SPIRIT AEROSYSTEMS : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
You should read the following discussion of our financial condition and results
of operations in conjunction with the unaudited condensed consolidated financial
statements and the notes to the unaudited condensed consolidated financial
statements appearing elsewhere in this Quarterly Report on Form 10-Q ("Quarterly
Report"). The following section may include "forward-looking statements."
Forward-looking statements reflect our current expectations or forecasts of
future events. Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "aim," "anticipate," "believe," "could,"
"continue," "estimate," "expect," "forecast," "goal," "intend," "may," "might,"
"objective," "plan," "predict," "project," "should," "target," "will," "would,"
and other similar words, or phrases, or the negative thereof, unless the context
requires otherwise. These statements reflect management's current views with
respect to future events and are subject to risks and uncertainties, both known
and unknown, including, but not limited to, those described in the "Risk
Factors" section of our Annual Report on Form 10-K and Quarterly Reports on Form
10-Q. Our actual results may vary materially from those anticipated in
forward-looking statements. We caution investors not to place undue reliance on
any forward-looking statements.

Important factors that could cause actual results to differ materially from those reflected in such forward-looking statements and that should be considered in evaluating our outlook include, but are not limited to, the following:

1)the timing and conditions surrounding the return to service of the B737 MAX,
future demand for the aircraft, and any residual impacts of the grounding on
production rates for the aircraft;
2)our reliance on Boeing for a significant portion of our revenues;
3)our ability to continue to grow our business and execute our growth strategy
including our ability to enter into profitable supply arrangements with
additional customers;
4)the business condition and liquidity of Boeing, Airbus and other customers and
their ability to satisfy their contractual obligations to the Company;
5)demand for our products and services and the effect of economic or
geopolitical conditions, or other events, such as pandemics, in the industries
and markets in which we operate in the U.S. and globally;
6)the impact of the COVID-19 pandemic on our business and operations, including
on the demand for our and our customers' products and services, on trade and
transport restrictions, on the global aerospace supply chain, on our ability to
retain the skilled work force necessary for production and development and
generally on our ability to effectively manage the impacts of the COVID-19
pandemic on our business operations;
7)the certainty of our backlog, including the ability of customers to cancel or
delay orders prior to shipment;
8)our ability to accurately estimate and manage performance, cost, margins, and
revenue under our contracts, and the potential for additional forward losses on
new and maturing programs;
9)our ability and our suppliers' ability to accommodate, and the cost of
accommodating, changes in the build rates of certain aircraft;
10)competitive conditions in the markets in which we operate, including
in-sourcing by commercial aerospace original equipment manufacturers;
11)our ability to successfully negotiate, or re-negotiate, future pricing under
our supply agreements with Boeing, Airbus and other customers;
12)our ability to effectively assess, manage, and integrate the acquisition of
select assets of Bombardier along with other acquisitions that we pursue, and
generate synergies and other cost savings therefrom, while avoiding unexpected
costs, charges, expenses, and adverse changes to business relationships and
business disruptions;
13)the possibility that our cash flows may not be adequate for our additional
capital needs;
14)our ability to avoid or recover from cyber-based or other security attacks
and other operations disruptions;
15)legislative or regulatory actions, both domestic and foreign, impacting our
operations;
16)the effect of changes in tax laws and rates including as a result of the 2020
U.S. presidential election and our ability to accurately calculate and estimate
the effect of such changes;
17)any reduction in our credit ratings;
18)our dependence on our suppliers, as well as the cost and availability of raw
materials and purchased components;
19)our ability to recruit and retain a critical mass of highly skilled
employees;
20)our relationships with the unions representing many of our employees,
including our ability to avoid labor disputes and work stoppages with respect to
our union employees;
21)spending by the U.S. and other governments on defense;
22)pension plan assumptions and future contributions; and
23)the effectiveness of our internal control over financial reporting; and any
difficulties or delays that could affect the Company's ability to effectively
implement the remediation plan, in whole or in part, to address the material
weakness identified in the Company's internal control over financial reporting,
as described in Item 9A. "Controls and Procedures" of the Annual Report on Form
10-K for the year ended December 31, 2019;
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24)the outcome or impact of ongoing or future litigation, claims, and regulatory
actions, including our exposure to potential product liability and warranty
claims;
25)our ability to continue selling certain receivables through our supplier
financing programs;
26)our ability to access the capital markets to fund our liquidity needs, and
the costs and terms of any additional financing;
27)any regulatory or legal action arising from the review of our accounting
processes;
28)potential impacts on the Company and the jurisdictions it operates relating
to the 2020 U.S. presidential election, including potential changes to the
Department of Defense budgets and spending; and
29)the risks of doing business internationally, including fluctuations in
foreign currency exchange rates, impositions of tariffs or embargoes (including
recent contemplated actions by the World Trade Organization and any retaliatory
actions from other jurisdictions), trade restrictions, compliance with foreign
laws, and domestic and foreign government policies.

These factors are not exhaustive and it is not possible for us to predict all
factors that could cause actual results to differ materially from those
reflected in our forward-looking statements. These factors speak only as of the
date hereof, and new factors may emerge or changes to the foregoing factors may
occur that could impact our business. As with any projection or forecast, these
statements are inherently susceptible to uncertainty and changes in
circumstances. Except to the extent required by law, we undertake no obligation
to, and expressly disclaim any obligation to, publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. You should review carefully the section captioned "Risk
Factors" in our most recent Annual Report on Form 10-K and under Part II, Item
1A, "Risk Factors" in Form 10-Q for the first and second quarters of 2020 and
hereunder for a more complete discussion of these and other factors that may
affect our business.



COVID-19

During the three months ended October 1, 2020, the COVID-19 pandemic has
continued to have a significant negative impact on the aviation industry, our
customers, and our business globally. In response to the pandemic, we and our
customers have implemented production suspensions and our customers have
adjusted production rates. Our customers may reduce or alter production rates
again if circumstances require. A description of our customers' rates are below.
We expect the pandemic and its effects to continue to have a significant
negative impact on our business for the duration of the pandemic and during the
subsequent economic recovery, which could be an extended period of time.

In response to the COVID-19 pandemic, we have enacted our crisis management and
response process as part of our enterprise risk management program to help us
navigate the challenges we face due to the COVID-19 pandemic. Actions that we
have taken include the following (certain capitalized terms are defined further
below):

•Deployed global teams to monitor the situation and recommend appropriate
actions;
•Implemented travel restrictions for our employees;
•Implemented social-distancing standards throughout the workplace and mandated
mask use;
•Initiated consistent and ongoing cleaning of high-touch areas;
•Conducted deep cleaning and sanitization of work spaces potentially exposed to
the virus;
•Established processes aligned with CDC guidelines to work with any exposed
individual on the necessary quarantine period and the process to return to work;
and
•Implemented working from home to minimize potential exposure to the virus.

Spirit has taken several actions to reduce costs, increase liquidity and strengthen our financial position in light of the economic impact of the COVID-19 pandemic, and the B737 MAX impact (further described below), including the following:

•Reduced pay for all executives by 20 percent until further notice;
•Reduced 2020-2021 term non-employee director compensation by 15 percent;
•Reduced planned capital expenditures and operating expenses;
•Suspended share repurchase program;
•Reduced quarterly dividends to one penny per share;
•Initiated multiple production worker furloughs;
•Reduced pay for all U.S. based, salaried employees and implemented a
correlating four-day work week which remains in place for salaried workforce at
its Wichita, Kansas facility until further notice;
•Reduced ~6,600 employees globally including voluntary packages;
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•Amended and eventually terminated our 2018 Credit Agreement and put into place
current Credit Agreement for $400 million;
•Issued $1.2 billion in Second Lien 2025 Notes and $500 million in First Lien
2025 Notes; and
•Elected to defer the payment of $21.4 million in employer payroll taxes
incurred through October 1, 2020, as provided by the Coronavirus Aid, Relief,
and Economic Security Act (the "CARES Act"), of which 50% is required to be
deposited by December 2021 and the remaining 50% by December 2022 and accrued a
pre-tax benefit related to the Employee Retention Credit related to paid
employee furloughs of approximately $13.6 million. In addition, as of October 1,
2020 the Company has recorded a deferral of $29.4 million of VAT payments until
March 2022 under the United Kingdom deferral scheme.

If OEM production rates decline in the future or the expected pandemic recovery timeline lengthens, Spirit will evaluate further cost reduction actions, including additional workforce actions.

