By Dean Seal
Boeing has agreed to pay Spirit AeroSystems up to $350 million in advance to keep producing products for it as the fuselage supplier works through a liquidity crunch.
The jet maker said Tuesday that the advance payments are intended to help Spirit address high levels of inventory and lower operational cash flows. Spirit warned last week that it may not be able to keep operating after reporting billions of dollars in losses over the last four years.
The advanced payments should also help Spirit as it faces high costs to keep factories running at their current rates, along with lingering impacts from a recent strike by Boeing machinists. The eight-week strike ended last week when the union voted to approve a new contract.
Spirit is obligated to repay 25% of the advance to Boeing on April 30, June 30, Sept. 30 and Dec. 31 of 2026.
Boeing agreed in July to acquire Spirit in an all-stock transaction valued at about $4.7 billion. Spirit Chief Executive Pat Shanahan said last month that the acquisition is on track to close in mid-2025.
Formed by a spinoff from Boeing in 2005, Spirit said last week that management has a plan to improve liquidity, though it is dependent on the terms it can reach for the repayment of some advances from customers. Spirit said it was considering seeking additional customer advances and could also issue securities or debt.
The beleaguered Arlington, Va.-based Boeing has had a tough year too following a series of mishaps and quarterly losses. The company said last month that it intends to raise about $19 billion through stock sales to shore up its balance sheet.
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
November 12, 2024 10:20 ET (15:20 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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