* Analyst cites more potential bad news from conference call
* Charges tied mainly to 787 weigh on results
* Oklahoma assets could be sold or kept
(Adds Airbus, analyst reaction)
Feb 6 Spirit AeroSystems Holdings Inc, a
major supplier of aircraft components to Boeing Co and
Airbus, reported a surprise loss for the fourth quarter
on charges tied mainly to the Boeing 787 Dreamliner
program, sending its shares down about 22 percent.
The Wichita, Kansas, maker of fuselage and wing systems also
forecast 2014 earnings below analyst estimates.
The unexpected loss on Thursday follows a series of stumbles
by Spirit in recent years, caused by cost overruns and
underpricing of contracts that have hurt its profitability.
During its earnings conference call, the company tried to
reassure analysts that it was taking steps to stem the tide of
big charges. Spirit AeroSystems has cut jobs and put certain
assets up for sale since former Lockheed Martin executive Larry
Lawson was named chief executive last year.
"We're trying to make smart decisions as it relates to going
forward in terms of the type of work we get involved in and then
our ability to estimate that work and make sure that the jobs we
take on align with our core competencies," Lawson said during
Still, RBC Capital Markets analyst Steven Cahall said
Spirit's comments on the call that it had lowered pricing in
Boeing contracts did not bode well.
"The 787 program is already zero margin so if SPR can't hit
its 787 cost targets in time then there are further charges
ahead," Cahall said in a note to clients.
Other analysts said they had concerns about the charges for
the Airbus A350 program that were not addressed on the call.
Spirit makes pieces for the fuselages and wings of the new
plane, due to enter service this year.
Airbus, however, said it sees no problems with the ability
of the company to supply the components.
"We are very comfortable," said Daniel Wenninger, senior
director of the A350 program in the U.S. He said he doesn't
expect problems with deliveries or with Spirit's ability to meet
Airbus' schedule to meet A350 production targets.
Wenninger said Airbus was not considering alternative
suppliers or taking the work in house.
Cahill also noted from Spirit's comments on the call that
while the company was trying to sell the Oklahoma operations it
put up for sale six months ago, Spirit could also keep the
assets. The Oklahoma operations, which also produce wing
components for Gulfstream business jets, have been largely to
blame for $1 billion in Spirit losses since October 2012.
Cahall said the commentary could indicate potential buyers
aren't willing to pay Spirit's price for the Oklahoma assets or
signal a change of mind regarding a sale. "Either way we think
the divestiture is seen as a significant future catalyst, the
loss of which is incrementally negative," Cahall's note added.
Spirit's fourth quarter was hurt by pretax charges of $546
million, or $2.42 a share, tied to expected costs on the 787
Dreamliner. The company also recorded costs of $381 million, or
$2.69 a share, related to deferred tax assets.
Spirit said the 787 charge was intended to cancel out
certain expected forward losses related to the Boeing program -
an agreement to settle claims associated with the production of
Spirit reported a net loss of $587 million, or $4.15 per
share, for the fourth quarter, compared with a profit of $61
million, or 43 cents per share, a year earlier.
Adjusted for items, the company had a profit of 65 cents a
share in the latest period, a result in line with what analysts
expected on average, according to Thomson Reuters I/B/E/S.
Quarterly revenue rose 5 percent to $1.49 billion.
Costs spiraled for Spirit, spun off from Boeing in 2005,
when the company started supplying parts for business jets along
with commercial planes.
Spirit said it expects 2014 earnings of $2.50-$2.65 per
share. Analysts on average expected profit of $2.68.
Spirit shares, among the percentage loss leaders on the New
York Stock Exchange, slumped 21.7 percent, or $7.15, to $25.82
in afternoon trading.
(Reporting by Sagarika Jaisinghani in Bangalore, Karen Jacobs
in Atlanta and Alwyn Scott in Seattle; Editing by Sriraj
Kalluvila, Andrew Hay and Chris Reese)