Our customers, including Boeing and Airbus, have significantly reduced their
overall production rates as a result of the COVID-19 pandemic and, in the case
of Boeing, the B737 MAX grounding, described below. A discussion of current
rates is set forth below:

Boeing Production Volumes

As of October 1, 2020 the overall rates announced by Boeing and used by the Company in the third quarter of 2020 are as follows:

•B737 MAX, including P-8, of 72 shipsets for 2020, increasing to 31 airplanes
per month ("APM") in 2022;
• B787 average production volume of 10 APM in 2020, decreasing to 6 APM in 2021
and 2022;
• B777/777X average production volume of 3.6 APM in 2020, decreasing to 1.8 APM
in 2021;
• B767 current and future production volume of 3 APM; and
• B747 current production volume of 0.5 APM and ending production in 2022.

The Company is attempting to calibrate its cost structure to the lower
production volumes and manage the impact of excess production capacity across
our sites. The Company's strategy to recalibrate its cost structure is likely to
lead to a consolidation of sites where excess capacity exists.

Airbus Production Volumes

As of October 1, 2020 the overall rates announced by Airbus and used by the Company in third quarter are as follows:

•Single-aisle average production volume of 40 APM;
•A350 average production volume of 3.5 APM in 2020, increasing to 5 APM end of
2021; and
•A330 average production volume of 2 APM.

Due to the uncertain and rapidly evolving nature of current conditions around
the world, we are unable to predict accurately the impact that COVID-19 will
have on our business going forward, including:

•whether there will be additional production suspensions or production rate
reductions relating to the COVID-19 pandemic and the resulting impact on our
financial performance, liquidity and our cash flows;
•if we will have significant employee absenteeism due to fear of COVID-19
infection;
•if we may experience lawsuits or regulatory actions due to COVID-19 spread in
the workplace;
•reputational risk we may experience due to COVID-19 spread in the workplace;
•the effect of significant salary cuts across our workforce, which may result in
critical employee departures;
•the impact remote working arrangements, salary reductions, and shortened work
weeks for salaried employees will have on the health and productivity of
management and our employees, and our ability to maintain our financial
reporting processes and related controls and manage the complex accounting
issues presented by the COVID-19 pandemic such as excess cost accounting,
impairment analysis and business combination controls;
•the impact on the Company's vendors and outsourced business processes and their
process and controls documentation;
•the impact on our suppliers, including whether they will be able to meet our
future needs;
•the impact on our contracts with our customers and suppliers, including force
majeure provisions;
•our ability to withstand and recover from any cyberattacks as a result of a
remote working environment, and potential reputational impacts or loss of
customer contracts as a result of such cyberattacks;
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•the impact on our ability to successfully integrate the Bombardier Acquisition;
•the impact on the public's demand and ability to pay for future airline travel,
whether or not vaccines or effective treatments for COVID-19 become available;
and
•the impact of Government health and protection policies to future air traffic
demand.

Any of these items or all of these items may occur, which individually or in the aggregate may have a material adverse effect on our business, financial condition, results of operations and cash flows.

The extent of the effects of the COVID-19 outbreak on our business, results of operations, cash flows and growth prospects is highly uncertain and will ultimately depend on future developments, most of which are outside of our control. These include, but are not limited to:

•the severity, extent and duration of the global pandemic and its impact on the
aircraft industry;
•the availability of a vaccine or cure that mitigates the effect of the virus;
•actions taken by governments and municipalities to contain the disease or treat
its impact, including travel restrictions and bans, bans on public gatherings,
closures of non-essential businesses and aid and economic stimulus efforts;
•the speed and extent of the recovery across the broader travel ecosystem,
including how long the public will continue to be concerned about the pandemic
and avoid aircraft travel; and
•any economic recession resulting from the pandemic.

The pandemic may continue to expand in regions that have not yet been
significantly affected by the COVID-19 outbreak or may return to regions that
were previously heavily impacted by the pandemic, which could continue to affect
our business. Also, existing restrictions in affected areas could be extended
after the virus has been contained in order to avoid relapses, and regions that
recover from the outbreak may suffer from a relapse and re-imposition of
restrictions.

Our expectation is that our business operations will not improve until our
customers are willing to produce aircraft at sufficient levels, which is
dependent upon the public's willingness to use aircraft travel and sufficient
OEM orders (without suspension) from airlines and the financial resources of
airlines specifically and generally. This may not occur until well after the
broader global economy begins to improve.

CARES Act and United Kingdom Deferral Scheme

On March 27, 2020, the CARES Act was enacted in the United States. The CARES
Act, among other things, provides certain changes to tax laws, which may impact
the Company's results of operations, financial position and cash flows. The
Company is currently implementing certain provisions of the CARES Act, such as
deferring employer payroll taxes and utilizing the ability to carry back and
deduct losses to offset prior income in previously filed tax returns.

As of October 1, 2020, the Company has deferred $21.4 million of employer
payroll taxes, as allowed by the CARES Act, of which 50% are required to be
deposited by December 2021 and the remaining 50% by December 2022 and accrued a
pre-tax benefit related to the Employee Retention Credit related to paid
employee furloughs of approximately $13.6 million. In addition, as of October 1,
2020, the Company has recorded a deferral of $29.4 million of VAT payments until
March 2022 under the United Kingdom deferral scheme.

The CARES Act allows net operating losses to be carried back to the previous
five years, when the federal tax rate was 35%. As of October 1, 2020, the
Company anticipates it will report a net operating loss when it files its fiscal
year 2020 tax return.  Management will continue to monitor potential legislation
as well as dynamic market conditions which may materially alter the anticipated
value of this net operating loss.

As part of the U.S. government's response to COVID-19, to support the health of
the defense industrial base, the Department of Defense allocated certain funds
to our prime customers to expand statements of work. Such allocation includes
$80 million that was set aside for an expansion of the Company work scope in
connection with the Company's critical work on Defense programs. Defense
Production Act Title III contracts support the defense industrial base and use
funds authorized and appropriated under the CARES Act.

B737 Program

The B737 MAX program is a critical program to the Company. For the twelve months
ended December 31, 2019, approximately 53% of our net revenues were generated
from sales of components to Boeing for the B737 MAX aircraft. While
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we have entered into long-term supply agreements with Boeing to continue to
provide components for the B737 for the life of the aircraft program, including
commercial and the military P-8 derivatives, Boeing does not have any obligation
to purchase components from us for any replacement for the B737 that is not a
commercial derivative model as defined by the Sustaining Agreement. The contract
is a requirements contract and Boeing can reduce the purchase volume at any
time.

In March 2019, the B737 MAX fleet was grounded in the U.S. and internationally
following the 2018 and 2019 accidents involving two B737 MAX aircraft. To date,
the fleet remains grounded and the recertification process is continuing. Due to
the grounding and the impacts of COVID-19 on the aviation industry, the Company
has experienced significant deteriorations in its B737 MAX production rates that
have reduced the Company's revenues. A summary of the production rate changes is
below.

•On April 12, 2019, Boeing and the Company executed a Memorandum of Agreement
(the "2019 MOA") providing that the Company was to maintain its delivery rate of
52 shipsets per month with respect to the B737 MAX. Previously, the Company was
expecting to increase production to a rate of 57 shipsets per month in 2019;
•On December 19, 2019, Boeing directed the Company to stop all B737 MAX
deliveries to Boeing effective January 1, 2020. Accordingly, Spirit suspended
all B737 MAX production beginning on January 1, 2020;
•On February 6, 2020, Boeing and Spirit entered into a Memorandum of Agreement
(the "2020 MOA") largely superseding the 2019 MOA and providing for Spirit to
deliver to Boeing 216 B737 MAX shipsets in 2020;
•On May 4, 2020, Boeing and the Company agreed that Spirit would deliver 125
B737 MAX shipsets to Boeing in 2020; and
•On June 19, 2020, Boeing directed Spirit to reduce its 2020 B737 production
plan from 125 to 72 shipsets.

While we have taken actions to align our cost structure to the lower 2020
production rates, the benefit of such actions will be realized over time and the
B737 MAX situation continues to present challenges to our liquidity. These
challenges are exacerbated by the COVID-19 pandemic as other programs that
mitigate the strain of the lower B737 MAX production rate are now suspended or
producing at lower rates.

While recent news reports have indicated that the recertification process for
the B737 MAX continues, we are unable to determine definitively when Boeing will
be able to secure regulatory approval for the B737 MAX. Based on public
information, we have assumed that regulatory approval will enable Boeing to
resume delivering B737 MAX aircraft to its customers in the fourth quarter of
2020. However, the civil aviation authorities control the timeline for
recertification and resumption of deliveries and actual timing may be materially
different. Further, we cannot predict the effect of the COVID-19 pandemic on
this timeline. In the event of delays to this timeline and corresponding changes
to our production rate, we may be required to take actions with longer-term
impact, such as additional changes to our production plans, employment
reductions and/or the expenditure of significant resources to support our supply
chain and/or Boeing.

