Spirit AeroSystems (NYSE:SPR) Holdings Inc. and Boeing (NYSE:BA) Co. announced a partnership agreement on Wednesday, aiming to address quality issues and improve supply chain performance. The announcement triggered a significant increase in Spirit AeroSystems' shares, which soared over 20% in premarket trading.
The collaboration between the two companies comes as a response to Boeing's concerns about not meeting its annual delivery targets. This issue was primarily due to the quality problems with the Boeing 737 Max that were discovered in August, causing delays in shipments. The new agreement focuses on synchronized production systems to enhance quality and expedite deliveries, a strategy highlighted by Spirit CEO Patrick Shanahan as crucial for ensuring delivery assurance.
InvestingPro data reveal that Spirit AeroSystems' Market Cap stands at 2230M USD and the company has been experiencing a Revenue Growth of 20.31%. Despite a negative P/E Ratio of -2.62, the company's shares have seen a significant rise, underlining the market's positive response to the partnership.
Later on Wednesday, Spirit AeroSystems' shares continued their upward trajectory, ascending an additional 7.2% following the accord announcement with Boeing. The deal aims to target production stability and resolve the Boeing 737 Max's quality issues that led to shipment delays earlier this year. InvestingPro Tips, however, point out that Spirit AeroSystems operates with a significant debt burden and may have trouble making interest payments on its debt. For more insights, investors can visit InvestingPro SPR.
Despite the positive news and subsequent increase in Spirit's share price, both companies have experienced significant declines in their yearly stock performance. Spirit's shares have plummeted nearly 30%, while Boeing's shares have seen a close to 5% decrease. These declines are part of a broader downturn in the market, with the S&P 500 index also experiencing a 4% decrease over the last three months.
Boeing, with a Market Cap of 111.92B USD and Revenue Growth of 21.18%, is a prominent player in the Aerospace & Defense industry according to InvestingPro Tips. The company's shares have been trading at a high EBITDA valuation multiple, despite not being profitable over the last twelve months. For additional tips and insights, investors can check out InvestingPro BA.
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