Another Round Of Layoffs At Spirit AeroSystems

Jul 31, 2020

Spirit AeroSystems announced another round of layoffs on Friday as the Wichita aerospace company continues to get battered by the grounding of the 737 Max and the pandemic.

Spirit said in a news release it will cut another 1,100 jobs from its commercial programs. That represents 450 new layoffs in Wichita when taking into account previous reductions and employees moving to other programs, such as defense. Some employees also previously agreed to take voluntary layoffs.

The 737 Max program typically accounts for half of Spirit’s annual revenue. But the production rate on the plane has dropped 80% at Spirit after it was grounded in 2019 following two fatal accidents.

Spirit makes 70% of the plane, including the fuselage. In 2019, it shipped 52 units – called shipsets – per month to Boeing. Boeing has requested 72 shipsets for all of 2020.

"Our production rates for commercial aircraft have fallen from historic highs to significantly lower volumes in a matter of months," Tom Gentile, Spirit’s president and CEO, said in a statement. "We are taking this action to better calibrate our employment level to the reduced demand we see from our customers.”

Gentile said the latest round of reductions is intended to reduce costs and keep Spirit financially healthy while the commercial aviation market recovers.

In addition to problems with the 737 Max, the pandemic has reduced the demand for new commercial aircraft globally. Air travel remains at historic lows across the world.

Spirit has been beset by layoffs, furloughs and pay cuts since the first of year, shortly after Boeing halted production of the 737 Max. Spirit has laid off more than 4,000 employees since January, about a third of its workforce.

Another 850 employees took early retirement, and its top executives took a 20% pay cut.

Spirit’s woes also filter out to the smaller aviation supply firms in the Wichita area that do business with the company.

Spirit's stock price  has dropped nearly 75%  since the beginning of the year. It will announce its second-quarter earnings on Tuesday. Boeing reported a second-quarter loss of $2.4 billion this week.

"Although this extraordinary time has required us to make difficult decisions, we remain focused on fulfilling requirements to our customers, including the important work we provide for defense and space programs," Gentile said in a statement. "I continue to remain confident in the future of the aviation industry, and in our ability to navigate through these challenges to emerge a stronger company."