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Boeing, Spirit agree $425 million deal to address fuselage supplier's issues

(Reuters) — Spirit AeroSystems said Boeing would give it advance payments of $425 million and help it address issues like higher levels of inventory and lower cashflows after the U.S. aviation regulator capped the planemaker's 737 MAX production.

The agreement announced by Spirit on Tuesday comes amid talks between the two for Boeing to buy the fuselage supplier, a former subsidiary, and as the planemaker tries to get control of a sprawling crisis sparked by a mid-air panel blowout in January on a new Alaska Airlines 737 MAX 9.

Under the deal, Spirit will maintain a production rate that supports Boeing's contractual production demand.

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Boeing said it continues "to work together with Spirit to improve quality, stabilize operations and support our customers."

Spirit, one of the industry's major manufacturers of large aircraft structures, has struggled with cash flow problems over the past few quarters and quality issues surrounding the fuselages it makes for Boeing's 737 narrowbody jets.

Spirit will also provide to Boeing specified financial information on a weekly basis.

The deal would also help navigate lower expected deliveries to Boeing due to the Federal Aviation Administration decision to cap the planemaker's 737 production rate at 38 planes per month and higher factory costs to maintain rate readiness and production quality.

(Reporting by Nathan Gomes in Bengaluru and David Shepardson in Washington; Editing by Shilpi Majumdar, Shailesh Kuber and Jamie Freed)