By Valerie Insinna and Abhijith Ganapavaram
(Reuters) -Aerospace supplier Spirit AeroSystems on Monday named board member Patrick Shanahan as its interim chief executive, effective immediately, succeeding under-pressure Thomas Gentile, who has resigned from the board.
Shanahan, who has served on the company’s board since November 2021, was previously an executive with Boeing Co, Spirit’s biggest customer.
Spirit said its board will conduct a search to identify a new CEO, while Gentile will stay on as a consultant for three months.
Spirit shares have fallen 45% since the beginning of the year due to financial difficulties, including a two-week work stoppage at its Kansas-based production plant, the discovery of several costly 737 production errors, and more than $200 million in losses on Airbus and Boeing plane production programs.
Shares of Spirit were down 0.8% before the bell.
Gentile was named Spirit’s CEO in August 2016, months after he joined the company as its chief operating officer. He oversaw the company during the 737 MAX crisis and pandemic, steering plans to diversify Spirit revenues with more defense and aftermarket work.
In September, Gentile said current contracts with Boeing and Airbus were “not sustainable” due to rising inflation and needed to be renegotiated.
Over a 31-year career at Boeing, Shanahan was known as “Mr. Fix-It” for his ability to turn around poorly-performing programs. He was put in charge of the 787 Dreamliner in 2008 during a troubled time in the program’s development and rose to become Boeing’s senior vice president for supply chain and operations in 2016.
His career with Boeing ended in 2017, when he became deputy secretary of defense. He was tapped to succeed Jim Mattis as defense secretary in May 2019, but withdrew in June 2019.
Shanahan said in a statement he intends to stabilize Spirit’s operations and “optimize” cash flow.
“I believe Spirit possesses the assets, know-how and talent to satisfy the extraordinary aviation demand and mitigate global supply chain challenges,” he said.
(Reporting by Abhijith Ganapavaram in Bengaluru and Valerie Insinna in Washington; Editing by Shailesh Kuber and Sharon Singleton)
