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Spirit AeroSystems A Possible Takeover

|Includes: Spirit AeroSystems Holdings, Inc. (SPR)

Spirit Aerosystems ,The company, based in Wichita, Kansas, makes airplane body sections for the best-selling Boeing 737 and Airbus A320 jets, as well as wing pieces and other components for other aircraft makers, including Bombardier, Gulfstream and Mitsubishi.Spirit was spun off from Boeing in 2005.

Posiitive

1.In March, Spirit named former Lockheed Martin executive Larry Lawson as president and chief executive, and is undergoing a strategic and financial review of its operations at four locations, including Kansas and Oklahoma

2.Has started laying off about 360 workers in Kansas and Oklahoma.These lay offs are a strategic step to make the aerospace supplier more cost-competitive.

3.Possible bid for the company by UK aerospace and car parts maker GKN. Rumors of GKN could launch "a $5 billion cash and shares bid, worth around $35 a share," for Spirit.

4.Its price-to-book (P/B) ratio of 1.7 suggests that the stock is still undervalued

5.Remains strong with a "robust backlog" of orders worth about $36 billion.

6.While deliveries of finished 787s were halted for nearly the entire quarter because of malfunctioning batteries, production by Boeing and its suppliers continued. Spirit delivered sections for 17 787s during the quarter, up from 15 during the fourth quarter of 2012.

Negative

1.Lack of profitability on its development programs, and a lack of cash generation

Disclosure: I am long SPR.