We are one of the largest independent non-OEM aircraft parts designers and
manufacturers of commercial aerostructures in the world, based on annual revenues,
as well as the largest independent supplier of aerostructures to Boeing. In
addition, we are one of the largest independent suppliers of aerostructures
to Airbus. Boeing and Airbus are the two largest aircraft OEMs in the world.
Aerostructures are structural components such as fuselages, propulsion systems
and wing systems for commercial and military aircraft.
We derive our revenues primarily through long-term supply agreements with Boeing
and Airbus. Approximately 84% and 11% of our net revenues were generated from
sales to Boeing and Airbus, respectively. We are currently the sole-source supplier
for nearly all of the products we sell to Boeing and Airbus. We are a critical
partner to our customers due to the broad range of products we currently supply
to them and our leading design and manufacturing capabilities using both metallic
and composite materials. Under our supply agreements with Boeing and Airbus,
we supply products for the life of the aircraft program (other than the A350
XWB and A380), excluding Airbus commercial derivative models. For the A350 XWB
and A380, we have long-term requirements contracts with Airbus.
We manufacture aerostructures for every Boeing commercial aircraft currently
in production, including the majority of the airframe content for the Boeing
B737, the most popular major commercial aircraft in history. As a result of
our unique capabilities both in process design and composite materials, we were
awarded a contract that makes us the largest aerostructures content supplier
on the Boeing B787, Boeings next generation twin aisle aircraft. In addition,
we are one of the largest content suppliers of wing systems for the Airbus A320
family. We are a significant supplier for the Airbus A380 and the Airbus A350
XWB (Xtra Wide-Body). Sales related to the commercial aircraft market, some
of which may be used in military applications, represented approximately 99%
of our net revenues.
Since Spirits incorporation, the Company has expanded its customer base to
include Sikorsky, Rolls-Royce, Bombardier, Mitsubishi Aircraft Corporation,
Bell Helicopter, Southwest Airlines, United Airlines and American Airlines.
The Company has its headquarters in Wichita, Kansas, with manufacturing facilities
in Tulsa and McAlester, Oklahoma; Prestwick, Scotland; Wichita and Chanute,
Kansas; Kinston, North Carolina; Saint-Nazaire, France; and Subang, Malaysia.
Leading Position in the Growing Commercial Aerostructures Market. We are one
of the largest independent non-OEM commercial aerostructures manufacturers with
an estimated 21% market share of the global market. Based on their published
aircraft backlog figures.
We are under contract to provide aerostructure products for approximately
97% of the aircraft that comprise this commercial aircraft backlog. We are currently
the sole-source supplier for nearly all of the products we sell to Boeing and
Airbus. The significant Boeing and Airbus aircraft order backlog for scheduled
deliveries, and our strong relationships with Boeing and Airbus, should enable
us to continue to grow our profit from our core commercial aerostructures business.
Participation on High-Volume and Major Growth Platforms. We derive a high proportion
of our Boeing revenues from the high-volume B737 program and a high proportion
of our Airbus revenues from the high-volume A320 program. Boeings backlog consists
of approximately 4,400 B737s (more than eight years of backlog at current build
rates), including the 737 MAX orders, and Airbus backlog consists of approximately
5,500 aircraft in the A320 family (more than ten years of backlog at current
build rates), including A320 NEO orders. The B737 and A320 families are Boeings
and Airbus best-selling commercial airplanes, respectively. We have also been
awarded a significant amount of work on major twin-aisle programs, the B777,
B787 and A350 XWB.
Stable Base Business. We have entered into long-term supply agreements with
Boeing and Airbus, our two largest customers, making us the exclusive supplier
for most of the products covered by these contracts. Our supply agreements with
Boeing provide that we will continue to supply essentially all of the products
we currently supply to Boeing for the life of the current aircraft programs,
including commercial derivative models. The principal supply agreements we have
entered into with Boeing make us Boeings exclusive source for substantially
all of the products covered by the agreements.
Under our supply agreements with Airbus, we supply most of our products for
the life of the aircraft program, including commercial derivative models. For
the A380 and A350 XWB, we have long-term requirements contracts with Airbus
that cover a fixed number of units.
Strong Incumbent and Competitive Position. We have a strong incumbent position
on the products we currently supply to Boeing and Airbus, forged by long-standing
relationships and long-term supply agreements. Several members of our management
team have a long history of working in the aerospace industry. We believe our
management team possesses inherent knowledge of and relationships with Boeing
and Airbus that may not be matched to a corresponding degree between other suppliers
and these two OEMs.
We believe that OEMs incur significant costs to change aerostructures suppliers
once contracts are awarded. Such changes after contract award require additional
testing and certification, which may create production delays and significant
costs for both the OEM and the new supplier. We also believe it would be cost
prohibitive for other suppliers to duplicate our facilities and the thousands
of major pieces of equipment that we own or operate.
The insurable values represent the estimated replacement cost of buildings
and equipment used in our operations and covered by property insurance, and
exceed the fair value of assets acquired as determined for financial reporting
purposes. As a result, we believe that as long as we continue to meet our customers
requirements, the probability that they change suppliers on our current statement
of work is quite low. Our incumbent position also provides us with a competitive
advantage with respect to new business from our customers.
Industry-Leading Technology, Design Capabilities and Manufacturing Expertise.
Spirit AeroSystems, independently, and previously as Boeing Wichita, has over
85 years of experience designing and manufacturing large-scale, complex aerostructures.
We possess industry-leading engineering capabilities that include significant
expertise in structural design, technology development, test, and regulatory
certification (FAA and international civil aviation authorities). We specialize
in the use of metallic and composite materials, conducting stress analyses to
ensure structural integrity, systems engineering to ensure customer and regulatory
requirements are clearly identified and managed, and acoustics technology.
Drawing on talent across the globe, Spirit AeroSystems is an industry leader
in aerospace engineering. We possess knowledge and manufacturing know-how that
customers depend on and that would be difficult for other suppliers to replicate.
In addition to our engineering expertise, we have strong manufacturing and technological
capabilities. Our manufacturing processes are highly automated, delivering efficiency
and quality, and we have expertise in manufacturing aerostructures using both
metallic and composite materials. We have strong technical expertise in bonding
and metals fabrication, assembly, tooling and composite manufacturing, including
the handling of all composite material grades and fabricating large-scale complex
contour composites. We provide aftermarket support for the products we design
and build.
We believe our technological, engineering and manufacturing capabilities separate
us from many of our competitors and give us a significant competitive advantage
to grow our business and increase our market share. The fact that we are one
of the major external suppliers of forward fuselages for large commercial aircraft
demonstrates our industry leadership. The forward fuselage is one of the most
complex and technologically advanced aerostructures on a commercial aircraft
because it must satisfy the aircrafts contour requirements; balance strength,
aerodynamics and weight; and house the cockpit and avionics.
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