Aerospace & Defense

Spirit, Textron may face big workforce losses over vaccine mandate - Jefferies

2 minute read

The headquarters of Spirit AeroSystems Holdings Inc, is seen in Wichita, Kansas, U.S. December 17, 2019. REUTERS/Nick Oxford/File Photo

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Nov 17 (Reuters) - Spirit AeroSystems (SPR.N) and Textron (TXT.N) are likely to see the most workforce losses among major U.S. aerospace and defense companies from the COVID-19 vaccination mandate for federal contractors, brokerage Jefferies said on Wednesday.

A big chunk of Spirit and Textron's manufacturing units are in Wichita, Kansas, where just 53% of working age individuals are fully vaccinated, Jefferies said.

Gulfstream, General Dynamic's (GD.N) aerospace unit, is also heavily exposed as only 48% of the working-age population around Savannah is vaccinated, said Jefferies analyst Sheila Kahyaoglu.

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The White House earlier this month extended a deadline for federal contractors to get vaccinated from Dec. 8 to Jan. 4. [nL1N2RV181]

The mandate has fueled concerns that labor shortages could increase, while strikes rise as workers take advantage of the tight market to demand more pay and better conditions. read more

Raytheon Technologies (RTX.N) had warned last month that it would lose "several thousand" employees who refused to take COVID-19 vaccines. read more

However, Jefferies believes Raytheon's Intelligence & Space is one of the best-insulated as its headquarters are located in a region where 79% of the working-age population is vaccinated.

Jefferies analyst Kahyaoglu also said several questions remain around the vaccine mandate, including who would be liable if a supplier does not comply with the mandate and what the potential penalties could be.

"Additionally, it remains unknown whether costs related to vaccine-related loss of workers is an allowable cost for relief from the Federal government," the analyst added.

"We addressed the vaccine mandate on our third quarter earnings call and we do not have any further updates," Textron said in a statement.

Spirit AeroSystems and GD did not respond to requests for comment.

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Reporting by Tapanjana Rudra in Bengaluru; writing by Tanvi Mehta; Additional reporting by Nathan Gomes in Bengaluru; Editing by Shailesh Kuber and Devika Syamnath

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