Spirit AeroSystems Earnings: Spirit Aero Does Not Control Its Economic Destiny; Fair Value Unchanged

Spirit AeroSystems' quarterly financial results almost don't matter anymore, and we leave our fair value estimate unchanged. The company clocked in revenue of $1.7 billion on slower Boeing 737 and Airbus deliveries, losing $528 million in the quarter, mostly because it cannot make money assembling parts of the Airbus A220 and A350. Spirit accounts for its unfortunate, constraining contracts with original equipment manufacturers Boeing and Airbus by booking not just its financial performance on units it produced and delivered in the quarter, but also the proportional share of all the units it has on order in the given batch that is under contract. As a result, at the end of March, the company booked $281 million and $167 million of forward losses on its planned work on A350 and A220 planes, respectively. Hence, the urgency with which the company has been negotiating with Airbus to revise its pricing. However, negotiations with Boeing for control of the company and with Airbus for control of facilities and teams working on its planes are likely overshadowing the pricing talks.