If Boeing is unable to return the B737 MAX to service in one or more
jurisdictions, begin timely deliveries to customers, or if our customers'
production levels across our programs are reduced beyond current expectations
due to depressed demand relating to COVID-19 or otherwise, our liquidity
position may worsen absent our ability to procure additional financing, our
ability to comply with the terms of our existing indebtedness may be negatively
impacted and our business, financial condition, results of operations and cash
flows could be materially adversely impacted.

Impairment Recoverability of Current and Noncurrent Assets

The Company's operations require management to make estimates, which involve a
significant amount of judgment when completing recoverability and impairment
tests of current and noncurrent assets. Factors that management estimates
include, but are not limited to, program delivery schedules, changes to
identified risks and opportunities, changes to estimated revenues and costs for
the accounting contracts, any outstanding contractual matters, the economic
lives of the assets, foreign currency exchange rates, tax rates, capital
spending, and customers' financial condition. The ability for the Company to
fully assess these factors is challenging and presents many risks and
opportunities, as more fully described in Note 4, Changes in Estimates, to our
condensed consolidated financial statements included in Part I of this Quarterly
Report for more information.

The uncertainties associated with the duration of the COVID-19 pandemic increase
the difficulty in estimating the potential impact of these factors. Actual
results could differ from these estimates, which were based upon circumstances
that existed as of the date of the consolidated financial statements, October 1,
2020. Subsequent to this date, it is reasonably possible that changes to the
global economic situation and to public securities markets as a consequence of
the COVID-19 pandemic could alter estimates as a result of the financial
circumstances of the markets in which the Company operates, the price of the
Company's publicly traded equity in comparison to the Company's carrying value,
and the health of the global economy. Such changes to estimates could
potentially result in impacts that would be material to the consolidated
financial statements, particularly with
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Table of Contents respect to the fair value of the Company's reporting units in relation to potential goodwill impairment and the fair value of long-lived assets in relation to potential impairment.

At October 1, 2020, the net book value of long-lived assets was $2,147.4 million
and the balance of intangible assets was $29.5 million. For the period ended
October 1, 2020, there were no events which would require the Company to update
its impairment analysis.

As of October 1, 2020, the balance of goodwill was $78.4 million. Goodwill
primarily represents the purchase price in excess of the fair value of the net
assets acquired and liabilities assumed in connection with the acquisition of
Fiber Materials Inc. ("FMI") in the first quarter of 2020. Goodwill is primarily
assigned to two reporting units, our fuselage systems reporting unit which is
aligned with our Fuselage Systems Segment, and our propulsion systems reporting
unit which is aligned to our Propulsion Systems Segment.

The Company assesses goodwill for impairment annually or more frequently if
events or circumstances indicate that the fair value of a reporting unit that
includes goodwill may be lower than its carrying value. For the period ended
October 1, 2020, there were no triggering events which would require the Company
to update its goodwill impairment analysis. As discussed above, due to the
inherent uncertainties of the current operating environment, we will continue to
evaluate our reporting units for events or circumstances that indicate that
their fair values may be lower than their carrying values, however, as of
October 1, 2020, management believes that there is sufficient excess fair value
for each of the reporting units such that no material amount of goodwill is at
risk of failing future quantitative impairment tests.

Bombardier Acquisition

On October 31, 2019, Spirit and Spirit UK, wholly owned subsidiaries of the
Company, entered into a definitive agreement (the "Bombardier Purchase
Agreement") with Bombardier Inc., Bombardier Aerospace UK Limited, Bombardier
Finance Inc. and Bombardier Services Corporation (collectively, the "Bombardier
Sellers") pursuant to which Spirit UK agreed to acquire the outstanding equity
of Short Brothers plc ("Shorts") and Bombardier Aerospace North Africa SAS
("BANA"), and Spirit agreed to acquire substantially all the assets of the
maintenance, repair and overhaul business in Dallas, Texas (collectively, the
"Bombardier Acquired Business") and assume certain liabilities of Shorts and
BANA (the "Bombardier Acquisition").

On October 26, 2020, Spirit, Spirit UK and the Bombardier Sellers entered into
an amendment to the Bombardier Purchase Agreement (the "Amendment"). The
Amendment reduced the net proceeds purchase price payable to the Bombardier
Sellers from $500 million to $275 million. Spirit will continue to make a
special contribution of £100 million (approximately $130 million) to the Shorts
pension scheme ("Shorts Pension") on the first anniversary of closing.

On October 30, 2020, Spirit and Spirit UK closed the Bombardier Acquisition and
assumed certain liabilities including the net pension liabilities of the Shorts
Pension and Shorts' financial payment obligations under a repayable investment
agreement with the United Kingdom's Department for Business, Energy and
Industrial Strategy. The acquired business involves aerostructures and
fabrication manufacturing and maintenance, repairs and overhaul ("MRO")
services. The backlog of work includes long-term contracts on Airbus programs,
along with Bombardier business jets. The acquisition is in line with the
Company's growth strategy of increasing Airbus content, growing the Company's
aftermarket business, and developing a low-cost country footprint.

Under the original Bombardier Purchase Agreement, the Pension Contribution was
to be made at Closing. Subsequently, in exchange for a parent guarantee by
Spirit of up to £112.4 million (approximately $146.0 million), the parties
changed the date on which the payment will be made to-one year after closing
(October 30, 2021). The Shorts Pension is in a deficit position and there is a
risk that additional contributions will be required to fund the deficit or from
the trustees the UK Pension Regulator as described under Part II, Item 1A. "Risk
Factors."

Asco Acquisition

On May 1, 2018, the Company and its wholly-owned subsidiary Spirit AeroSystems
Belgium Holdings BVBA ("Spirit Belgium") entered into a definitive agreement (as
amended, the "Asco Purchase Agreement") with certain private sellers (the
"Sellers") providing for the purchase by Spirit Belgium of all of the issued and
outstanding equity of S.R.I.F. N.V., the parent company of Asco Industries N.V.,
subject to certain customary closing adjustments, including foreign currency
adjustments.

On September 25, 2020, the Company, Spirit Belgium and the Sellers entered into
an amendment to the Asco Purchase Agreement (the "Termination Agreement")
pursuant to which the parties agreed to terminate the Asco Purchase Agreement,
including all schedules and annexes thereto (other than certain confidentiality
agreements) (collectively with the Asco Purchase
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Agreement, the "Transaction Documents"), effective as of September 25, 2020.
Under the Termination Agreement, the parties also agreed to release each other
from any and all claims, rights of action, howsoever arising, of every kind and
nature, in connection with, arising out of, based upon or related to, directly
or indirectly, the Transaction Documents, including any breach, non-performance,
action or failure to act under the Transaction Documents.

Results of Operations

The following table sets forth, for the periods indicated, certain of our
operating data:

                                                             Three Months Ended                           Nine Months Ended
                                                     October 1,           September 26,          October 1,           September 26,
                                                        2020                  2019                  2020                  2019
                                                               ($ in millions)                             ($ in millions)
Revenue                                             $    806.3          $      1,919.9          $  2,528.2          $      5,903.8
Cost of sales                                            903.4                 1,647.6             2,941.0                 5,029.1
Gross (loss) profit                                      (97.1)                  272.3              (412.8)                  874.7
Selling, general and administrative                       52.8                    53.6               179.2                   173.6

Restructuring costs                                       19.5                       -          $     68.4                       -
Research and development                                   7.5                    12.6                28.1                    36.0
Loss on disposal of assets                          $        -                       -          $     22.9                       -
Operating (loss) income                                 (176.9)                  206.1              (711.4)                  665.1
Interest expense and financing fee amortization          (53.0)                  (23.6)             (133.8)                  (66.1)
Other (expense) income, net                              (10.0)                   (9.5)              (65.4)                  (11.9)

(Loss) income before income taxes and equity in net (loss) income of affiliate

                              (239.9)                  173.0              (910.6)                  587.1
Income tax benefit (provision)                            85.2                   (41.7)              340.0                  (124.7)

(Loss) income before equity in net (loss) income of affiliate

                                               (154.7)                  131.3              (570.6)                  462.4
Equity in net (loss) income of affiliate                  (0.8)                      -                (3.8)                      -
Net (loss) income                                   $   (155.5)         $        131.3          $   (574.4)         $        462.4

