Investing.com — Spirit AeroSystems (NYSE:) raised concerns about its ability to continue as a going concern on Tuesday, Nov. 5, raising questions about the implications for its planned acquisition of Boeing (NYSE:).
In its third-quarter financial report, the aerospace manufacturer disclosed that there is “substantial doubt about the company’s ability to continue as a going concern.”
“The company will require additional liquidity to continue operations over the next twelve months,” the filing said.
Spirit AeroSystems reported significant net losses of $1.5 billion year-to-date, with cash used for operations at $1.25 billion. At the end of the third quarter, Spirit’s debt was $4.4 billion, while its cash and cash equivalents were just $217.6 million.
The company also expects cash burn of approximately $450 to $550 million over the next three quarters.
The company’s financial problems are partly attributed to complications with Boeing and Airbus.
More concretely, the aircraft supplier has been hit by Boeing’s decision to reject deliveries that require additional assembly or quality rework, which has led to an increase in inventory and contract assets, along with reduced cash flow.
Other contributing factors include delays in Boeing’s production ramp-up, a strike at Boeing and ongoing price adjustment discussions with Airbus.
The filing comes amid ongoing discussions about the acquisition by Boeing. According to Bank of America analysts, the full impact of Spirit’s recent filing on the financial aspects of the acquisition is not yet clear.
“We assume that Boeing will likely need to inject capital into Spirit,” analysts led by Ronald J. Epstein said in a note.
In April 2024, Boeing provided a $425 million advance to Spirit AeroSystems to shore up its liquidity, and BofA analysts say further capital injections could be in the offing.
Last month, Spirit raised more than $24 billion. It also confirmed that it had fully drawn down a $350 million bridge loan provided when Boeing agreed to acquire the company in June.
Bank of America maintained a neutral rating on Boeing as the industry awaits further details.
In the meantime, Boeing continues to aim to restart production of the 737 MAX following the resolution of a weeks-long strike that ended production of the 737 MAX. Monday (NASDAQ:) night. The strike, which involved more than 33,000 workers on the West Coast, halted production of most of Boeing’s commercial aircraft, including the 737 model.
