Nov 1 (Reuters) - Spirit AeroSystems (SPR.N) on Wednesday projected higher-than-expected cash burn for 2023 as it slashed anticipated deliveries of 737 fuselages, but its new CEO said returning the embattled aerospace supplier to positive cash flow will be his "principle goal."
Patrick Shanahan, a former Boeing (BA.N) executive who became the company's interim CEO on Oct. 2, told investors he has committed to stay in the job for a year - a critical timeline for Spirit, which hopes to reverse financial headwinds and turn cash flow positive in 2024.
"Executing on programs and increasing deliveries is the most crucial leverage to achieve that goal," he said during an earnings call.
"However, we have other cash levers to pull," including organizational inefficiencies and more closely enforcing contracts with its own supply chain, he said.
Shares closed up 7.9%.
LOWERED 737 DELIVERY EXPECTATIONS
On Wednesday, Spirit increased its anticipated free cash burn to between $275 and $325 million for 2023, compared with the $200 million to $250 million range.
It attributed that increase in cash consumption to lower expected 737 narrowbody fuselage deliveries to Boeing, which are now expected to be within 345 to 360 units, compared with its prior forecast of 370 to 390 units.
Spirit's third-quarter results, while "not pretty," were rendered "essentially irrelevant" by a financial agreement with Boeing announced in mid-October that will help Spirit grow near-term revenue, said Robert Stallard of Vertical Research Partners.
Shanahan said that reaching an similar agreement with Airbus (AIR.PA) - which will focus on turning around the money-losing A220 - was a matter of urgency and likely to occur before February.
Airbus declined to comment on the discussions.
During the quarter, Spirit booked $101 million in losses driven primarily by higher supply chain and labor costs on the Boeing 787 Dreamliner program and Airbus A350 program.
Executives said they anticipate positive margins on the 787 program by the first half of 2025 as a result of the agreement with Boeing.
One of the industry's largest suppliers, Spirit has been struggling to stabilize cash flows due to persistent inflationary pressures and a series of production snafus, with shares down 20% since the beginning of 2023.
Spirit reported a third-quarter adjusted loss per share of $1.42, less than the average analysts' expectation of a loss of $1.54 per share, according to LSEG data.
Revenue rose 13% to $1.43 billion, compared with estimates of $1.46 billion.
Third-quarter cash burn was $136 million, compared with a cash burn of $73 million a year ago.
Reporting by Abhijith Ganapavaram in Bengaluru and Valerie Insinna in Washington; Editing by Maju Samuel, Louise Heavens, Jonathan Oatis and Marguerita Choy
Our Standards: The Thomson Reuters Trust Principles.
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