July 23, 2020 / 2:09 PM / 15 days ago

Spirit Aerosystems braces for deeper 737 production cut through 2022: CNBC

FILE PHOTO: Airplane fuselages bound for Boeing's 737 Max production facility sit in storage at their top supplier, Spirit AeroSystems Holdings Inc, in Wichita, Kansas, U.S. December 17, 2019. REUTERS/Nick Oxford

(Reuters) - Spirit Aerosystems Holdings Inc (SPR.N) has spoken with lenders to loosen some of its debt terms as it expects deliveries of 737 MAX planes to be lower than estimated in the coming years, CNBC reported on Thursday, citing a person familiar with the matter.

Spirit warned last month it was at risk of breaching its financial covenants after its largest customer Boeing Co (BA.N) asked the aero parts maker to substantially reduce 737 production this year due to the coronavirus crisis.

Wichita, Kansas-based Spirit, which makes fuselages for the 737 MAX, has shared a forecast with lenders that showed deliveries for 737 MAX in 2020 to be around 70, much lower than its previous forecast of a little more than 200, according to the report.

Spirit expects 2021 deliveries of the narrow-body plane to come in at less than half of its earlier forecast of 400 planes, according to the CNBC report.

For 2022, the fresh estimates for Boeing’s 737 deliveries were projected at fewer than 400 planes, a decline from a previous forecast of almost 500.

Spirit’s profits have come under pressure after Boeing halted production of the once best-selling 737 MAX in January. The jet was grounded worldwide in March 2019 after two fatal crashes killed 346 people.

As a result, Spirit has been forced to cut thousands of jobs and reduce its quarterly dividend by 90% to just 1 cent per share.

Both Spirit and Boeing were unavailable for comment.

Reporting by Rachit Vats in Bengaluru; Editing by Saumyadeb Chakrabarty

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