The Spirit Aerosystems Magazine

October 2012 | Volume 6 | Issue 1 Resilience MOVING FORWARD WITH Why SpiritWhy The Spirit AeroSystems Magazine Spirit The Is YourIs Choice

TABLE OF CONTENTS FEATURE ARTICLES: MOMENTUM THE SPIRIT AEROSYSTEMS MAGAZINE Moving forward with 04 EDITOR: RESILIENCE Lisa Conklin On Saturday, April 14, an EF-3 tornado slammed into Spirit Wichita. After employees CONTRIBUTORS: working that night were accounted for, the Jarrod Bartlett next order of business was to start delivering Jeff Black airplanes again as quickly as possible. Mike Jackson Sharon Pullen Lin Ramsay Sam Sackett Spirit Creative Services Engineering Design 07 Center in NASHVILLE Momentum is published periodically for external readers as well as Spirit AeroSystems employees worldwide.

08 101 The copyright for photographs and “Airbus is a critical customer for Spirit, and as illustrations in Momentum is not always owned by Spirit AeroSystems. Please contact we continue to grow our relationship with Spirit AeroSystems for more information. Airbus, we hope to grow our work statement as well.” CONTACT: Momentum P.O. Box 780008 MC K12-14 Wichita, KS 67278-0008 [email protected]

To subscribe to the electronic Community version of Momentum, visit 11 SPIRIT www.spiritaero.com/momentum.aspx In Wichita, employees collected more than $60,000 in monetary donations, and nearly $20,000 in school supplies to total an $80,000 © Spirit AeroSystems, 2012 donation to help local school children in need.

14 2Q Earnings 2012 CONNECT ONLINE @spiritaero spiritaero spiritaerocorporate Resilience On Saturday, April 14, immediately. Any delay in delivering said Stewart Johnson, director to our customers could literally leave for 737 quality. “The entire team rallied passengers without a plane to ride in.” to bring back operations in an effort to an EF-3 tornado minimize any disruption to Boeing and Orders completed before the storm slammed into Spirit Wichita. its customers.” began shipping just five days after the After employees working that night tornado hit. Some Aftermarket items How did Spirit return to shipped four days after the storm, and were accounted for, the next order operations so quickly? of business was to start delivering on day six, railcars were moving again airplanes again as quickly as possible. with 737 fuselages. In large part, it was because of An initial assessment of the facility partnerships with contractors like Eby found that Spirit’s operational “The fuselages shipped just three days Construction. A team from Eby met with capabilities were still intact. Once safety late to the master schedule,” said Jim Spirit’s senior operations leadership and security measures were in place, Hans, director of 737 final assembly. three times a day to help prioritize Spirit employees could begin filling the “They were scheduled to ship Tuesday, recovery efforts, starting with restoring air with the sounds of drilling and rivets. and they ended up shipping Friday. We gas, water and power. did not miss any scheduled loads of our “Our customers deliver airplanes products to Boeing.” Boeing executives “Quite simply, it was amazing teamwork,” every day,” said John Pilla, senior vice have congratulated Spirit for returning said David Coleal, senior vice president, president/general manager, Propulsion to operations so quickly. fuselage segment. “It was the power of & Wing Segments; Aftermarket. “Airlines people coming together so quickly to have those aircraft planned into routes “I was amazed at the swift recovery,” accomplish so much.”

Number Sq. ft. roof TORNADO of hours damage: 10 million before full power Sq. ft. roof restored: ~32 acres repaired of new or repaired 91 so far: roof installed

