is, the number of aircraft) grouped by type of aircraft.
If you do the math, Airbus accounts for 51 percent of Spirit’s aircraft deliveries in all of 2023 — but Boeing started to close the gap by Q4 2023, when it accounted for 33.4 percent of all Spirit deliveries versus 49 percent for Airbus.
Even better is that Spirit reports the number of deliveries per type of aircraft, including the 737. Using our “Show Tag History” feature, we then looked at the number of 737 deliveries per quarter for the last four years. See Figure 2, below.
Boeing had made the 737 Max a linchpin of growth plans in the 2010s, until it suffered two crashes in 2018 that cost more than 300 lives. Sales of the Max had just begun to recover from that disaster when this new incident with the door struck. So what will Q1 2024 deliveries look like? Only time will tell, but Calcbench does let you track disclosures at that level of detail!
Spirit also reports revenue and earnings for several operating segments. One of them is a Commercial segment, which includes the Boeing 737 and other aircraft types mentioned in Figure 1, above. Those revenues arrived at $1.52 billion in Q4 2023.
We again used our Show Tag History feature to chart Spirit’s commercial revenues for the last four years. See Figure 3, below. (Note the swift plunge in Q2 2020 when the pandemic struck.)
What we don’t know from these disclosures is how much Spirit’s commercial revenues depend on Boeing deliveries, and deliveries of the 737 specifically. Yes, Boeing accounts for roughly one-third of aircraft deliveries lately; but one-third of deliveries doesn’t necessarily mean one-third of all revenue. For example, it might well be the case that Airbus aircraft are more expensive, and account for an outsized share of that $1.52 billion.
We do know that Spirit AeroSystems is likely to go under the investor microscope in weeks and quarters to come, as the full extent of the Boeing crisis becomes clear. Analysts following Spirit can use Calcbench to dive into the various non-GAAP disclosures and other performance metrics Spirit makes, so you can model the potential disruption now rather than be caught by surprise later.