Reuters
Fri, June 23, 2023
Airplane fuselages bound for Boeing's 737 Max production facility sit in storage behind Spirit AeroSystems Holdings Inc headquarters, in Wichita
(Reuters) - Spirit AeroSystems Inc said it will meet with the U.S. machinists union on Saturday to continue negotiations for a new contract, after workers rejected a proposed four-year deal and announced a strike.
Shares of Spirit were up 4.8% in afternoon trade on Friday.
The company, a crucial supplier for aerospace heavyweights Boeing and Airbus, expects its Wichita production operations to remain suspended until an agreement is reached with the International Association of Machinists and Aerospace Workers.
The union did not immediately respond to a Reuters request for comment.
The Wichita site makes the entire fuselage for Boeing's bestselling 737 MAX narrowbody jet and the forward sections for most of its other aircraft, as well as pylons for the Airbus A220.
A prolonged work stoppage at Spirit could impact the aircraft makers it supplies, eventually forcing them to slow or stop jetliner assembly at a time when both Airbus and Boeing are trying to ramp up production.
(Reporting by Aishwarya Nair in Bengaluru; Editing by Devika Syamnath)
Spirit Aerosystems, major airlines supplier, suspends plant operations after labor contract rejected
Spirit AeroSystems in Wichita, Ks. The major supplier to the world’s biggest aircraft manufacturers is suspending operations at a critical plant in Kansas after union workers rejected a tentative contract, sending shares of Boeing and Airbus lower Thursday, June 22, 2023.
PARIS (Reuters) -Spirit AeroSystems will suspend factory production on Thursday at its plant in Wichita, Kansas, the company said, after workers rejected a proposed four-year deal and announced a strike to begin on June 24.
Spirit is one of the most consequential suppliers for aerospace heavyweights Boeing and Airbus. The Wichita site makes the entire fuselage for Boeing's bestselling 737 MAX narrowbody jet and the forward sections for most of its other aircraft, as well as pylons for the Airbus A220.
Shares of Spirit tumbled about 9% in afternoon trade, while those of Boeing fell 2.4%. Paris-listed shares of Airbus shed 1.7%.
A prolonged work stoppage at Spirit could have ripple effects for the aircraft makers it supplies, eventually forcing them to slow or stop jetliner assembly at a time when both Airbus and Boeing are ramping up production.
"It's not a welcome development," said Richard Aboulafia, an aerospace analyst with AeroDynamic Advisories.
"I think the general feeling is that (Spirit) had it under control with what appeared to be a reasonable agreement," he said. But after more than a decade of cost pressure on the aerospace industry, "labor feels like they have some power."
Spirit will suspend factory production prior to the expiration of its contract with the International Association of Machinists and Aerospace Workers (IAM) on June 24, but will continue to pay employees, it said.
"Despite this setback, we are not distracted from the task at hand. We look forward to continued meetings with IAM leadership," Spirit said.
Although IAM and Spirit reached a tentative contract agreement last week, 79% of workers voted to reject the contract and 85% voted to strike, the union said on Thursday.
IAM added it would regroup and begin planning "the following steps to bring the company back to the table."
About 55% of Spirit's U.S. workers were covered by the agreement, which will expire this month. Spirit had 12,735 workers in its six U.S. facilities, of which 11,000 were located in Wichita.
Boeing said it continued to monitor the situation and support Spirit.
Stan Deal, the head of Boeing Commercial Airplanes business, encouraged employees to "stay focused on our task at hand, which is to continue to build and deliver the finest airplanes in the world," in an internal email seen by Reuters.
The planemaker has been working to boost output of its 737 MAX jets to 38 per month from the current level of 31, and 787 jets to five per month from the present level of four this year.
"(The upcoming strike) threatens Boeing’s pace of production on these programs," J.P.Morgan analyst Seth Seifman said in a note.
Boeing has more than 100 MAX planes in its inventory, so it could shift workers from production to modifying inventory jets to keep deliveries flowing in the event of a stop at its production facility in Renton, Washington.
Airbus, while not commenting on the work stoppage itself, said it conducted regular assessments with suppliers to mitigate potential risks to production.
The strike is yet another setback for Spirit, which has been grappling with a recent quality issue on 737 fuselages and is experiencing cash flow pressures.
In May, Boeing CEO Dave Calhoun said it would be difficult to make contingency plans for a strike at Spirit.