FACTS4 | MOMENTUM MOVING FORWARD WITH Resilience Emergency plans pay off confirming that all employees had was preparing to drive into work to for Security and EHS made it safely out of shelters and that assess the damage. there were no injuries. Then, teams At his home, Dan Marceau, senior could get to work inspecting buildings. “Not knowing what I was going to see manager of security, was on the edge of as I drove north along Oliver Street, his seat the night of April 14. When he Spirit is not required by law to do the first thing I noticed was the IPB heard the tornado was heading toward weather drills in which all employees buildings,” said Redford. “It was dark, Southeast Wichita, he started driving must physically go to shelter, but it is a but I could see the front of the buildings toward Spirit. Spirit safety policy. were down. I was amazed at how much damage I could Driving to the facility, Marceau was struck Facilities teams see when I turned west and by the eerie darkness – the Spirit campus focus on full began driving over rubble. All was pitch black. Debris lay everywhere recovery for site of a sudden, we got into full across the roads and parking lots. When infrastructure response mode according Marceau arrived, he was surprised – and to the procedures we have grateful – to see Spirit uniformed security Ron Redford, senior manager for established.” officers already on site, before they were global facilities, was watching even called to the scene. weather reports from his home When Redford looks back at those Without the benefit of landline phones, April 14 to see if the Wichita first 24 hours, he said it seems like a radios or computers, Security Manager region would be hit with a tornado blur. He and his team proceeded by Jason Neal and a team of officers started that night. As news came that Spirit’s foot to the security building as a central the process of clearing buildings, Wichita facility had taken a hit, Redford meeting point for their teams. Redford Continue reading on page 6.

to cover leaky Maximum Loads of debris: 300 forty- Nearly 12 acres areas number of cranes cubic-yard dumpsters and of roof membraneof installed on site at once: 350 semi-truck-loads of trash

Number of support 19 (including (enough to cover 17 contractors at peak: 1,190 a 275-ton crane!) football fields one foot deep)

5 | MOMENTUM Continued from page 5.

MOVING FORWARD WITH Labor partnerships and “When Jeff put up that April 23 target flexibility key to recovery Resilience on the wall and signed it and asked everyone else to sign it, he set that vision described avoiding downed power When he was director of facilities, Adam for us,” said Redford. lines, and that’s when they passed Pogue spent a lot of time thinking about employees coming out of shelters. what to do if a disaster hit Wichita. He “This is an awesome team and an recalled that mental checklist when awesome company. It was a whole bunch “The number one thing we were the tornado struck. As vice president of of individual teams coming together all concerned with was everyone’s employee, labor relations and rewards, as one whole team to accomplish the safety,” said Redford. “We kept asking, Pogue knew that one of the critical first goal. It’s really amazing. I couldn’t be ‘Is everyone OK?’ We were so thankful steps toward recovery was to work with more proud of what this team has there were no injuries. Once we Spirit’s labor partners. established that, we continued making accomplished.” calls and organizing our teams.” Spirit Tulsa comes through “When we set the course and said by May 31 we would be back to full Redford said disaster planning helped for Aftermarket production, there was a feeling of awe. Spirit teams quickly take action Then, we had to get into action.” The mission of Southwest Airlines is to during the first 24 hours. The Wichita Pogue said years of building labor provide great value and excellent service. facilities team maintains a red disaster partnerships and developing long- To fulfill that mission, they require speedy preparedness book that contains term agreements have fostered an maintenance and repair on their fleet. key contact information, forms environment of flexibility that was A week before the tornado, Southwest and processes. The book had been central to the tornado recovery. updated April 2, less than two weeks sent two 737 thrust reversers to the Spirit before the tornado. Wichita site for maintenance work by the Aftermarket Services team. Meeting the “The unions were coming forward offering up different thoughts and ideas “You don’t always have time to go customer’s April 27 deadline was critical. and creative ways of thinking about through a process flow and read about The tornado might have thrown a wrench what their teams’ skill sets, levels of the next step,” said Redford. “You have into those plans, if not for Spirit Tulsa. expertise and backgrounds could bring to know it. Having considered what Following the tornado, Aftermarket to this recovery,” said Pogue. “It really was could happen before, having gone contacted Tulsa to ask for their help an amazing thing.” through this planning, and having curing inner wall repairs for the units. helped put the book together, we Inner wall composite parts from the “Labor leaders brought ideas about knew what needed to be done. Good Wichita MRO facility were transported what they could do to help, and that planning helps.” and received in Tulsa. They were cured in an autoclave, loaded back on a truck, and contributed significantly to our ability to The goal sent back to Wichita in just 10 hours. get back to production so quickly,” said Pogue. “I couldn’t have asked for better Redford said one of the turning points As a result of the teamwork cross both cooperation.” in the recovery effort was when Jeff sites, the units were delivered to the Turner, Spirit president and CEO, on customer April 26 – one day ahead of Tuesday asked everyone to achieve full schedule. production by April 23.

