Skip to main content

Spirit Aerosystems Holdings(SPR-N)

Today's Change
Real-Time Last Update Last Sale Cboe BZX Real-Time

Why Spirit AeroSystems Stock Lost Altitude This Week

Motley Fool - Fri Jun 23, 12:11PM CDT

What happened

Spirit AeroSystems Holdings(NYSE: SPR) was forced to halt operations at a Kansas facility after workers at the plant voted to reject a new contract offer. The uncertainty engendered by that vote sent shares of the Boeing(NYSE: BA) supplier down 12% for the week, according to data provided by S&P Global Market Intelligence, as of Friday afternoon.

So what

Spirit, a one-time Boeing subsidiary that is still responsible for manufacturing airframes and other components for the 737 and other models, has been hit hard in recent years due to Boeing's issues and the pandemic. The last thing its shareholders needed was another negative surprise.

But that's just what they got this week when members of the International Association of Machinists and Aerospace Workers voted to reject management's proposed contract. The offer was Spirit's final offer ahead of a Saturday strike date, and had the support of union leadership.

Spirit had offered a 16% pay hike over four years, with a $7,500 signing bonus, cost of living updates, and annual one-time bonuses for a total of up to 34% wage hikes over the course of the four-year deal. That offer was in line with or better than recent contract deals reached with unions by Boeing and others in the aerospace business, leading investors to expect it to be approved by Spirit's employees.

"Most of our members have concluded that the company's offer is unacceptable," the union said in a statement.

Union officials told local media that members were disappointed with increases in healthcare premiums. This was also the first time in 13 years that union membership has had a chance to vote on a contract.

Now what

On Friday, Spirit CEO Tom Gentile said that the company and union leadership have agreed to reengage in negotiations on Saturday morning with the assistance of a government mediator. Though production has been suspended since Thursday, it is possible that it could be restarted quickly should the two sides reach a deal.

If not, Boeing's 737 MAX program would be the primary model that is impacted. Boeing likely has a buffer of two to three weeks' worth of fuselages, but there is a lot of motivation from all parties to get a deal done as soon as possible.

10 stocks we like better than Spirit AeroSystems
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Spirit AeroSystems wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of June 12, 2023

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Paid Post: Content produced by Motley Fool. The Globe and Mail was not involved, and material was not reviewed prior to publication.