Spirit Aerosystems Falls After Boeing Asks It to Stop Delivering Parts for MAX Jet

Spirit Aerosystems, a top supplier to Boeing, announces that Boeing told it to stop delivering parts for 737 MAX jets as of Jan. 1.
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Shares of Spirit Aerosystems  (SPR) - Get Report fell Friday after the company announced that Boeing  (BA) - Get Report told it to stop delivering parts for 737 MAX jets as of Jan. 1.

Wichita, Kan.-based Spirit, which is Boeing’s top supplier, according to Reuters, makes fuselages, pylons and wing components among other products.

Chicago-based Boeing decided this week to suspend 737 MAX production as it struggles to fix the problems that resulted in two crashes of MAX aircraft within the last 18 months.

“Because revenue from 737 aircraft components represents more than 50% of Spirit's annual revenue, this suspension will have an adverse impact on Spirit's business, financial condition, results of operations, and cash flows,” Spirit said in a statement.

The company said it will provide more financial information related to the suspension in its fourth-quarter earnings release, expected Jan. 30.

This is Boeing’s first announcement of a cutoff of a major supplier for the 737 MAX, and it may not be the last. The Federal Aviation Administration isn’t expected to grant approval for the troubled plane to fly again for several months.

The plane has been grounded for nine months. Southwest Airlines  (LUV) - Get Report, the biggest user of the MAX jet, has suspended its planned use until April 13.

Boeing has more than 600 suppliers. That includes General Electric  (GE) - Get Report, which provides the engines for the MAX. GE will take an earnings hit from Boeing’s suspension of production.

As for Spirit Aerosystems, the shares fell 1.61% to $74.11 in trading Friday. The stock has gained 3.8% over the past year. 

(The writer owns shares in General Electric).

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