S&P trims Spirit AeroSystems

S&P said it lowered the ratings for Spirit AeroSystems Inc. and its unsecured debt to BB from BBB-. S&P also assigned a 3 recovery rating, indicating the expectations for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default.

Spirit AeroSystems' limited 737 MAX production will cause a material deterioration in revenues, earnings and cash flow in 2020, resulting in very weak credit measures. “The company said it plans to restart production but produce only 216 sets of parts for the MAX (including the fuselage, engine pylon, thrust reverser and wing components) this year, compared to the more than 600 it produced in 2019. It will gradually increase production over the next two years but will only reach the previous level of 52 a month in late 2022,” S&P said in a press release.

S&P is keeping the ratings for Spirit and its unsecured debt on CreditWatch with negative implications.

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