Spirit AeroSystems Names New CFO After Compliance Review--Update
31 January 2020 - 1:36AM
Dow Jones News
By Doug Cameron and Mary de Wet
The biggest supplier on the Boeing Co. 737 MAX program said
Thursday it had reached a new production deal for the plane but
also revealed an internal accounting probe that led to the ouster
of its chief financial officer.
Spirit AeroSystems Holdings Inc. also pushed back the planned
closing of a big acquisition as it announced that CFO Jose Garcia
had resigned with immediate effect, replaced by Mark Suchinski. It
said its chief accounting officer was also departing.
The company said a continuing probe hadn't so far uncovered
anything that would have a material financial impact. Its shares
fell more than 6% in pre-open trade.
The executives weren't immediately available for comment via
Spirit.
The Wichita, Kan., company was already under pressure after
Boeing first cut and then suspended production of the MAX following
two fatal crashes. Spirit makes the fuselages and large engine and
wing parts, with the grounded MAX accounting for half of sales and
profits. It still plans to lay off 2,800 staff, a third of the
workforce devoted to the MAX.
Spirit had continued to produce fuselages at a rate of 52 a
month even as Boeing slowed assembly of the plane to 42, before
halting output earlier this month.
The new deal will see Spirit resume limited production this year
and deliver parts for 216 jets. The rate would be increased, though
Spirit doesn't expect to reach the previous monthly volume of 52
until late 2022.
Negotiations are ongoing and hinge on Boeing's ability to
restart production.
Boeing said this week that it plans to begin "low rate" MAX
production around two months ahead of securing regulatory approval
for the plane to re-enter commercial service. It has guiding for
that to happen by midyear, though said it is up to regulators to
determine the final timing, and its own plans could change if that
timetable changes.
The new Spirit pact provides the clearest guide to date of how
Boeing plans to expand output. The company last year shelved plans
to raise monthly output to 57 as it worked through a backlog of
4,500 MAX jets, and the agreement with Spirit implies that won't
happen before 2023.
Spirit also said Thursday that it had pushed back the planned
purchase of Asco, part of its effort to diversify away from Boeing
into more work for Airbus SE and military aircraft. The company
said it is still committed to the deal.
The Boeing pact came as Spirit said Mr. Garcia stepped down
after the airplane-part manufacturer found in a review that it
didn't comply with established accounting processes related to
certain potential contingent liabilities received after the end of
third quarter 2019.
The review, which is ongoing, was prompted by information the
company received in December 2019 through its compliance
processes.
Spirit said it doesn't believe the noncompliance would result in
a restatement of its third-quarter financial statements nor
materially impact its year-end financial statements, but no final
conclusions have been made.
John Gilson, vice president, controller and principal accounting
officer, has also resigned. Damon Ward has been named interim
controller and principal accounting officer.
Mr. Suchinski served as Spirit's controller and principal
accounting officer from 2014 to 2018.
Spirit said it is taking steps to strengthen procedures relating
to contingent liabilities of this type to ensure they are processed
correctly in the future.
(END) Dow Jones Newswires
January 30, 2020 09:21 ET (14:21 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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