Boeing supplier Spirit Aero flags $31 million hit from 737 fuselage defect

(Reuters) – Spirit AeroSystems (NYSE:) Holdings Inc said on Wednesday it expects a $31 million hit to full-year gross profit from disruptions and rework related to affected 737 MAX fuselages.

Boeing (NYSE:) last month said it had paused deliveries of some 737 MAXs due to a problem involving two fittings that join the aft fuselage made by Spirit to the vertical tail, which were not attached correctly.

“Additional costs are expected, including costs Boeing may assert to repair certain models of previously delivered units in their factory and warranty costs related to affected 737 units in service,” Spirit said.

“However, the company cannot reasonably estimate the remaining potential costs at this time,” it added.

Boeing CEO Dave Calhoun last week called the manufacturing defect “gnarly” and “difficult to find,” but noted that Spirit and Boeing quickly identified affected planes and began the rework.

Boeing said it was advancing cash and contributing “manufacturing and engineering resources” to Spirit after the company discovered the 737 bracket issue.

Nevertheless, the hit to profit piles more pressure on Spirit, which has been struggling to stabilize cash flows and make parts on time for widebody plane programs due to industry-wide parts and supply shortages.