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The Street
The Street
Patricia Battle

Boeing supplier's workers face the consequences of 737 Max hiccups

Boeing  (BA) supplier Spirit AeroSystems  (SPR) is reportedly making some cuts, and its staff will face the brunt of them.

The company is laying off roughly 450 of its workers at its main plant in Wichita, Kansas, amid Boeing’s struggles with its 737 Max fleet. The plant employs about 13,000 people. 

The Max planes have been the source of concern and a series of investigations after a door plug blew off an Alaska Airlines-operated Boeing 737 Max 9 aircraft shortly after its Jan. 5 takeoff on a flight from Portland, Ore., to Ontario, Calif. 

The incident caused the Federal Aviation Administration to pause the expansion of Boeing’s 737 Max aircraft production as it looked into the company’s safety and quality control practices. 

Spirit AeroSystems, which supplies fuselages and other vital pieces to Boeing’s planes (as well as to rival Airbus), has also faced multiple probes into its production practices and quality control since the incident in January.

Related: Another Boeing whistleblower dies after raising safety concerns

The probes have caused a slowdown in orders and deliveries of Boeing aircraft, which appear to be the main culprit of Spirit AeroSystems recent layoffs.

“The recent slowdown in the delivery rate on commercial programs compels a reduction to our workforce in Wichita,” said Spirit AeroSystems spokesperson Joe Buccino in a memo announcing the job cuts, which was obtained by KSN TV in Wichita. 

“In the coming weeks, we will inform affected employees. We are committed to implementing this transition in as compassionate a manner as possible.”

In the memo, Buccino also claimed that the company “must slow down” its operations to align its workforce with its customers’ needs.

United Airlines ground crew load luggage onto a Boeing 737 Max-8 plane at Newark Liberty International Airport (EWR) in Newark, N.J. on March 13, 2024. 

Bloomberg/Getty Images

The move from Spirit AeroSystems comes after it filed a lawsuit on May 1 against Texas Attorney General Ken Paxton for launching an investigation into the company (which has a facility in Texas) over the Alaska Airlines incident. The investigation aims to look into Spirit AeroSystems’ “organization, conduct, and management,” and will require the company to turnover a series of documents that detail manufacturing issues in its products.

Spirit AeroSystems claims in its lawsuit that Paxton’s request to examine documents “violates” its “Fourth and Fourteenth Amendment right to be free from unreasonable searches and seizures.”

Related: Boeing whistleblower says he received ‘physical threats’ over safety concerns

The company also said that its documents contain “significant business interests” as well as “employment and personnel records” that it aims to keep private.

The lawsuit coincidentally was filed on the same day it was revealed that a second Boeing whistleblower, Joshua Dean, died from a severe bacterial infection. Dean was a quality auditor with Spirit AeroSystems and was part of a class-action lawsuit that accused the company of hiding “widespread quality failures” in its aircraft production from its shareholders.

His death came roughly a month after Boeing whistleblower John Barnett was found dead in his car from a "self-inflicted gunshot wound.”

Spirit AeroSystems was once part of Boeing but spun off in 2005. But its work has had quality issues, and Boeing is now trying to buy it back. 

But a deal has yet to be struck because Spirit has so far failed to reach a deal with Airbus over control of Spirit factories that produce parts for Airbus jets. 

Spirit AeroSystems shares were off 48 cents or 1.55% to $30.51 on Friday. They have fallen 4% so far in 2024. 

The shares tend to track Boeing's stock price. Spirit reached as high as $105 in 2018 but crashed to as low as $15 during the Covid-19 pandemic. They reached into the $50 range in 2022. 

Boeing closed at $184.95 on Friday, up $1.99. The shares up 10% this quarter but down 29% on the year.

Related: Veteran fund manager picks favorite stocks for 2024

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