Comparative shipset deliveries by model are as follows:

                                                          Three Months Ended                                 Nine Months Ended
                                               October 1,                September 26,            October 1,                September 26,
Model                                             2020                       2019                    2020                       2019
B737                                                      15                          154                    52                          453
B747                                                       1                            2                     4                            5
B767                                                       9                            9                    20                           25
B777                                                      14                           15                    30                           44
B787                                                      30                           40                    92                          124
Total Boeing                                              69                          220                   198                          651
A220                                                       9                     8                           32                    26
A320 Family                                              108                          160                   365                          510
A330                                                       4                            9                    17                           27
A350                                                      12                           23                    51                           81
A380                                                   -                         -                        -                                1
Total Airbus                                             133                          200                   465                          645
Business and Regional Jets (1)                             4                           17                    26                           43
Total                                                    206                          437                   689                        1,339





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For purposes of measuring production or shipset deliveries for Boeing aircraft
in a given period, the term "shipset" refers to sets of structural fuselage
components produced or delivered for one aircraft in such period. For purposes
of measuring production or shipset deliveries for Airbus and Business/Regional
Jet aircraft in a given period, the term "shipset" refers to all structural
aircraft components produced or delivered for one aircraft in such period. For
the purposes of measuring wing shipset deliveries, the term "shipset" refers to
all wing components produced or delivered for one aircraft in such period. Other
components that are part of the same aircraft shipsets could be produced or
shipped in earlier or later accounting periods than the components used to
measure production or shipset deliveries, which may result in slight variations
in production or delivery quantities of the various shipset components in any
given period.

Net revenues by prime customer are as follows:

                            Three Months Ended                  Nine Months Ended
                      October 1,      September 26,       October 1,      September 26,
Prime Customer           2020              2019              2020              2019
                             ($ in millions)                     ($ in millions)
Boeing               $    493.8      $      1,542.0      $  1,539.9      $      4,705.1
Airbus                    160.1               284.1           575.3               934.0
Other                     152.4                93.8           413.0               264.7
Total net revenues   $    806.3      $      1,919.9      $  2,528.2      $      5,903.8



Changes in Estimates

During the third quarter of 2020, we recognized unfavorable changes in estimates
of $123.8 million, which included net forward charges of $128.4 million, and
favorable cumulative catch-up adjustments related to periods prior to the third
quarter of 2020 of $4.6 million.

We provided previous guidance which disclosed an estimated forecasted forward
loss in the third quarter ended October 1, 2020 on the B787 program of $25-$35
million and the A350 program of $13-$20 million based upon data available as of
July 2, 2020. Throughout the quarter ended October 1, 2020, the demand for wide
body aircraft continued to evolve as a result of uncertainty regarding timing of
resolution of the global pandemic. We evaluated additional schedule and
production demand information received from our customers, market and analyst
data including forecasted demand for wide body aircraft, and as a result,
adjusted the expected results on the B787 and A350 programs to include a lower
rate of production for a longer duration compared to its previous forecast. This
resulted in incremental fixed cost absorption on the B787 and A350 programs and
as a result, the forward loss recognized was $64.7 million on the B787 program
and $44.9 million on the A350 program for the quarter ended October 1, 2020.

During the same period in the prior year, we recognized total unfavorable
changes in estimates of $41.8 million, which included unfavorable changes in
estimates on loss programs of $28.8 million, and unfavorable cumulative catch-up
adjustments related to periods prior to the third quarter of 2019 of $13.0
million.

Three Months Ended October 1, 2020 as Compared to Three Months Ended September 26, 2019

Revenue. Revenues for the three months ended October 1, 2020 were $806.3
million, a decrease of $1,113.6 million, or 58.0%, compared to net revenues of
$1,919.9 million for the same period in the prior year. Lower revenues were
recorded for all segments during the third quarter of 2020 compared to the same
period in the prior year. The decrease in revenues was primarily due to B737 MAX
grounding and lower production activity on B787, B777, A350, and A320 due to
COVID-19, partially offset by increased Defense activity. Approximately 81% of
Spirit's net revenues for the third quarter of 2020 came from our two largest
customers, Boeing and Airbus.

Total production deliveries to Boeing decreased to 69 shipsets during the third
quarter of 2020, compared to 220 shipsets delivered in the same period of the
prior year, primarily driven by decreased production on the B737 MAX and B787
programs. Total production deliveries to Airbus decreased to 133 shipsets during
the third quarter of 2020, compared to 200 shipsets delivered in the same period
of the prior year, primarily driven by decreased production on the A320 and A350
programs. Total production deliveries of business/regional jet wing and wing
components decreased to 4 shipsets during the third quarter of 2020, compared to
17 shipsets delivered in the same period of the prior year. In total, production
deliveries decreased to 206 shipsets during the third quarter of 2020, compared
to 437 shipsets delivered in the same period of the prior year.
Gross (Loss) Profit. Gross Loss was ($97.1) million for the three months ended
October 1, 2020, compared to Gross Profit of $272.3 million for the same period
in the prior year. This decrease was primarily driven by decreased margins
recognized on
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the B737 MAX and B777 programs, additional forward losses on B787 and A350
programs due to reduced production rates, excess capacity production costs of
$72.6 million due to temporary production schedule changes on B737 MAX and A320
programs, and temporary workforce favorable adjustments of $10.9 million due to
COVID-19, net of the U.S. employee retention credit and U.K. government
subsidies. In the third quarter of 2020, we recognized $4.6 million of favorable
cumulative catch-up adjustments related to periods prior to the third quarter of
2020, and $128.4 million of net forward loss charges related to the B787, B747,
B767 A350, and BR725 programs. In the third quarter of 2019, we recorded $13.0
million of unfavorable cumulative catch-up adjustments related to periods prior
to the third quarter of 2019, and $28.8 million of net forward loss charges.

SG&A and Research and Development.  SG&A expense was $0.8 million lower for the
three months ended October 1, 2020, compared to the same period in the prior
year. Research and development expense was $5.1 million lower for the three
months ended October 1, 2020, compared to the same period in the prior year.

Restructuring Costs. Restructuring costs were $19.5 million higher for the three
months ended October 1, 2020, compared to the same period in the prior year for
cost-alignment and headcount reductions as a result of B737 MAX grounding and
COVID-19 impacts.

Operating (Loss) Income.  Operating loss for the three months ended October 1,
2020 was ($176.9) million, a decrease of $383 million, compared to operating
income of $206.1 million for the same period in the prior year. The decrease was
primarily driven by the production schedule changes on B737 MAX, B787, B777,
A350 and A320 programs. Spirit recognized lower margin driven by significantly
less deliveries as a result of B737 MAX grounding and COVID-19 impacts, excess
capacity production costs of $72.6 million, temporary workforce favorable
adjustment of $10.9 million due to COVID-19 net of U.S. employee retention
credit and U.K. government subsidies, and restructuring expenses of $19.5
million for cost-alignment and headcount reductions. Further, Spirit recognized
a non-cash expense of $2.6 million resulting from the Company's Voluntary
Retirement Program (the "VRP"). In addition to the expenses described above,
Spirit recognized forward loss charges of $128.4 million in the third quarter of
2020 related to the B787, B747, B767, A350, and BR725 programs.

Interest Expense and Financing Fee Amortization. Interest expense and financing
fee amortization for the three months ended October 1, 2020 includes
$41.0 million of interest and fees paid or accrued in connection with long-term
debt and $4.4 million in amortization of deferred financing costs and original
issue discount, compared to $19.9 million of interest and fees paid or accrued
in connection with long-term debt and $0.9 million in amortization of deferred
financing costs and original issue discount for the same period in the prior
year.

Other (Expense) Income, net. Other expense, net for the three months ended October 1, 2020 was $10.0 million, compared to $9.5 million for the same period in the prior year. Other expense, net during the third quarter of 2020 was primarily driven by loss reclassified from Accumulated Other Comprehensive Income ("AOCI") as a result of termination of a swap agreement.

