Robert Stallard: Okay. And just a quick follow-up, Pat. Hard to put a time frame on this. Do you think you’ll get this done before February?
Patrick Shanahan: I think so.
Operator: Our next question comes from Robert Spingarn from Melius Research.
Scott Mikus: Scott Mikus on for Rob Spingarn. Pat, I did want to ask you, if you pursue a financial remedy on the A220 or A350, is there any concern that Spirit could potentially see a reduced role later on A220 or A320neo if Airbus rewings those programs?
Patrick Shanahan: I mean, I spend half my time on that question and half my time on the negotiating. Not as much of the negotiating strategy with the strategy process. And I think with our advanced engineering capability and the things that we do with resin transfer molding, we’re a critical part. It’s not so much the wing of tomorrow. It’s just Airbus’ long-term composite supply chain, I think we’re a vital piece of that. The issue we have is just here in the near term, how do we solve this financial disconnect? But I would bet on the team in Belfast to be a critical part of Airbus’ future. We just have the overhang of some agreements that go back a long time pre-COVID that we have to kind of work our way through. But as the earlier remark I made about this company in advanced materials, the things that we’re doing are really going to be the basis of the next generation of product out there on the defense world and commercially because we can do it at scale and we get reps every single day.
And to go replicate some of these assets in a greenfield at scale is cost-prohibitive. So I think it’s just you get trapped in these situations of managing quarter-to-quarter or that somebody should get better performance than they’re actually realizing. And I think just like with the Boeing agreement, we’re going to get to a place that makes sense for both parties.
Operator: Our next question comes from Cai von Rumohr from TD Cowen. Please go ahead.
Cai Von Rumohr: Yes, thanks so much. Pat, welcome. So the Boeing MOA basically, you basically get some — have to take a lower price on the 737 as you get out to ’26. And you get a much higher price on the 787 near term. But then around the middle of 2008, you have the renegotiation of the price on the 787. And I mean, as I read what I’ve read of the MOA, it looks like basically barring any change in the negotiation, that the 787 price at that point goes back to where it currently is or relatively close. Is that your read or so — how should I be concerned that that’s a real liability or as you get out there that the 87 could revert to going back into modest, basically breakeven or a loss?
Mark Suchinski: Cai, it’s Mark. Let me jump in there. I would say that we came to a good conclusion on the appropriate pricing on the 787 program, essentially out through the order book. We have a commitment between the two parties to negotiate a fair and reasonable price beyond 1605, one year in advance of that delivery date. And just like we came to an appropriate conclusion, which allows Spirit to make an appropriate margin on that airplane program here shortly. That’s what our expectations will be long term.
Cai Von Rumohr: Okay. And if I may, one more on the Airbus talks, clearly, it’s going to be difficult to do a refi unless that is behind you. Does that — do you feel that puts increased pressure on you to kind of come to the table more quickly? Or how do you deal with that timing issue of having to get that done before a refi?
Patrick Shanahan: Cai, I don’t think we’re in a position where we’re pressured to negotiate. I mean, Mark, you might comment just on the financial situation, but I think we have time to get it right, but there’s no point in wasting time.
Mark Suchinski: No, I agree with Pat. I’d just say this, Cai, I think the Boeing MOA provides a nice boost to liquidity here over the next several years. And I think we have some momentum here on that front. And so again, when it comes to the refinancing, we’re going to do what’s best for us, for our company and for our shareholders. And work through that accordingly. And as Pat said, no pressure on the Airbus side. That will happen in its due course.
Operator: Our next question comes from Gavin Parsons at UBS.
Gavin Parsons: Good morning. Pat, you suggested you’ll be delivering, I think, around 37 to 42 a month in the fourth quarter. Just to clarify, is your plan still that you’ll be cycling and delivering at 42, starting in 2024? Or is there a spread? And then could you update us on the current MAX inventory buffer?
Patrick Shanahan: Let’s see. No guidance on ’24. And in terms of the buffer, I don’t have…
Mark Suchinski: I’ve got that, Pat.
Patrick Shanahan: We’ve got, as you know, a mix of units in there.
Mark Suchinski: Yes. So we — Gavin, we have about 80 units in buffer. We like to categorize them in two components. Units that are on hold and then units that are available to ship. So there’s around 50 units that have — that are in Boeing’s — in the buffer, Boeing owns title to those, and Boeing can pull them whenever they’re ready to pull. So buffers increased a bit. At the end of the second quarter, it was low as we prepared for the work stoppage issue, but we’ve been able to build up that buffer to a certain degree. And as Pat said, the goal here is as we move forward here to sync up our production schedules. But that’s an update on the buffer.
Operator: Our next question comes from Peter Arment from Baird. Please go ahead.
Peter Arment: Yes. Good morning, Pat, Mark. Hey, the $100 million you’re getting for tooling-related equipment for the 737 and 787, can you kind of give us a little more color of what the real benefit is there? I mean, obviously, it’s nice to see the cash infusion. But as Pat you said, you’ve been at these higher rates before. So what is actually the benefit that you’re seeing here?
Mark Suchinski: Yes, sure, Peter. A couple of things. Number one, with most OEMs, if you have production rate increases or model mix or new derivatives, the OEMs always own the tooling, right? And so that’s unchanged from our previous agreements. But in this current environment, when we look at the model mixes — and we have the Dash-7s, the 8s, the 9s and the 10s, Boeing is selling more 7s, more 10s, and that has an impact on our production system. And so therefore, it’s going to require us to make some capital investment. And so one of the benefits of the agreement, we appreciate this from Boeing is they’re going to pay for some capital that normally Spirit would have to pay. And normally, what would happen is as we built those units, we’d absorb more overhead and that would help profitability.
