Boeing's crisis starts hurting its biggest supplier; Spirit to lay off 2,800 workers

Spirit suspended manufacturing components for Boeing from January 1, days after the aircraft maker announced that it will halt production of 737 Max

Boeing's biggest supplier, Spirit Aerosystems is planning to lay off almost a 15% of its workforce, following the aircraft maker's decision to halt production of its 737 Max jets from this month. From airline companies to suppliers, Boeing's crisis is making its partners bleed.

Spirit Aerosystems is Boeing's biggest suppliers and makes fuselages, wing components and other accessories for the aircraft maker. Understandably, the grounding of 737 Max since March last year, following two fatal air crashes, has been biting into the profits of Spirit Aerosystems. Boeing's decision to halt production of the jet now further increases pressure on Spirit Aerosystems.

Spirit Aerosystems bears the brunt

Spirit Aerosystems
Spirit Aerosystems YouTube Grab

Spirit Aerosystems is planning to lay off almost 20% of its workforce at its Wichita-Kansas base. This means the aerospace builder will part ways with 2,800 employees. The aerospace builder employees around 18,000 workers, of which 13,000 are in its Wichita-Kansas facility. This is the first major disruption at Spirit's facility owing to the grounding of the 737 Max aircrafts.

Spirit makes fuselages, wing components, engine pylons and other parts for Boeing's best-selling 737 Max. This accounts for almost 50% of Spirit's annual revenues.

Spirit Aerosystems' Chief Executive Officer Tom Gentile said further layoffs may follow depending on the final production rates that will be reached with Boeing. The aerospace builder stopped production of Boeing 737 Max's parts on January 1, days after the aircraft maker announced that it will halt production of the aircraft.

Boeing's problems increase

Boeing 737-MAX. (File Photo: Boeing)
Boeing 737-MAX. (File Photo: Boeing) IANS

There seems to be no respite for Boeing. Spirit's decision stop production of 737 Max's parts followed by it announcement of layoffs could further escalate Boeing's problems as the company also has plans to ramp up production of the aircraft once it comes back to service.

However, 737 Max's return to service isn't likely to happen soon given that US Federal Aviation Administration made it clear last month that it will take it own time to review the troubled aircraft. Moreover, Spirit's announcement comes just a day after Boeing shared documents showing that its employees knew about the problems with 737 Max. In one of the messages two employees were heard saying that the aircraft was "designed by clowns who in turn are supervised by monkeys."

To add to the woes, airlines companies too have started initiating talks with Boeing for compensation owing to the grounding of the aircraft. In the past one month, the company has reached compensation agreement with quite a few airlines.