CHICAGO (Reuters) - Aircraft parts maker Spirit Aerosystems Holdings Inc (SPR.N) said it reached a deal with Boeing Co (BA.N) on Spirit’s claims related to development and production of the long-delayed 787 Dreamliner.
Spirit did not give details, but its shares rose 9.7 percent on Wednesday on the New York Stock Exchange. The company has taken financial hits in recent years because of delays in the Dreamliner, which is nearly three years behind schedule.
Spirit spokeswoman Debbie Gann said the claims were related to design changes requested by Boeing that slowed 787 development.
“We have developed a fair and equitable framework that reflects current program financial realities and reinforces a partnership that provides the basis for long-term value creation on the program for both Spirit and Boeing,” Phil Anderson, Spirit’s chief financial officer, said in a statement.
“We are optimistic about the future of the overall program, which we anticipate will continue to provide long-term benefit to Spirit,” Anderson said.
Gann declined to say exactly what Spirit had requested of Boeing, but she said the company would give more information on the claims when it reports its quarterly earnings.
JPMorgan analyst Joseph Nadol said in a research note: “We do not yet have all the details, so it is difficult to assess the extent to which this deal benefits Spirit, but it certainly lifts a major overhang.”
Nadol said costs to Spirit for work on the 787 have risen significantly from the assumptions in its initial contract.
“We believe that the total value of the settlement was probably in the hundreds of millions,” Nadol said.
Spirit, a former Boeing unit that makes a range of fuselage and wing parts for large commercial planes, is one of the major suppliers for the carbon-composite 787. Wichita, Kansas-based Spirit also supplies the Airbus unit of Europe’s EADS EAD.PA.
The aviation industry is waiting for word from Boeing on when it will make the first delivery of the Dreamliner to an airline customer. The 787 program suffered a setback in November when an electrical fire on a Dreamliner halted test flights.
Shares of Spirit closed up 9.69 percent at $22.42 in afternoon trading on the New York Stock Exchange. Boeing shares were up 1.73 percent to $70.15.
Reporting by Kyle Peterson; Editing by John Wallace, Tim Dobbyn and Steve Orlofsky