"Even if they tried to get ahead of it by virtue of their current production, that will be measured in weeks not in months, so we're supporting them in every way possible to get to a constructive answer," he said.
(Reporting by Valerie Insinna, Abinaya Vijayaraghavan, Shivansh Tiwary and Abhijith Ganapavaram; Editing by Jason Neely, Mark Potter and Pooja Desai)
Spirit AeroSystems in Wichita, Ks. The major supplier to the world’s biggest aircraft manufacturers is suspending operations at a critical plant in Kansas after union workers rejected a tentative contract, sending shares of Boeing and Airbus lower Thursday, June 22, 2023.
(Mike Hutmacher/The Wichita Eagle via AP, File)
MICHELLE CHAPMAN
Thu, June 22, 2023
Spirit Aerosystems, a major supplier to the world's largest aircraft manufacturers, is suspending operations at a critical Kansas plant after union workers there rejected a proposed four-year contract and authorized a strike.
Approximately 6,000 members of the IAM District 70, Local 839 voted to reject Spirit Aerosystems' best and last offer after 13 years without a fully negotiated agreement, the International Association of Machinists and Aerospace Workers said in a prepared statement.
Shares of Boeing Co. and Airbus slid about 2%, and shares of Spirit Aerosystems Holdings Inc. tumbled 10% at the opening bell.
The tentative deal that was rejected had included up to a compounded 34% average pay bump through general wages increases, cost-of-living adjustments, and a guaranteed annual bonus; a 14.7% increase in retirement benefits; increased paid time off; job security enhancements and made Sunday overtime voluntary.
A strike is scheduled to start on Saturday.
“Most of our members have concluded that the company’s offer is unacceptable,” the union said in a prepared statement. "IAM District 70 and Local 839 will regroup and begin planning the following steps to bring the company back to the table.”
The IAM is an industrial trade union that representing about 600,000 active and retired members in the aerospace, defense, airlines, railroad, transit, healthcare, automotive, and other industries.
Operations at the factory will be suspended starting Thursday, Spirit said. The company said union employees should not show up for work, but would be paid for their regularly scheduled hours. All scheduled overtime was canceled. Employees not represented by the IAM were instructed to show up for work as normal.
“We are disappointed that our employees represented by the IAM rejected our four-year contract offer and voted to strike. We believe that our fair and competitive offer recognizes the contributions of our employees and ensures we can successfully meet increasing demand for aircraft from our customers,” the Wichita, Kansas, company said in a prepared statement.
Aircraft manufacturers have wrestled with supply issues in recent years and a strike at Spirit Aerosystems at the Wichita plant could add to those headaches.
Spirit builds the fuselage for Boeing's 737 MAX narrowbody jet and substantial sections of aircraft bodies in other of its models. It builds components for Airbus aircraft as well
Spirit AeroSystems to halt work at Wichita plant as union votes to strike
Valerie Insinna, Abinaya V and Shivansh Tiwary
Wed, June 21, 2023
The headquarters of Spirit AeroSystems Holdings Inc, is seen in Wichita
MICHELLE CHAPMAN
Thu, June 22, 2023
Spirit Aerosystems, a major supplier to the world's largest aircraft manufacturers, is suspending operations at a critical Kansas plant after union workers there rejected a proposed four-year contract and authorized a strike.
Approximately 6,000 members of the IAM District 70, Local 839 voted to reject Spirit Aerosystems' best and last offer after 13 years without a fully negotiated agreement, the International Association of Machinists and Aerospace Workers said in a prepared statement.
Shares of Boeing Co. and Airbus slid about 2%, and shares of Spirit Aerosystems Holdings Inc. tumbled 10% at the opening bell.
The tentative deal that was rejected had included up to a compounded 34% average pay bump through general wages increases, cost-of-living adjustments, and a guaranteed annual bonus; a 14.7% increase in retirement benefits; increased paid time off; job security enhancements and made Sunday overtime voluntary.
A strike is scheduled to start on Saturday.
“Most of our members have concluded that the company’s offer is unacceptable,” the union said in a prepared statement. "IAM District 70 and Local 839 will regroup and begin planning the following steps to bring the company back to the table.”
The IAM is an industrial trade union that representing about 600,000 active and retired members in the aerospace, defense, airlines, railroad, transit, healthcare, automotive, and other industries.
