Spirit Aerosystems Holdings, Inc.

Good morning, ladies and gentlemen, and welcome to the Spirit Aerosystems Holdings Incorporated's first quarter 2021 earnings conference call. My name is Jamie, and I'll be your coordinator today. After today's prepared remarks, there will be an opportunity to ask questions. At that time, to ask a question, you may press star and then one. To withdraw yourself from the question queue, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the presentation over to Aaron Hunt, Director of Investor Relations. Sir, please go ahead.

Thank you, Jamie, and good morning, everyone. Welcome to SPIRIT's first quarter 2021 earnings call. I'm Aaron Hunt, Director of Investor Relations. And with me today are SPIRIT's President and Chief Executive Officer, Tom Gentile, SPIRIT's Senior Vice President and Chief Financial Officer, Mark Suchinski, and SPIRIT's Executive Vice President and Chief Operating Officer, Sam Marnick. After opening comments by Tom, Sam, and Mark regarding our performance and outlook, we will take your questions. Before we begin, I need to remind you that any projections or goals we may include in our discussion today are likely to involve risks, which are detailed in our earnings release, in our SEC filings, and the forward-looking statement at the end of this web presentation. In addition, we refer you to our earnings release and presentation for disclosures and reconciliation of non-GAAP measures we use when discussing our results. And as a reminder, you can follow today's broadcast and slide presentation on our website at investor.spirithour.com. With that, I would like to turn the call over to our Chief Executive Officer, Tom Gentile.

Thank you, Aaron, and good morning, everyone. Welcome to SPIRIT's first quarter results call. A year ago, we were contending with the unprecedented disruption and uncertainty from the continued 737 MAX grounding and COVID-19 pandemic. Since then, the FAA lifted the 737 MAX grounding order and And shortly after that, the aircraft resumed commercial service. Today, the 737 MAX is certified in the US, UK, Europe, and many other parts of the world. Additionally, Boeing has secured several new orders from airlines, including large orders from Southwest, Alaska Air, and Ryanair, who will take delivery of their first newly certified 737 MAX 8200 aircraft in the near future. The COVID-19 pandemic has had a significant global impact. the aviation industry saw more than 19,000 aircraft grounded and air traffic down more than 95% at the worst point last April. Thanks to the tireless efforts of many to mitigate the severe impact of COVID-19, we believe we are now on the path to recovery. We continue to see encouraging news on the return to commercial air travel with domestic routes, primarily flown by narrow-body aircraft leading the way. In the U.S., the TSA checkpoint travel numbers have been consistently staying above the 1 million mark since early March, and more recently, we have seen many days above 1.5 million travelers, including 1.6 million travelers last Sunday. We have observed a similar domestic recovery in China. We believe Spirit is well positioned to benefit from this trend of recovering domestic air travel in the largest aviation markets, given that 85% of our backlog is narrow-body aircraft. In line with the improved narrow-body outlook, As we described in our 10K, Spirit is planning to produce about 160 737 MAX aircraft in 2021. This plan allows for us to burn down the Boeing inventory of 737 MAX shipsets stored in Wichita and Tulsa. With the current outlook, we should be at our targeted number of a permanent buffer to cushion the production system toward the second half of 2022. We have regular conversations with Boeing on the current environment, and we'll work closely with them to make any necessary rate adjustments as the year progresses. As for our Airbus narrowbody programs, we have plans in place to support the A220 and the A320 Airbus schedule increases as the air traffic demand recovery continues. International air traffic demand still remains at relatively low levels versus pre-pandemic times and is expected to take longer to recover. Consequently, we have experienced and believe there will continue to be pressure on our wide-body programs. The wide-body programs have created significant pressure on our overall performance as the OEMs have adjusted production rates on those programs downward. On the A350, schedule changes this year and next year contributed to the forward loss of $29 million that we announced this quarter. The forward loss also included some charges for tooling and build process improvements to improve product quality. we decided to implement the improvements at our Kinston facility during this period of lower production rates. Over the last few months, we have also been working with Boeing on the 787 program. At Boeing's request, we conducted an extensive review and engineering analysis as a result of fit and finish issues that they had identified on other parts of the aircraft. While there were no safety of flight issues, areas of rework were identified. We have started the rework, and Boeing has reinitiated deliveries the 787. the rework plan that we have put into place supports boeing's 787 delivery schedule the engineering analysis and the projected rework will drive a forward loss of 29 million dollars mark will provide more detail on the forward losses in his comments the uneven recovery from the pandemic created challenges during our first quarter during 2021 we expected to see performance start to normalize as we get into the second half of the year, assuming air traffic recovery remains on track. Overall, our 2021 free cash flow usage is expected to be between $200 million and $300 million after considering the $300 million cash tax benefit. As we have previously indicated, we expect our cash flow to be positive in 2022 as production rates improve and we realize all the benefits of the cost reduction and productivity actions that we have taken. Now I'd like to turn our focus to the integration process of our recently acquired Belfast, Casablanca, and Dallas sites. Our Chief Operating Officer, Sam Marnick, has joined us today, and I would like to turn the call over to her to give you a few updates on the integration process as well as progress in our aftermarket business. Sam?