Spirit Aerosystems gains after confirming advance payments pact with Boeing

Spirit Aerosystems (NYSE:SPR) rose 1.6% after the company confirmed that it entered into an advance payments pact with Boeing (BA).

Boeing (BA) committed to pay as much as $350 million in the advanced payment pact, according to a statement on Tuesday. Shares of Boeing (BA) fell 1.3%.

The confirmation comes after a Reuters report on Friday that Spirit (SPR) was close to reaching a funding agreement with Boeing (BA) that would give it a cash lifeline.

The pact follows after Spirit (SPR), Boeing’s (BA) key supplier and acquisition target, last Tuesday disclosed it raised substantial doubt about its ability to continue as a going concern amid mounting losses, rapid cash burn and production challenges.

“Boeing intends these payments to address Spirit’s high levels of inventory and lower operational cash flows, decrease in expected deliveries to Boeing and higher factory costs to maintain rate readiness, and lingering effects brought on by the recent strike by Boeing employees,” Spirit said in the statement on Tuesday.

Spirit Aero (SPR) said it has been facing bloated inventory and lower cash flows due to recent changes in the production and delivery process implemented by Boeing (BA).