Spirit AeroSystems Holdings (SPR) - Get Spirit AeroSystems Holdings, Inc. Class A Report, Boeing's (BA) - Get Boeing Company Report biggest supplier, plans to lay off more than 20% of the workforce at its Wichita, Kan., base, as it responds to fallout from the grounding of the 737 MAX jet.
“This is not the news I wanted to share, and I know it’s not the news you wanted to hear,” CEO Tom Gentile said in a letter to employees.
“But the continued grounding of the MAX fleet and the suspension of production has created a challenging situation for us."
Gentile said layoffs are "a necessary step given the uncertainty of when production of the MAX will resume and the expected lower production levels when it does resume. Spirit has not yet received notice from Boeing on when MAX production will restart or what production rates will be when it does.”
Spirit said plans layoff workers later this month at its plants in Tulsa and McAlester, Oklahoma, which also produce components for the MAX. Based on final production rates agreed with Boeing, Spirit said it may have to take additional workforce actions in the future.
In mid-December 2018 Spirit said it planned to expand operations in Tulsa by hiring about 250 staffers and investing more than $80 million in capital projects to support fuselage manufacturing and assembly.
Spirit has some 13,000 employees in Wichita, out of 18,000 total worldwide.
The company said on its website that it builds the fuselage, thrust reversers, engine pylons and wing components on the 737 MAX. The program accounts for more than half its more than $7 billion of annual revenue.
Spirit on Jan. 1 suspended production of fuselages and other parts for the MAX, after Boeing told the company to suspend shipments.
The 737 MAX has been grounded since March following two deadly crashes that killed a total of 346 people.
Separately, Boeing published damning internal messages that showed significant concerns for the safety of its grounded 737 MAX.
At last check Spirit AeroSystems shares were off 2.9% to $70.69.