Company: SPR
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0001364885-25-000011
Chunk: 75

Company: Spirit AeroSystems Holdings, Inc.
Filing Date: 2025-10-31
Form: 10-Q
Item: Part I, Item 1
Chunk 75
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 While certain increases in raw material costs can generally be passed on to the Company’s customers, in most instances the Company must fully absorb cost overruns. Some of the factors that may cause the costs incurred in fulfilling contracts to vary substantially from current estimates are technical problems, production rate changes, production stoppages, materials shortages, supplier difficulties, realization targets, existence of and execution to recovery plans caused by these factors, and multiple other events, including those identified in Item 1A. “Risk Factors” of the 2024 Form 10-K. The risk particularly applies to products such as the B737, B787, A220, and A350, which are in forward loss positions.During the third quarter ended October 2, 2025, the Company recognized unfavorable changes in estimates of $599.6, which included net forward loss charges of $585.2, and unfavorable cumulative catch-up adjustments related to periods prior to the third quarter of 2025 of $14.4. The forward losses in the third quarter were primarily driven by schedule changes, increased supply chain cost and overall production cost growth on the B737 program, foreign exchange rates, current production performance and supply chain cost growth on the A350 and A220 programs, and production cost and supply chain cost growth, which includes the Company’s latest estimate for tariffs on the B787 program. The unfavorable cumulative catch-up adjustments primarily relate to increased production costs on the B737 program, which includes the Company’s latest estimate for tariffs.   During the third quarter ended September 26, 2024, the Company recognized unfavorable changes in estimates of $242.9, which included net forward loss charges of $217.2, and unfavorable cumulative catch-up adjustments related to periods prior to the third quarter of 2024 of $25.7. The forward losses in the quarter ended September 26, 2024 were primarily driven by current production performance, supply chain cost growth on the A350 and A220 programs, additional labor and supply chain cost growth on the B787 program, and increased costs related to factory performance on the B767 program. The unfavorable cumulative catch-up adjustments primarily related to increased production costs associated with changes implemented by Boeing in March 2024 to introduce a new product verification process in Wichita, KS on the B737 program and period changes in certain cost allocation methodologies and increased production costs on the B777 program. This change in business process for the B737 units delayed delivery acceptances and caused a buildup of undelivered units in Wichita, KS.