Boeing 737 Max production freeze whacks supplier

Jetliner has been grounded for almost a year after two crashes

Boeing has directed Spirit Aerosystems to stop deliveries of all 737 Max components starting Jan. 1, sending the supplier's shares lower.

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TickerSecurityLastChangeChange %
SPRSPIRIT AEROSYSTEMS HOLDINGS INC67.30-0.69-1.01%
BABOEING COMPANY324.15-7.85-2.36%

The suspension of deliveries will have an “adverse impact” on Spirit’s business since the single-aisle 737 MAX makes up more than 50 percent of the firm's annual sales.

Spirit says it is “evaluating all potential actions to align its cost base with lower production levels expected in 2020” and that it will remain in close communication with Boeing on a timetable for resuming production. The company plans to provide updated financial information alongside its fourth-quarter earnings report in January.

Earlier this week, Boeing announced it would temporarily suspend production of the 737 Max in January as it continues work with regulators regarding a timetable for the aircraft’s return to the skies.

The best-selling aircraft in Boeing’s history, the Max was grounded on March 10 after two fatal crashes in a five-month span.

Wall Street analysts surveyed by Refinitiv expect Spirit to report a fourth-quarter profit of $178 million, or an adjusted $1.71 a share, on revenue of $1.95 billion.

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Its shares have climbed 4.5 percent this year, underperforming a 28 percent gain on the S&P 500.