Spirit posts bigger-than-expected loss as virus hits aero parts demand

(Reuters) – Spirit AeroSystems (SPR.N) made less than a third as much revenue as a year earlier and reported a bigger-than-expected quarterly loss on Tuesday, as its top customers Boeing and Airbus slashed production due to a collapse in global travel.

Coronavirus-led lockdowns have brought airports to a virtual halt and left the world’s big carriers reeling, spurring the cancellations of hundreds of orders for new Boeing and Airbus jets.

Boeing Co (BA.N), which accounts for nearly 80% of Spirit’s revenue, said last month it would cut 787 Dreamliner output to six units a month in 2021 – down from a previous estimate of seven – the fourth such cut since last year when output touched a record 14 units a month.

Last week, Airbus SE (AIR.PA) also cut production of its wide-body A350 plane to five jets a month, after dropping it to six from 9.5 in April.

Spirit, which makes parts for both the 787 and A350, warned of a bigger hit to its earnings in the current quarter as the impact of the fresh cuts announced by Boeing and Airbus in July were not included in second-quarter results.

“Spirit production levels in the quarter fell 65% from last year and 51% from the first quarter,” Chief Executive Officer Tom Gentile said in a statement.

“We continue to adjust our cost base to align with the lower levels of production and to preserve liquidity.”

Spirit, among the air industry’s biggest parts suppliers, posted a net loss of about $256 million, or $2.46 per share, in the second quarter ended July 2, compared with a profit of $168 million, or $1.61 per share, a year earlier.

Revenue plunged 68% to $644.6 million.

Analysts on average had expected Spirit to post a loss of $1.33 per share on revenue of $863.2 million, according to IBES data from Refinitiv.