Spirit AeroSystems Holdings, Inc. says that it has reached a Memorandum of Understanding (MOU) with Boeing Co. This agreement includes open commercial issues connected to several programs and will last through 2022.
The MOU includes the 737 MAX and the 787 programs. Spirit AeroSystems Holdings, Inc. says that the MOU requires it to negotiate a Definitive Documentation in the third quarter of 2017. SPR says that it expects this to happen and that the agreement will help it reach long-term cash flow goals, which is great for SPR stock.
Spirit AeroSystems Holdings, Inc. notes that this agreement includes extending blocks through 1003 units to 1300 units. It also includes making a plan for block through line unit 1405. There is also a price stepdowns for the Boeing 787-9 and 787-10 through line unit 1405 in the agreement.
“As a result of the MOU, we have recognized a reach-forward loss of $353 million on the 787 program,” Tom Gentile, CEO of Spirit AeroSystems Holdings, Inc., said in a statement. “The agreement also includes a commitment from both organizations to work together on joint cost reduction efforts with financial incentives for both parties.”
Spirit AeroSystems Holdings, Inc.’s deal with Boeing Co was announced in its earnings report for the second quarter of 2017. This includes earnings per share of $1.57 on revenue of $1.83 billion. This beats out Wall Street’s estimate for earnings per share of $1.21 on revenue of $1.75 billion.
SPR stock was up 15% as of Wednesday afternoon and is up 21% year-to-date.
As of this writing, William White did not hold a position in any of the aforementioned securities.