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21 April 2024

Aircraft parts suppliers face tough quarter

By Reuters

US parts suppliers to commercial aircraft makers will be counting their losses from the machinists' strike at Boeing Co and the delay in 787 Dreamliner programme, when they report their fourth-quarter results starting this week.

"It's pretty much a foregone conclusion that the quarter is going to be weak," analyst Alex Hamilton of Jesup & Lamont Securities said.

"The main event this quarter will be the impact of Boeing strike and more importantly the outlook by managements."

Last September, Boeing's 27,000-strong machinists union went on a 58-day strike over contract terms, halting commercial airplane production.

The strike at Boeing pushed back the schedule for its troubled 787 Dreamliner for the fourth time in December, resulting in inventory pileup at several of its parts suppliers.

Some analysts feel the impact from the strike will last for a couple of more quarters.

In November 2008, Rockwell Collins, which makes a range of cockpit gear and high-tech systems for commercial and military aircraft, had cut its 2009 outlook, citing the strike and slowdown in airline traffic.

Last quarter, Spirit Aerosystems Holdings, one of the world's largest makers of aircraft structures, said it will work out a production and delivery schedule with Boeing once the strike was over and then update its financial outlook. Spirit was a unit of Boeing before being sold in 2005. A successful production run of the 787 is important to Spirit as it gets a lion's share of its revenue from the programme.