NEW YORK: Spirit AeroSystems Holding, a major supplier of aircraft components to Boeing Co and Airbus, reported a higher-than-expected quarterly profit as it cut costs, and its shares rose 7.8 per cent to a year high.
The company, whose profits have been hurt by cost overruns in recent years, is cutting staff this year to reduce costs. It is also selling assets such as Oklahoma operations that handle wing design for Gulfstream, a subsidiary of General Dynamics Corp, and some Boeing jets.
Chief Executive Larry Lawson, a former Lockheed Martin executive, said on Friday that Spirit is talking with potential buyers for the Oklahoma operations and added the sales process will likely extend into next year.
Spirit reported net income of $93.7 million, or 65 cents per share, for the third quarter ended Sept.26, compared with a loss of $134.4 million, or 94 cents a share, a year earlier.
Analysts had expected 60 cents a share, according to Thomson Reuters I/B/E/S.
Operating costs fell about 8 per cent.
Airbus and Boeing expect aircraft demand to double to more than $2 trillion over the next 20 years, as emerging markets drive passenger growth and airlines in developed markets look to replace aging fleets with more fuel-efficient planes. Those trends bode well for Spirit AeroSystems, which makes fuselages and wing systems.
“We had a productive quarter as we reduced costs and remained on track for our rate increases,” Lawson said.
Spirit said revenue rose to $1.5 billion in the quarter from $1.36 billion a year earlier.
Backlog rose to $38 billion at the end of the third quarter from $34 billion a year ago.
The company’s shares rose as high as $29.28, before trading up $1.98, or 7.4 per cent, at $28.77, at the New York Stock Exchange.
Spirit has struggled with its own suppliers on capacity and costs as planemakers worldwide boost output. The company said it will record a pretax charge of $350 million to $400 million tied to work for General Dynamics Corp.’s Gulfstream business-jet unit, and is limiting draws on its credit facility until 2014’s last three months. No default event has occurred, Spirit said.
Standard & Poor’s cut its outlook for Spirit to negative from stable, saying the costs for the Gulfstream planes will keep credit ratios from improving this year.