Provision for Income Taxes. On March 27, 2020, President Trump signed into U.S.
federal law the CARES Act, which is aimed at providing emergency assistance and
health care for individuals, families, and businesses affected by the COVID-19
pandemic and generally supporting the U.S. economy. The CARES Act, among other
things, includes provisions relating to refundable payroll tax credits,
deferment of employer social security payments, net operating loss carryback
periods, alternative minimum tax credit refunds, modifications to the net
interest deduction limitations and technical corrections to tax depreciation
methods for qualified improvement property. In particular, under the CARES Act,
(i) for taxable years beginning before 2021, net operating loss ("NOL")
carryforwards and carrybacks may offset 100% of taxable income, (ii) NOLs
arising in 2018, 2019, and 2020 taxable years may be carried back to each of the
preceding five years to generate a refund and (iii) for taxable years beginning
in 2019 and 2020, the base for interest deductibility is increased from 30% to
50% of earnings before interest, taxes, depreciation and amortization. The
anticipated impacts of the CARES Act have been incorporated into our results and
are reflected in the effective tax rate outlined below

Our reported tax rate includes two principal components: an expected annual tax
rate and discrete items resulting in additional provisions or benefits that are
recorded in the quarter that an event arises. Events or items that could give
rise to discrete recognition include excess tax benefit in respect of
share-based compensation, finalizing audit examinations for open tax years,
statute of limitations expiration, or a change in tax law.

Deferred income tax assets and liabilities are recognized for future income tax
consequences attributable to differences between the financial statement
carrying amounts for existing asset and liabilities and their respective tax
bases. A valuation allowance is recorded to reduce deferred income tax assets to
an amount that in management's opinion will ultimately be realized. We have
reviewed our material deferred tax assets to determine whether or not a
valuation allowance was necessary. Based on the Company's earnings history, in
conjunction with other positive and negative evidence, we have determined it is
more likely than not that the benefits from the deferred tax assets will be
realized and a valuation allowance is not appropriate at
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this time. We will continue to regularly assess the potential for realization of
our net deferred tax assets in future periods. Changes in future earnings
projections, among other factors, may cause us to record a valuation allowance
against some or all of our net deferred tax assets, which may materially impact
our income tax expense in the period we determine that these factors have
changed.

The income tax benefit for the three months ended October 1, 2020 includes
($78.3) million for federal taxes, ($5.3) million for state taxes and ($1.6)
million for foreign taxes. The income tax benefit for the three months ended
September 26, 2019 includes $39.5 million for federal taxes, ($2.7) million for
state taxes and $4.9 million for foreign taxes. The effective tax rate for the
three months ended October 1, 2020 was 35.5% as compared to 24.1% for the same
period in 2019. As we are reporting a pre-tax loss for the three months ended
October 1, 2020, increases to tax expense result in a decrease to our effective
tax rate and decreases to tax expense result in an increase to our effective tax
rate. The increase to our effective tax rate is primarily due to the benefits
generated related to the carryback of our 2020 estimated income tax loss as
permitted by the CARES Act, to state credits generated, offset by reduction in
the GILTI tax.
The increase from the U.S. statutory tax rate (resulting in incremental tax
benefit) is attributable primarily to the impact of the resulting permanent
benefit related to the carryback of our 2020 estimated tax loss, offset by
foreign tax rates lower than the U.S. rate.

The United Kingdom Finance Act 2020 was passed by the House of Commons on July
2, 2020 and received Royal Assent on July 22, 2020. As a result of the enactment
of this tax law change, we have a re-measurement related to our deferred tax
liabilities in the third quarter of 2020 resulting in less than $1 million of
income tax expense.

Segments. The following table shows segment revenues and operating income for the three months ended October 1, 2020 and September 26, 2019:

                                         Three Months Ended
                                   October 1,      September 26,
                                      2020              2019
                                          ($ in millions)
Segment Revenues
Fuselage Systems                  $    421.1      $      1,005.3
Propulsion Systems                     170.8               520.9
Wing Systems                           168.3               391.0
All Other                               46.1                 2.7
                                  $    806.3      $      1,919.9
Segment Operating (Loss) Income
Fuselage Systems                  $    (96.7)     $        105.8
Propulsion Systems                     (15.6)              111.7
Wing Systems                           (23.2)               53.9
All Other                               19.1                 1.3
                                      (116.4)              272.7
SG&A                                   (52.8)              (53.6)

Research and development                (7.5)              (12.6)
Unallocated cost of sales (1)           (0.2)               (0.4)
Total operating (loss) income     $   (176.9)     $        206.1

(1) Includes $0.2 million reversal of warranty expense and $0.4 million warranty expense for the three months ended October 1, 2020 and September 26, 2019, respectively.

Fuselage Systems Segment, Propulsion Systems Segment, Wing System Segment, and
All Other represented approximately 52%, 21%, 21% and 6%, respectively, of our
net revenues for the three months ended October 1, 2020.

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Fuselage Systems. Fuselage Systems Segment net revenues for the three months
ended October 1, 2020 were $421.1 million, a decrease of $584.2 million, or 58%,
compared to the same period in the prior year. The decrease in revenue was
primarily due to lower production volumes on B737 MAX, B787, B777, and A350
programs partially offset by increased Defense activity. Fuselage Systems
Segment operating margins were (23%) for the three months ended October 1, 2020,
compared to 11% for the same period in the prior year, primarily due to lower
margins recognized on the B737 MAX program due to significantly less deliveries,
forward losses on B787 and A350 programs, excess capacity production costs of
$42.0 million, temporary workforce favorable impact of $7.4 million due to
COVID-19 net of U.S. employee retention credit, and restructuring costs of $6.6
million for cost alignment and headcount reductions. In the third quarter of
2020, the segment recorded favorable cumulative catch-up adjustments of $8.8
million and net forward loss charges of $92.0 million. In comparison, during the
third quarter of 2019, the segment recorded unfavorable cumulative catch-up
adjustments of $14.4 million and net forward loss charges of $18.8 million.

Propulsion Systems. Propulsion Systems Segment net revenues for the three months
ended October 1, 2020 were $170.8 million, a decrease of $350.1 million, or 67%,
compared to the same period in the prior year. The decrease was primarily due to
lower production volumes on B737 MAX, B777, and B787 programs. Propulsion
Systems Segment operating margins were (9%) for the three months ended
October 1, 2020, compared to 21% for the same period in the prior year. This
decrease was primarily driven by lower margins due to significantly less
deliveries on the B737 MAX, and B777 programs, forward loss on B787 program,
excess capacity production costs of $17.5 million, and temporary workforce
favorable impact of $2.9 million due to COVID-19 net of U.S. employee retention
credit, and restructuring costs of $3.8 million for cost alignment and headcount
reductions. The segment recorded unfavorable cumulative catch-up adjustments of
$4.6 million and net forward loss charges of $14.9 million for the three months
ended October 1, 2020. In comparison, during the same period of the prior year,
the segment recorded favorable cumulative catch-up adjustments of $1.8 million
and net forward loss charges of $4.0 million.

Wing Systems. Wing Systems Segment net revenues for the three months ended
October 1, 2020 were $168.3 million, a decrease of $222.7 million, or 57%,
compared to the same period in the prior year. The decrease was primarily due to
lower production volumes on B737 MAX, B777, B787, A320, and A350 programs. Wing
Systems Segment operating margins were (14%) for the three months ended October
1, 2020, compared to 14% for the same period in the prior year, primarily driven
by lower margins due to significantly fewer deliveries on the B737 MAX, forward
losses on B787 and A350 programs, excess capacity cost of $13.1 million,
temporary workforce favorable impact of $0.6 million due to COVID-19 net of U.S
employee retention credit and U.K. government subsidies, and restructuring costs
of $9.1 million for cost alignment and headcount reductions. In the third
quarter of 2020, the segment recorded favorable cumulative catch-up adjustments
of $0.4 million and net forward loss charges of $21.5 million. In comparison,
during the third quarter of 2019, the segment recorded unfavorable cumulative
catch-up adjustments of $0.4 million and $6.0 million of net forward loss
charges.

All Other. All Other segment net revenues consist of sundry sales of
miscellaneous services and natural gas revenues from the Kansas Industrial
Energy Supply Company ("KIESC"). In the three months ended October 1, 2020, all
Other segment net revenues were $46.1 million, an increase of $43.4 million
compared to the same period in the prior year, primarily due to non-recurring
revenue.

Nine Months Ended October 1, 2020 as Compared to Nine Months Ended September 26, 2019

Revenue. Revenues for the nine months ended October 1, 2020 were $2,528.2
million, a decrease of $3,375.6 million, or 57.2%, compared to net revenues of
$5,903.8 million for the same period in the prior year. The decrease in revenues
was primarily due to decreased production activity on the B737 MAX, B777, B787,
A350 and A320, partially offset by increased Defense activity. Approximately
83.7% of Spirit's net revenues for the period came from our two largest
customers, Boeing and Airbus.