6 | MOMENTUM SPIRIT ADDS ENGINEERING DESIGN CENTER IN

NASHVILLESpirit recently opened an engineering Nashville team will complement the skills “I’m confident our new teammates will design center in Nashville, Tenn. The and expertise that already exists at Spirit.” complement our current engineering Nashville Design Center will support new processes and even enhance them with program development reporting to Spirit’s The Nashville team joined Spirit after the new and better ideas,” said Cobb. vice president of Engineering Andy Cobb. company initiated a search for a qualified Dan Jacob is the director for the facility and team of engineers. The team was selected There are currently 26 employees at the reports directly to Cobb. based on their experience and expertise. Nashville facility with the potential to grow The group previously worked for GKN as new projects are identified. “Employees here are very pleased to be . a part of the Spirit team,” said Jacob. “The

MOMENTUM | 7 Airbus, one of Spirit AeroSystems’ prime Airbus president and CEO at the About the customers, is growing its presence announcement in Mobile. “The U.S. is in the United States. Recently the the largest single-aisle aircraft market A350 XWB company announced it will build a new in the world – with a projected need for manufacturing plant in Mobile, Ala., 4,600 aircraft over the next 20 years — where it will assemble the A319, A320 and this assembly line brings us closer The A350 XWB is an all new family and A321 aircraft. This is Airbus’ first to our customers.” of mid-sized, wide-body airliners production facility in the United States. to shape the efficiency of medium- The United States is the largest single to-long haul airline operations. EXPANSION IN AMERICA supplier country to Airbus, and the The A350 XWB Family consists of airplane manufacturer supports jobs three passenger versions with long- “The time is right for Airbus to expand with suppliers in more than 40 states, range capability of flying up to in America,” said Fabrice Brégier, including . 8,500nm/15,580km. In a typical three- class configuration, the A350-800 will offer 270 seats while the A350-900 and the A350-1000 will offer 314 and 350 seats, respectively.

With one aircraft available in three “Airbus is a critical customer for different sizes, airlines can match their A350 XWB fleets to route capacity Spirit, and as we continue to grow our demands, guaranteeing optimum revenue potential. Pilots can fly relationship with Airbus, we hope all three versions with the same to grow our work statement as well.” certification, which further maximizes airline profitability. AIRBUS 101 Over 70 percent of the A350 XWB’s weight-efficient airframe is made from advanced materials combining composites (53 percent), titanium SPIRIT’S WORK STATEMENT Atlantic ocean to Spirit’s assembly facility and advanced aluminum alloys. in Saint-Nazaire, France. Once assembled, Spirit’s largest Airbus work statement is The aircraft’s all-new Carbon Fibre the Section 15 barrel is delivered to on the A350 XWB – Section 15 – or the Reinforced Plastic fuselage results Airbus’ Saint-Nazaire facility nearby for center fuselage section. The fuselage in lower fuel burn as well as easier integration. section as well as wing spars are both maintenance. produced at Spirit’s Kinston, N.C., In addition to A350 XWB work, Spirit also facility. A number of Spirit engineers has wing assembly work at its European work on Section 15 in Wichita, while facilities. The company’s Prestwick, the majority of employees in Kinston Scotland, operation produces structural manufacture the composite panels components, chiefly on wings, across the and wing spar pieces. From there, the entire Airbus range. Airbus wing work components are shipped across the Continue reading on page 10.

