Spirit AeroSystems and Boeing Stocks Are Falling Premarket - Here's Why

In response to the strike decision by Spirit AeroSystems employees represented by the International Association of Machinists and Aerospace (IAM) Workers, factory production will be suspended before the contract expires.

Spirit AeroSystems Inc is a subsidiary of Spirit AeroSystems Holdings Inc SPR.

IAM-represented employees are not to report to work starting from the first shift on Thursday, June 22 but will receive pay for their regular work hours. Overtime is canceled.

All employees not represented by the IAM should report to work as usual on Thursday.

"We are disappointed that our employees represented by the IAM rejected our four-year contract offer and voted to strike," Spirit said. "Despite this setback, we are not distracted from the task at hand. We look forward to continued meetings with IAM leadership," the company said.

Around 6,000 workers at the Kansas plant will go on strike on Saturday after rejecting a proposed four-year deal.

The plant produces 70% of Boeing Co's BA narrow-body aircraft and defense and business jet structures.

Without those fuselages coming by train from Kansas, work at Boeing's Renton factory will eventually halt, impacting airlines that are expecting jets and other suppliers who provide parts, components, and subassemblies for Boeing's best-selling commercial aircraft.

Spirit also builds the nose sections for the 787, 767, and 777.

IAM and Spirit reached a tentative agreement that included additional health insurance and retirement benefits, made overtime on Sunday voluntary, and provided for up to a compounded 34% average pay increase over four years.

In its Q1 earnings release, Spirit AeroSystems identified the affected units in Wichita and has begun implementing repairs to those units.

SPR expects disruptions and rework within its Wichita factory to negatively impact full-year gross profit by $31 million, of which $17 million is reflected in 1Q23.

Both Boeing and Spirit AeroSystems stocks are falling in response to the news.

Price Action: SPR shares are down 9.16% at $26.96 during the premarket session on the last check Thursday. BA shares are down 3.46% at $204.75.

Photo via Wikimedia Commons