Total production deliveries to Boeing decreased to 198 shipsets through third
quarter of 2020, compared to 651 shipsets delivered in the same period of the
prior year, primarily driven by decreased production on the B737 MAX, B777, B767
and B787 programs. Total production deliveries to Airbus decreased to 465
shipsets through third quarter of 2020, compared to 645 shipsets delivered in
the same period of the prior year, primarily driven by decreased production on
the A320, A330 and A350 programs, partially offset by increased A220 deliveries.
Total production deliveries of business/regional jet wing and wing components
decreased to 26 shipsets through third quarter of 2020, compared to 43 shipsets
delivered in the same period of the prior year. In total, production deliveries
decreased to 689 shipsets through third quarter of 2020, compared to 1,339
shipsets delivered in the same period of the prior year.
Gross (Loss) Profit. Gross Loss was ($412.8) million for the nine months ended
October 1, 2020, compared to Gross Profit of $874.7 million for the same period
in the prior year. This decrease was primarily driven by decreased margins
recognized on the B737 MAX, B777, and A320 programs, forward loss charges on
B787 and A350 programs due to reduced
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production rates, excess capacity production costs of $228.8 million, and
temporary workforce adjustment costs of $33.8 million due to COVID-19, net of
the U.S employee retention credit and U.K. government subsidies. Through the
third quarter of 2020, we recognized $30.6 million of unfavorable cumulative
catch-up adjustments related to periods prior to the third quarter of 2020, and
$342.2 million of net forward loss charges related to B787, B747, B767, A350 and
BR725 programs. Through the third quarter of 2019, we recorded $1.8 million of
unfavorable cumulative catch-up adjustments related to periods prior to the
third quarter of 2019, and $21.8 million of net forward loss charges.

SG&A and Research and Development.  SG&A expense was $5.6 million higher for the
nine months ended October 1, 2020, compared to the same period in the prior year
mainly acquisition costs related to Asco and Bombardier. Research and
development expense was $7.9 million lower for the nine months ended October 1,
2020, compared to the same period in the prior year.

Restructuring Costs. Restructuring costs were $ $68.4 million higher for the
nine months ended October 1, 2020 compared to the same period in the prior year
for cost-alignment and headcount reductions related to B737 MAX grounding and
COVID-19 impacts.

Operating (Loss) Income.  Operating loss for the nine months ended October 1,
2020 was ($711.4) million, a decrease of $1,376.5 million, compared to operating
income of $665.1 million for the same period in the prior year. The decrease was
primarily driven by decreased margins on B737 MAX, B777, B787, A350 and A320
programs, excess capacity production costs of $228.8 million, and temporary
workforce adjustment costs of $33.8 million due to COVID-19, net of the U.S.
employee retention credit and U.K. government subsidies. Spirit also recognized
restructuring expenses of $68.4 million for cost-alignment and headcount
reductions, and $22.9 million loss from disposition of assets. Further, Spirit
recognized a non-cash expense of $86.4 million resulting from the VRP. In
addition to the expenses described above, Spirit recognized net forward loss
charges of $342.2 million for the nine months ended October 1, 2020 related to
B787, B747, B767, A350 and BR725 programs.

Interest Expense and Financing Fee Amortization. Interest expense and financing
fee amortization for the nine months ended October 1, 2020 includes
$108.8 million of interest and fees paid or accrued in connection with long-term
debt and $9.8 million in amortization of deferred financing costs and original
issue discount, compared to $57.4 million of interest and fees paid or accrued
in connection with long-term debt and $2.7 million in amortization of deferred
financing costs and original issue discount for the same period in the prior
year.

Other (Expense) Income, net. Other expense, net for the nine months ended
October 1, 2020 was ($65.4) million, compared to ($11.9) million for the same
period in the prior year. Other expense, net through the third quarter of 2020
was primarily driven by the VRP.

Provision for Income Taxes. On March 27, 2020, President Trump signed into U.S.
federal law the CARES Act, which is aimed at providing emergency assistance and
health care for individuals, families, and businesses affected by the COVID-19
pandemic and generally supporting the U.S. economy. The CARES Act, among other
things, includes provisions relating to refundable payroll tax credits,
deferment of employer social security payments, net operating loss carryback
periods, alternative minimum tax credit refunds, modifications to the net
interest deduction limitations and technical corrections to tax depreciation
methods for qualified improvement property. In particular, under the CARES Act,
(i) for taxable years beginning before 2021, net operating loss carryforwards
and carrybacks may offset 100% of taxable income, (ii) NOLs arising in 2018,
2019, and 2020 taxable years may be carried back to each of the preceding five
years to generate a refund and (iii) for taxable years beginning in 2019 and
2020, the base for interest deductibility is increased from 30% to 50% of
earnings before interest, taxes, depreciation and amortization. The anticipated
impacts of the CARES Act have been incorporated into our results and are
reflected in the effective tax rate outlined below.

Our reported tax rate includes two principal components: an expected annual tax
rate and discrete items resulting in additional provisions or benefits that are
recorded in the quarter that an event arises. Events or items that could give
rise to discrete recognition include excess tax benefit in respect of
share-based compensation, finalizing audit examinations for open tax years,
statute of limitations expiration, or a change in tax law.

Deferred income tax assets and liabilities are recognized for future income tax
consequences attributable to differences between the financial statement
carrying amounts for existing asset and liabilities and their respective tax
bases. A valuation allowance is recorded to reduce deferred income tax assets to
an amount that in management's opinion will ultimately be realized. We have
reviewed our material deferred tax assets to determine whether or not a
valuation allowance was necessary. Based on the Company's earnings history, in
conjunction with other positive and negative evidence, we have determined it is
more likely than not that the benefits from the deferred tax assets will be
realized and a valuation allowance is not appropriate at this time. We will
continue to regularly assess the potential for realization of our net deferred
tax assets in future periods.
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Changes in future earnings projections, among other factors, may cause us to
record a valuation allowance against some or all of our net deferred tax assets,
which may materially impact our income tax expense in the period we determine
that these factors have changed.

The income tax benefit for the nine months ended October 1, 2020 includes
($282.7) million for federal taxes, ($55.9) million for state taxes and ($1.4)
million for foreign taxes. The income tax benefit for the nine months ended
September 26, 2019 includes $112.7 million for federal taxes, ($2.8) million for
state taxes and $14.7 million for foreign taxes. The effective tax rate for the
nine months ended October 1, 2020 was 37.3% as compared to 21.2% for the same
period in 2019. As we are reporting a pre-tax loss for the nine months ended
October 1, 2020, increases to tax expense result in a decrease to our effective
tax rate and decreases to tax expense result in an increase to our effective tax
rate. The increase to our effective tax rate is primarily due to the benefits
generated related to the carryback of our 2020 estimated income tax loss as
permitted by the CARES Act, the re-measurement of deferred taxes under the CARES
Act, increases in state tax credits, and increases in the benefit from foreign
rate differences.

The increase from the U.S. statutory tax rate (resulting in incremental tax benefit) is attributable primarily to the impact of the resulting permanent benefit related to the carryback of our 2020 estimated tax loss, the re-measurement of deferred taxes under the CARES Act, and state income tax credits.

Segments. The following table shows segment revenues and operating income for the nine months ended October 1, 2020 and September 26, 2019:

                                         Nine Months Ended
                                   October 1,      September 26,
                                      2020              2019
                                          ($ in millions)
Segment Revenues
Fuselage Systems                  $  1,299.7      $      3,171.7
Propulsion Systems                     565.6             1,525.5
Wing Systems                           582.2             1,197.4
All Other                               80.7                 9.2
                                  $  2,528.2      $      5,903.8
Segment Operating (Loss) Income
Fuselage Systems                  $   (434.6)     $        380.5
Propulsion Systems                     (38.2)              304.9
Wing Systems                           (52.1)              177.1
All Other                               28.9                 2.5
                                      (496.0)              865.0
SG&A                                  (179.2)             (173.6)

Research and development               (28.1)              (36.0)
Unallocated cost of sales (1)           (8.1)                9.7
Total operating (loss) income     $   (711.4)     $        665.1

(1) Includes $2.7 million warranty expense and $10.1 million reversal of warranty expense for the nine months ended October 1, 2020 and September 26, 2019, respectively.

Fuselage Systems Segment, Propulsion Systems Segment, Wing Systems Segment, and
All Other represented approximately 51.4%, 22.4%, 23.0% and 3.2%, respectively,
of our net revenues for the nine months ended October 1, 2020.