8 | MOMENTUM AIRBUS 101

MOMENTUM | 9 Continued from page 8. AIRBUS 101

includes structures on the A320, A330, contributions on the A350 program. A340, A380 and A350 families of aircraft. Pinner stressed the importance of relationships and said the entire CRITICAL CUSTOMER team is what makes the program successful. “Airbus is a critical customer for Spirit, and as we continue to grow our relationship with Airbus, we hope to SUPPLIER SUMMIT Then in August, David Walker, grow our work statement as well,” said Spirit senior vice president/chief Dan Wheeler, then-vice president and technology officer, business general manager of the Spirit North development & A350, spoke at the Carolina business unit. Airbus Air Capital Supplier Summit held in Wichita. Walker spoke about PINNER VISIT the importance of a strong and Back in Wichita, in late June, Spirit diverse supply base and noted that executives hosted Geoff Pinner, Spirit does significant business with head of A350 XWB fuselage and hundreds of suppliers in Kansas. cabin engineering, and John O’Leary, Spirit has about 40 Kansas suppliers vice president of engineering for supporting the Airbus A350 alone Airbus Americas, for a meeting with annual receipts of about $5 with Spirit Wichita A350 engineers. million. U.S. Sen. Jerry Moran and O’Leary described Airbus as an Airbus Americas Chairman Allan Training. Approximately 114 companies “entrepreneurial” company and McArtor hosted the summit at attended, and Spirit was an official thanked Spirit employees for their the National Center for Aviation sponsor of the summit.

A350 XWB, Over 70% of the A350 XWB’s weight-efficient airframe is made from AirbusFACTS: advanced materials, combining 53% of composite structures with titanium The A320 single-aisle jetliner family (the The A330 Family has five members – and advanced aluminum alloys. A318, A319, A320 and A321) is used in the A330-200, A330-300, A330-200F, a full range of services from very short- ACJ330 and A330 MRTT – which cover haul airline routes to intercontinental all market segments with one twin- segments, on operations engine aircraft type. A380 family, The from challenging in- double-deck city airports to A340 family, Four versions of the A340 A380 is the high-altitude were produced by Airbus: the A340- world’s largest commercial aircraft airfields and an Antarctic ice runway, and 200, A340-300, A340-500 and A340- flying today, with capacity to carry 525 on VIP and government missions with 600. The program is now completed, passengers in a comfortable three-class the most discerning passengers. but Airbus will support the fleet as configuration, and up to 853 in a single- long as it is in operation. class configuration.

10 | MOMENTUM COMMUNITY

SPOTLIGHT ON KANSAS Wichita volunteers SPIRITfrom helping at local In June, Spirit employees and their agency Victory in families volunteered at Special the Valley. More Olympics of Kansas. Individuals helped than 20 volunteers decorate the stadium, assisted with painted, cleaned the athlete parade and opening and organized the ceremonies, and staged athletes agency’s headquarters. before their track events. More than 200 individuals volunteered with Spirit Also in July, Spirit Wichita in this effort to help special athletes. employees held the annual Tools for School fundraising July brought a lot of hot weather to event for the Salvation Army.

Kansas, but that didn’t stop Spirit Employees collected more than Continue reading on page 12.

MOMENTUM | 11 Continued from page 11. COMMUNITY cannot afford medical attention, including test strips for diabetic patients.

SPIRIT Contributions made to Hope House $60,000 in monetary donations, and make it possible for them to provide nearly $20,000 in school supplies to homeless shelter services for women total an $80,000 donation to help local and children. school children in need. Funds donated to the Choose to Give SPOTLIGHT ON organization are used to provide clothing and toys for children who otherwise may not receive gifts Employees from the McAlester Good during Christmas. Neighbor Fund recently provided grants to a number of local agencies. In August, 38 volunteers from Spirit Donations made to Mercy Health Clinic Tulsa volunteered at the local Food will help provide medical services Bank. The team sorted and weighed to members of the community who numerous pallets of assorted food items.

