Reuters: Global Markets: Spirit AeroSystems plunges 21 percent on profit warning

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Spirit AeroSystems plunges 21 percent on profit warning Oct 25th 2012, 15:28 Thu Oct 25, 2012 11:28am EDT (Reuters) - Shares of Spirit AeroSystems Holdings Inc (SPR.N) dropped over 20 percent Thursday after the company warned it would record $590 million in charges in the third-quarter, including $184 million relating to making parts for Boeing Co's(BA.N) 787 Dreamliner. The charges resulted from the company's struggle with complex product development efforts, and Spirit said its lenders had agreed to adjust certain loan and credit facilities to accommodate the charges. The company said it had not defaulted. Spirit's stock was down 21 percent at $17.11 in morning trading. Spirit, based in Wichita, Kansas, said the charges arose when it rapidly expanded its customer base, manufacturing sites and product design abilities while trying to manage several product development programs that were experiencing design changes and delays. "The execution of our diversification and growth strategy has proven very complex," said Jeff Turner, President and Chief Executive Officer. "It is unfortunate that we have struggled on these development efforts," Turner added. "As we move forward, our focus is on applying our lessons learned in strong program management, change control, and shop floor disciplines to drive performance on these programs and continue the solid performance on our core production programs." The pretax charges include about $184 million on the Boeing 787 Dreamliner program; $163 million on the wing program from the Gulfstream G650 business jet; $151 million for the G650's engine nacelle package; and $88 million on the wing program for the Gulfstream G280 business jet, among other items. Gulfstream is owned by General Dynamics Corp(GD.N). Spirit has a history of recording charges for plane programs. But the size of the charges caught the market off guard. "Management had previously mentioned that charges would likely come through this quarter, but this magnitude is a surprise," RBC Capital Markets analyst Robert Stallard said in a note to clients. "The question that we have is what happens next? Many of these contracts last for a number of years, and what assurance is there that similar charges can be avoided in the future?" Stallard asked. (Reporting by Alwyn Scott; Editing by Bernadette Baum and Andrew Hay) Link this Share this Digg this Email Reprints

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