Operations at the factory will be suspended starting Thursday, Spirit said. The company said union employees should not show up for work, but would be paid for their regularly scheduled hours. All scheduled overtime was canceled. Employees not represented by the IAM were instructed to show up for work as normal.
“We are disappointed that our employees represented by the IAM rejected our four-year contract offer and voted to strike. We believe that our fair and competitive offer recognizes the contributions of our employees and ensures we can successfully meet increasing demand for aircraft from our customers,” the Wichita, Kansas, company said in a prepared statement.
Aircraft manufacturers have wrestled with supply issues in recent years and a strike at Spirit Aerosystems at the Wichita plant could add to those headaches.
Spirit builds the fuselage for Boeing's 737 MAX narrowbody jet and substantial sections of aircraft bodies in other of its models. It builds components for Airbus aircraft as well
Spirit AeroSystems to halt work at Wichita plant as union votes to strike
Valerie Insinna, Abinaya V and Shivansh Tiwary
Wed, June 21, 2023
The headquarters of Spirit AeroSystems Holdings Inc, is seen in Wichita
PARIS (Reuters) -Spirit AeroSystems will suspend factory production on Thursday at its plant in Wichita, Kansas, the company said, after workers rejected a proposed four-year deal and announced a strike to begin on June 24.
Spirit is one of the most consequential suppliers for aerospace heavyweights Boeing and Airbus. The Wichita site makes the entire fuselage for Boeing's bestselling 737 MAX narrowbody jet and the forward sections for most of its other aircraft, as well as pylons for the Airbus A220.
Shares of Spirit tumbled about 9% in afternoon trade, while those of Boeing fell 2.4%. Paris-listed shares of Airbus shed 1.7%.
A prolonged work stoppage at Spirit could have ripple effects for the aircraft makers it supplies, eventually forcing them to slow or stop jetliner assembly at a time when both Airbus and Boeing are ramping up production.
"It's not a welcome development," said Richard Aboulafia, an aerospace analyst with AeroDynamic Advisories.
"I think the general feeling is that (Spirit) had it under control with what appeared to be a reasonable agreement," he said. But after more than a decade of cost pressure on the aerospace industry, "labor feels like they have some power."
Spirit will suspend factory production prior to the expiration of its contract with the International Association of Machinists and Aerospace Workers (IAM) on June 24, but will continue to pay employees, it said.
"Despite this setback, we are not distracted from the task at hand. We look forward to continued meetings with IAM leadership," Spirit said.
Although IAM and Spirit reached a tentative contract agreement last week, 79% of workers voted to reject the contract and 85% voted to strike, the union said on Thursday.
IAM added it would regroup and begin planning "the following steps to bring the company back to the table."
About 55% of Spirit's U.S. workers were covered by the agreement, which will expire this month. Spirit had 12,735 workers in its six U.S. facilities, of which 11,000 were located in Wichita.
Boeing said it continued to monitor the situation and support Spirit.
Stan Deal, the head of Boeing Commercial Airplanes business, encouraged employees to "stay focused on our task at hand, which is to continue to build and deliver the finest airplanes in the world," in an internal email seen by Reuters.
The planemaker has been working to boost output of its 737 MAX jets to 38 per month from the current level of 31, and 787 jets to five per month from the present level of four this year.
"(The upcoming strike) threatens Boeing’s pace of production on these programs," J.P.Morgan analyst Seth Seifman said in a note.
Boeing has more than 100 MAX planes in its inventory, so it could shift workers from production to modifying inventory jets to keep deliveries flowing in the event of a stop at its production facility in Renton, Washington.
Airbus, while not commenting on the work stoppage itself, said it conducted regular assessments with suppliers to mitigate potential risks to production.
The strike is yet another setback for Spirit, which has been grappling with a recent quality issue on 737 fuselages and is experiencing cash flow pressures.
In May, Boeing CEO Dave Calhoun said it would be difficult to make contingency plans for a strike at Spirit.
"Even if they tried to get ahead of it by virtue of their current production, that will be measured in weeks not in months, so we're supporting them in every way possible to get to a constructive answer," he said.
(Reporting by Valerie Insinna, Abinaya Vijayaraghavan, Shivansh Tiwary and Abhijith Ganapavaram; Editing by Jason Neely, Mark Potter and Pooja Desai)
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