12 | MOMENTUM SPOTLIGHT ON NORTH difference in the lives of the most local primary school’s Monkton CAROLINA vulnerable and neglected children in Mini Olympics. local areas. In Kinston, employees had great Since Team Spirit was launched in success in collecting monetary In August, Spirit Europe hosted a 2007, a total of £130,000 has been donations and school supplies for the Charity Golf Tournament which raised raised for selected charities. “Build a Back Pack” campaign in Lenoir £7,448 for the newly-named charity. County. Donations were taken to the A number of Lenoir County United Way, where suppliers and they will be distributed to local school employees children in need. The “Build a Back Pack” attended the program is the largest school supply event. drive ever conducted by Wal-Mart in Lenoir County. Also in recent months, employees SPOTLIGHT ON EUROPE took part in the annual In May, Spirit Europe employees Prestwick Cycle selected a new charity for the next two Challenge fundraising years, Action for Children, and Spirit UK an organization that helps make a sponsored the

MOMENTUM | 13 Q2 EARNINGS

Spirit AeroSystems Holdings, Inc. “During the quarter, our large quarter of 2012, compared to a $114 reported second quarter 2012 commercial aircraft deliveries million use of cash for the second financial results reflecting solid core increased by 12 percent over the quarter of 2011. operating performance, continued second quarter of 2011, reflecting the strong demand for large commercial strong ongoing demand for aircraft Cash balances at the end of the aircraft, and the impact of unusual worldwide,” said President and Chief quarter were $180 million and debt charges. Spirit’s second quarter 2012 Executive Officer Jeff Turner. balances were $1,178 million. The revenues were $1.341 billion, down company utilized its credit line during from $1.466 billion for the same period “We were also pleased that the Spirit the quarter as it continued to invest of 2011 as the previous period included team and our partners successfully in development programs, and fully recognition of deferred revenue restored production through repaid the borrowing by the end of associated with the 787 program extraordinary contract amendment. effort and teamwork after Operating income was $83 million, the severe compared to $64 million for the same weather event period in 2011, driven by increased on April 14, production volume. In the quarter, as minimizing previously announced, the company the impact to recognized a pre-tax ($55) million, or our customers,” ($0.26) per share, charge for expenses Turner related to the April 14 severe weather continued. event at its Wichita, KS facility. The company also recognized a pre-tax ($7) “Overall, million, or ($0.03) per share, additional this quarter forward-loss on the A350 non-recurring exemplifies wing program. In comparison, the how Spirit second quarter of 2011 operating AeroSystems is income included a pre-tax ($53) well positioned million additional forward-loss on the to meet the demand for large aircraft the quarter. Approximately $19.9 Gulfstream G280 wing program. as we are focused on continued million of the credit facility is reserved reliability, capability, and teamwork to for financial letters of credit. Net income for the quarter was $35 align the business for long-term value million, or $0.24 per fully diluted share, creation,” Turner concluded. The company’s credit rating was compared to $30 million, or $0.21 per affirmed (BB) and placed on positive fully diluted share, in the same period Cash flow from operations was a $121 outlook by Standard & Poor’s during of 2011. million source of cash for the second the quarter and remained unchanged

14 | MOMENTUM 2Q $1.341 STOCK WATCH Revenues billion The charts below show the stock price of Spirit compared to the S&P 500 index, the S&P Aerospace and Defense index, and other aerospace companies. Prices/values are Operating plotted as an index number. The base date for the price/values is Nov. 21, 2006, the $83 date Spirit become a public entity. Each data point represents the end of a trade day. million Income

Operating Margins 6.2% (including previously announced charges)

Fully Diluted Earnings Per Share $0.24 (including previously announced charges of $0.31 per share)

Cash & Cash $180 Equivalents million $32 Approximate million Total backlog

Full-Year 2012 Financial Guidance remains

unchanged (excluding severe weather impacts)

by Moody’s Investor Services (Ba2, positive outlook) at the end of the quarter.

To view the entire Q2 financial release, visit www.spiritaero.com.

MOMENTUM | 15 Headquarters 3801 S. Oliver St. Wichita, KS 67210 Phone: (316) 526-9000 Toll Free: (800) 501-7597 www.spiritaero.com