Fuselage Systems. Fuselage Systems Segment net revenues for the nine months
ended October 1, 2020 were $1,299.7 million, a decrease of $1,872 million, or
59.0%, compared to the same period in the prior year. The decrease in revenue
was primarily due to lower production volumes on B737 MAX, B777, B787 and A350
programs partially offset by increased activity on defense. Fuselage Systems
Segment operating margins were (33%) for the nine months ended October 1, 2020,
compared to 12% for the same period in the prior year, primarily due to lower
margins recognized on the B737 MAX program due to grounding, less deliveries on
B777 program, forward losses on B787, A350 and B767 programs, excess capacity
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production costs of $143.8 million, temporary workforce reductions of $19.1
million due to COVID-19 net of U.S. employee retention credit, restructuring
costs of $39.1 million for cost alignment and headcount reductions, and $22.5
million loss from disposition of assets. Through the third quarter of 2020, the
segment recorded unfavorable cumulative catch-up adjustments of $18.9 million
and net forward loss charges of $260.3 million. In comparison, during the same
period of 2019, the segment recorded unfavorable cumulative catch-up adjustments
of $2 million and net forward charges of $13.8 million.

Propulsion Systems. Propulsion Systems Segment net revenues for the nine months
ended October 1, 2020 were $565.6 million, a decrease of $959.9 million, or
62.9%, compared to the same period in the prior year. The decrease was primarily
due to lower production volumes on B737 MAX, B777, B787 and BR725 programs.
Propulsion Systems Segment operating margins were (7%) for the nine months ended
October 1, 2020, compared to 20% for the same period in the prior year. This
decrease was primarily driven by lower margins due to significantly less
deliveries on the B737 MAX program due to grounding, less deliveries on B777
program, forward loss on B787 program, excess capacity costs of $50.8 million,
temporary workforce reductions of $7.3 million due to COVID-19 net of U.S
employee retention credit, restructuring costs of $14.2 million for cost
alignment and headcount reductions. The segment recorded unfavorable cumulative
catch-up adjustments of $8.6 million and net forward loss charges of $34.2
million for the nine months ended October 1, 2020. In comparison, during the
same period of the prior year, the segment recorded unfavorable cumulative
catch-up adjustments of $1.5 million and net forward loss charges of $3.1
million.

Wing Systems. Wing Systems Segment net revenues for the nine months ended
October 1, 2020 were $582.2 million, a decrease of $615.2 million, or 51.4%,
compared to the same period in the prior year. The decrease was primarily due to
lower production volumes on B737 MAX, B777, B787, A320 and A350 programs. Wing
Systems Segment operating margins were (9%) for the nine months ended October 1,
2020, compared to 15% for the same period in the prior year, primarily due to
lower margins recognized on the B737 MAX and A320 program due to less
deliveries, forward losses on B787 and A350 programs, excess capacity costs of
$34.2 million, temporary workforce reductions of $7.4 million due to COVID-19
net of U.S employee retention credit and U.K. government subsidies,
restructuring costs of $15.1 million for cost alignment and headcount
reductions, and $0.4 million loss from the disposition of assets. Through the
third quarter of 2020, the segment recorded unfavorable cumulative catch-up
adjustments of $3.1 million and net forward loss charges of $47.7 million. In
comparison, through the third quarter of 2019, the segment recorded favorable
cumulative catch-up adjustments of $1.7 million and $4.9 million of net forward
loss charges.

All Other. All Other segment net revenues consist of sundry sales of
miscellaneous services and natural gas revenues from KIESC, a tenancy in common
with other Wichita companies established to purchase natural gas where we are a
major participant. In the nine months ended October 1, 2020, all Other segment
net revenues were $80.7 million, an increase of $71.5 million compared to the
same period in the prior year, primarily due to non-recurring programs.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our
operating, investing, and financing activities. Our principal source of
liquidity is operating cash flows from continuing operations. Our operating cash
flows from continuing operations have been adversely impacted by the B737 MAX
grounding and the COVID-19 pandemic (and resulting production rate changes
associated with both events) and we expect that adverse impact to continue for
the remainder of 2020 and beyond. For purposes of assessing our liquidity needs
in this section, we have assumed that Boeing would not further reduce the B737
MAX production rate (which naturally depends on the timely recertification of
the B737 MAX and timely return to service) and that other customers generally
would not further reduce their production rates.

We expend significant capital as we undertake new programs, meet increased
production rates on certain mature and maturing programs, and develop new
technologies for the next generation of aircraft, which may not be funded by our
customers. As part of our cost-reduction actions, we have reduced our capital
expenditures. In addition, other significant factors that affect our overall
management of liquidity include: debt service, redemptions or repayment of debt
or incentive obligations, the ability to attract long-term capital at
satisfactory terms, research and development, capital expenditures, and merger
and acquisition activities, such as the Bombardier aerostructures acquisitions.
Historically, share repurchases and dividend payments have also been factors
affecting our liquidity. Our share repurchase program is paused and we reduced
our quarterly dividend to one penny per share.

In the three months ended October 1, 2020, we issued the Second Lien 2025 Notes
with a principal amount of $1.2 billion and, as of October 1, 2020, our debt
balance is $2,994.5 million.

As of October 1, 2020, we had $1,441.3 million of cash and cash equivalents on
the balance sheet, which reflects a decrease of $505.8 million from the cash and
cash equivalents balance of $1,947.1 million as of July 2, 2020.
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We believe our cash on hand and cash flows generated from operations coupled
with our ability to vary our cost structure quickly, will provide sufficient
liquidity to address the challenges and opportunities of the current market and
our global cash needs, including M&A integration activities, capital
expenditures, debt service, and working capital, although we could experience
significant fluctuations in our cash flows from period to period during the
crisis. As of October 1, 2020, we were in compliance with all applicable
covenants under our 2018 Credit Agreement, as amended. The 2018 Credit Agreement
was terminated on October 5, 2020.

The COVID-19 pandemic has created significant uncertainty in our industry.
Aviation demand has deteriorated due to the pandemic and responsive government
preventative measures. Our customers have reduced their production rates, which
negatively impacts results of operations and cash flows. We are unable to
predict the outcome of the pandemic and the resulting impact on the aviation
industry and, accordingly, cannot predict the outcome on our operations. The
Company has taken a number of actions to assist with managing the impacts of the
COVID-19 pandemic, including those described earlier in this section.

Apart from the COVID-19 pandemic, the B737 MAX grounding creates significant
liquidity challenges for the Company. For the twelve months ended December 31,
2019, approximately 53% of our net revenues were generated from sales of
components to Boeing for the B737 aircraft. Spirit's production plan for the
B737 MAX in 2020, at 72 total shipsets to be delivered to Boeing, is
significantly less than its production rate of 606 shipsets in 2019. Further,
the COVID-19 pandemic may delay the recertification timeline for the B737 MAX
and/or cause Boeing to further lower the current production rate. While Spirit
has taken significant actions to curb costs and preserve liquidity, the B737 MAX
grounding combined with the COVID-19 pandemic significantly challenges Spirit's
liquidity.

If Boeing is unable to return the B737 MAX to service in one or more
jurisdictions, begin timely deliveries to customers, if production levels by
Boeing or Airbus are reduced beyond current expectations due to depressed demand
relating to the COVID-19 pandemic or otherwise, or if Spirit has difficulties in
managing its cost structure to take into account changes in production
schedules, Spirit's liquidity position may worsen absent Spirit's ability to
procure additional financing, and Spirit's business, financial condition,
results of operations and cash flows could be materially adversely impacted.

Furthermore, if the B737 MAX production rates and other production rates are
insufficient to generate the cash the Company needs for working capital in the
future or if production levels by Boeing or Airbus are reduced beyond current
expectations due to depressed demand, the COVID-19 pandemic or otherwise, the
Company may need to access the debt or equity markets for additional liquidity.
To the extent the Company is unable to secure such additional liquidity the
Company's operations and financial position could be materially adversely
affected. The Company may not be able to obtain new debt or equity financing in
light of the significant uncertainty relating to the B737 MAX or the impacts of
the COVID-19 pandemic or otherwise.

The Company has two agreements to sell, on a revolving basis, certain trade
accounts receivable balances with Boeing and Airbus to third party financial
institutions. These programs were primarily entered into as a result of Boeing
and Airbus seeking payment term extensions with the Company and they continue to
allow Spirit to monetize the receivables prior to their payment date, subject to
payment of a discount. Our ability to continue using such agreements is
primarily dependent upon the strength of Boeing's and Airbus's financial
condition. If any of these financial institutions involved with these
arrangements experiences financial difficulties, becomes unwilling to support
Boeing or Airbus due to a deterioration in their financial condition or
otherwise, or is otherwise unable to honor the terms of the factoring
arrangements, we may experience significant disruption and potential liquidity
issues due to the failure of such arrangements, which could have an adverse
impact upon our operating results, financial condition and cash flows.














