*

Furloughs affect employees on Boeing's ( BA ) 767 and 777

programs

*

Spirit Aero warns of further layoffs if strike continues

past

November

(Adds Spirit statement, CEO comment in paragraphs 1, 4-5,

details on Boeing ( BA ) furloughs in paragraph 10; share activity in

last paragraph)

By Allison Lampert and Mike Stone

Oct 18 (Reuters) - Spirit AeroSystems ( SPR ) told

employees on Friday that it will furlough 700 workers for 21

days as an over one-month-long strike at U.S. planemaker Boeing ( BA )

eats into the supplier's cash and inventory space.

The furloughs, first reported by Reuters, will affect Spirit

Aero employees working on Boeing's ( BA ) 767 and 777 widebody jet

programs. Production of those jets was halted during the strike

by more than 33,000 U.S. West Coast factory workers since Sept.

13.

The furloughs follow other Spirit efforts to cut costs,

including a hiring freeze and travel and overtime restrictions.

Spirit said in a statement on Friday it does not have room

for additional storage of the 767 and 777 fuselages it builds.

"We recognize the impact this has on our valued teammates

and their families, and we are committed to supporting them

through this period," said Spirit CEO Pat Shanahan.

Boeing ( BA ) suppliers, who invested heavily on materials and

tooling to support the planemaker's planned ramp-up of jets,

have been furloughing workers in recent weeks and holding off on

investments due to the strike.

Wichita, Kansas-based Spirit Aero also warned it would have

to lay off workers and announce additional furloughs if the

strike continues past November, Spirit spokesperson Joe Buccino

said.

Boeing ( BA ) declined to comment.

Boeing ( BA ) and its supply chain have weathered a series of

crises over the last six years, including a 737 MAX safety

grounding after two fatal crashes, the global pandemic, and a

quality crisis since the blowout of a door plug in January.

Boeing ( BA ) furloughed thousands of salaried employees on a

rolling basis after the strike began but cancelled those last

week after it announced plans to cut 10% of the company's

workforce, or about 17,000 jobs.

Spirit Aero's second-quarter losses more than doubled. One

industry source familiar with the matter said the company has

scaled back production of 737 MAX fuselages from 31 a month to

21 a month in August, September and October, and may have to

reduce further. Boeing ( BA ) has been checking in regularly with

Spirit Aero over its finances, a second source said.

Spirit has fully drawn a $350-million bridge term loan

facility set up when Boeing ( BA ) agreed to acquire its supplier, and

it is expected to be asking for additional help from the

planemaker, the source said.

Spirit declined to comment on its loan facility and output.

Since March, Boeing ( BA ) has been inspecting the new fuselages at

Spirit's Kansas factory and vetting has taken longer than

expected, a third industry source said. The delays had already

slowed deliveries of 737 MAX fuselages from Spirit to Boeing's ( BA )

Renton, Washington, factory.

The delays and the strike have made it less likely that

Boeing ( BA ) will meet its goal to produce 38 MAX jets a month by the

end of 2024, up from 25 jets a month in July.

During the strike, Spirit Aero has increased inspections of

737 MAX fuselages at its factory so more will be ready when the

stoppage ends, Buccino said.

Spirit Aero shares dipped 0.6% in morning trading, but are

on pace for a weekly gain.