Spirit AeroSystems Holdings

SPR · NYSE

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The case for and against

Updated Dec 7, 2024

Bull case

Spirit AeroSystems Holdings demonstrates a positive growth outlook largely due to expected substantial free cash flow (FCF) growth in 2025, driven by increased volumes on commercial programs, despite a projected loss of positive FCF in 2024. The company has potential upside to approximately $8.3 billion in revenues through faster delivery schedules for key commercial programs, alongside strategic diversification efforts, including the recent acquisition of Bombardier assets that expand its presence in business jets. Additionally, Spirit AeroSystems is on track to improve its revenue mix while actively managing costs and improving its balance sheet, reflecting strong execution during recent downturns and positioning the firm favorably for future growth in the narrowbody and business jet markets.

Bear case

Spirit AeroSystems Holdings faces a negative outlook primarily due to its heavy reliance on Boeing's 737 program, which constitutes nearly half of the company's revenue and has been significantly impacted by production rate reductions and ongoing quality issues. The company's inability to effectively negotiate with Airbus and the slow recovery from reduced delivery schedules contribute to a forecasted revenue decline to approximately $7.2 billion, further exacerbated by the loss-generating status of its Airbus-related assets. Additionally, the reported use of $444 million in free cash flow during the first quarter of 2024 raises concerns about the company's financial stability and its potential to achieve breakeven in the near term.

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