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Cash Flows

The following table provides a summary of our cash flows for the nine months ended October 1, 2020 and September 26, 2019:

For the Nine Months Ended

September 26,
                                                                    October 1, 2020             2019
                                                                           

($ in millions)

Net cash (used in) provided by operating activities                $       (612.8)         $      718.6
Net cash used in investing activities                                      (183.4)               (118.7)
Net cash (used in) provided by financing activities                        (105.6)                113.5
Effect of exchange rate change on cash and cash equivalents                  (3.3)                (13.5)

Net (decrease) increase in cash, cash equivalents and restricted cash for the period

                                                        (905.1)                699.9

Cash, cash equivalents, and restricted cash beginning of period 2,367.2

                 794.1

Cash, cash equivalents, and restricted cash, end of period $ 1,462.1 $ 1,494.0

Nine Months Ended October 1, 2020 as Compared to Nine Months Ended September 26, 2019

Operating Activities. For the nine months ended October 1, 2020, we had a net
cash outflow of $612.8 million from operating activities, an increase in outflow
of $1,331.4 million compared to a net cash inflow of $718.6 million for the same
period in the prior year. The increase in net cash outflow is primarily due to
negative impacts of working capital requirements driven by supplier payments
made and reduction of cash inflow from operating activities following the rate
reduction due to B737 MAX grounding and COVID-19 pandemic. This was offset by
the cash payments of $215 million received from Boeing as part of the 2020 MOA.

Investing Activities. For the nine months ended October 1, 2020, we had a net
cash outflow of $183.4 million for investing activities, an increase in outflow
of $64.7 million compared to a net cash outflow of $118.7 million for the same
period in the prior year. The increase in cash outflow is primarily due to the
FMI acquisition.

Financing Activities. For the nine months ended October 1, 2020, we had a net
cash outflow of $105.6 million for financing activities, an increase in outflow
of $219.1 million, compared to a net cash inflow of $113.5 million for the same
period in the prior year primarily driven by the payment of the 2018 Revolver in
second quarter 2020, repayment of the 2018 Term Loan and D2018 DDTL in third
quarter 2020, partially offset by the proceeds from the issuance of the Second
Lien 2025 Notes. There was a cash inflow due to a the 2018 DDTL of $250 million
during the first quarter of 2019. During the nine months ended October 1, 2020,
there were no repurchases of Common Stock under our share repurchase program,
compared to 796,409 shares repurchased for $75 million during the same period in
the prior year. Additionally, during the nine months ended October 1, 2020, we
paid a dividend of $14.4 million to our stockholders of record, compared to a
dividend of $37.8 million paid in the same period in the prior year.

Pension and Other Post-Retirement Benefit Obligations

Our U.S. pension plan remained fully funded at October 1, 2020, and we
anticipate non-cash pension income for 2020 to remain at or near the same level
as 2019. Our plan investments are broadly diversified and we do not anticipate a
near-term requirement to make cash contributions to our U.S. pension plan. See
Note 16, Pension and Other Post-Retirement Benefits, for more information on the
Company's pension plans.

On October 30, 2020, Spirit and Spirit UK closed the Bombardier Acquisition and
assumed certain liabilities including the net pension liabilities of the Shorts
Pension. Under the original Bombardier Purchase Agreement, the Pension
Contribution was to be made at Closing. Subsequently, in exchange for a parent
guarantee by Spirit of up to £112.4 million (approximately $146.0 million), the
parties changed the date on which the payment will be made to one year after
closing (October 30, 2021). The Shorts Pension is in a deficit position and
there is a risk that additional contributions will be required to fund the
deficit from the trustees or the UK Pension Regulator as described under Part
II, Item 1A. "Risk Factors."



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Interest Rate Swaps

 On March 15, 2017, the Company entered into an interest rate swap agreement,
with an effective date of March 31, 2017. The swap has a notional value of
$250.0 million and fix the variable portion of the Company's floating rate debt
at 1.815%. The swap expired in March 2020.

Cash Flow Hedges

During the third quarter of 2019, the Company entered into two interest rate
swap agreements with a combined notional value of $450.0. As of October 1, 2020,
the Company has one swap agreement with a notional value of $150.0. These
derivatives have been designated as cash flow hedges by the Company. The fair
value of these hedges was a liability of $1.7 as of October 1, 2020, which is
recorded in the other current liabilities line item on the Condensed
Consolidated Balance Sheet.

Changes in the fair value of cash flow hedges are recorded in AOCI and recorded
in earnings in the period in which the hedged transaction occurs. The loss
recognized in AOCI was $0.0 and $14.2 million for the three and nine months
ended October 1, 2020, respectively. For the three and nine months ended
October 1, 2020, a loss of $1.6 million and $3.0 million was reclassified from
AOCI to earnings, and included in the interest expense line item on the
Condensed Consolidated Statement of Operations, and in operating activities on
the Condensed Consolidated Statement of Cash Flows. For the three and nine
months ended October 1, 2020 a loss of $10.4 million was reclassified from AOCI
to earnings resulting from the termination of a swap agreement, and included in
the other income line item on the Condensed Consolidated Statement of
Operations, and in operating activities on the Condensed Consolidated Statement
of Cash Flows. Within the next 12 months, the Company expects to recognize a
loss of $1.7 million in earnings related to these hedged contracts. As of
October 1, 2020, the maximum term of hedged forecasted transactions was 9
months.

Debt and Other Financing Arrangements

On September 30, 2020 Spirit paid the remaining balance of the 2018 Term Loan and the 2018 DDTL. As of October 1, 2020, the outstanding balance and the carrying value of the 2018 Term Loan and the 2018 DDTL was $0.0.

The carrying value of the Floating Rate Notes, 2023 Notes, and 2028 Notes was $299.6 million, $298.7 million, and $694.5 million as of October 1, 2020, respectively.

The carrying value of the Second Lien 2025 Notes and 2026 Notes was $1,183.4 and $298.0 million as of October 1, 2020, respectively.

See Note 15, Debt, to our condensed consolidated financial statements included in Part I of this Quarterly Report for more information.

Supply Chain Financing Applicable to Suppliers

The Company has also provided its suppliers with access to a supply chain
financing program through a facility with a third party financing institution.
This program was primarily entered into as a result of Spirit and its
subsidiaries seeking payment term extensions with suppliers and the program
allows suppliers to monetize the receivables prior to their payment date,
subject to payment of a discount. Our suppliers' ability to continue using such
agreements is primarily dependent upon the strength of our financial condition.
While our suppliers' access to this supply chain financing program could be
curtailed if our credit ratings are downgraded, we do not believe that changes
in the availability of supply chain financing to our suppliers will have a
significant impact on our liquidity.

The balance of payables to suppliers who elected to participate in supply chain
financing program that is included in our accounts payable balance as of October
1, 2020 is $41.4 million. The balance as of September 26, 2019 was $149.4
million. Payables to suppliers who elected to participate in the supply chain
financing program decreased by $95.9 million for the nine months ended October
1, 2020 and increased by $99.2 million for the same period in the prior year.
The decrease for the nine months ended October 1, 2020 was primarily due to
reduced production on certain programs and associated decreases in purchases
from suppliers and not due to any changes in the availability of supply chain
financing. The increase for the nine months ended September 26, 2019 reflects a
combination of higher purchases, an extension of payment terms with certain
suppliers and increased utilization of our supply chain financing programs.



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Advance Payments

Advances on the B737 Program. The 2019 MOA included the terms and conditions for
an advance payment to be made from Boeing to Spirit in the amount of $123.0
million, which was received during the third quarter of 2019. The 2020 MOA
extended the repayment date of the $123.0 million advance received by Spirit
under the 2019 MOA to 2022. The 2020 MOA also required Boeing to pay $225
million to Spirit in the first quarter of 2020, consisting of (i) $70 million in
support of Spirit's inventory and production stabilization, of which $10 million
will be repaid by Spirit in 2021, and (ii) $155 million as an incremental
pre-payment for costs and shipset deliveries over the next two years.

Advances on the B787 Program.  Boeing has made advance payments to Spirit under
the B787 Supply Agreement that are required to be repaid to Boeing by way of
offset against the purchase price for future shipset deliveries. As of
October 1, 2020, the amount of advance payments received by us from Boeing under
the B787 Supply Agreement and not yet repaid was approximately $212 million.


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