Good morning, ladies and gentlemen, and welcome to Spirit AeroSystems Holdings Incorporated's fourth quarter and full year 2020 earnings conference call. My name is Matt, and I'll be your coordinator today. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then 1 on a touch-tone phone. To withdraw your question, please press Star, then 2. Please note this event is being recorded. I would like to turn the presentation over to Aaron Hunt, Director of Investor Relations. Please proceed. Thank you, Matt, and good morning, everyone. Welcome to Spirit's fourth quarter and full year 2020 earnings call. I'm Aaron Hunt, Director of Investor Relations. With me today are Spirit's President and Chief Executive Officer, Tom Gentile, Spirit's Senior Vice President and Chief Financial Officer, Mark Suchinski, and Spirit's Executive Vice President and Chief Operating Officer, Sam Marnick. After opening comments by Tom and Mark regarding our performance and outlook, we will take your questions. Before we begin, I need to remind you that any projections or goals we may include in our discussion today are likely to involve risks, which are detailed in our earnings release, in our SEC filings, and in the forward-looking statement at the end of our presentation. In addition, we refer you to our earnings release and presentation for disclosures and reconciliation of non-GAAP measures we use when discussing our results. As a reminder, you can follow today's broadcast and slide presentation on our website at investor.spiritaero.com. With that, I would like to turn the call over to our Chief Executive Officer, Tom Gentile. Thank you, Aaron, and good morning, everyone. Welcome to Spirit's fourth quarter and full year 2020 results call. 2020 was one of the most challenging years in aviation history. For Spirit, the MAX grounding and the COVID-19 pandemic created a dual crisis. Our response focused on five critical actions: protecting our employees, restructuring our cost base, strengthening our liquidity, implementing productivity and efficiency projects, and diversifying our business. Protecting employees from COVID became a top priority. COVID represented an unprecedented healthcare challenge, and as the virus began to spread, we put in place protocols to protect our employees. We referenced best practices and CDC guidance to implement enhanced cleaning measures, air purification, social distancing, mask requirements, and extensive testing. All of these measures have allowed us to continue our operations while protecting employees. We also restructured our cost base to align to lower levels of production. Almost immediately in 2020, we started with the need to react to multiple production rate reductions due to the 737 MAX grounding and then the COVID pandemic impact. After producing 606 MAX ship sets in 2019, we produced just 71 in 2020. We also saw substantial reductions in the production rates of all of our other Boeing and Airbus programs. We moved swiftly to take actions to mitigate the impact of these adjustments to our original plans. Consequently, through the restructuring of our cost base, we reduced our commercial aviation program headcount by more than 8,000 people, trimmed our purchase services, and set in motion multiple facility closures as we addressed these significantly lower production rates. Overall, we executed $1 billion of annualized cost reductions, or about 40% from the 2019 non-material base. We also strengthened our liquidity position and as a result, established a solid foundation to see us through these difficult times. Our initial actions included reducing the cash dividend to a penny per share, suspending the share repurchase program, and deferring $120 million of capital expenditures. Boeing also provided a $225 million cash advance and granted a deferral of a $123 million repayment until 2022. In April, we raised $1.2 billion of senior secured second lien notes and paid down our $800 million revolver, which put us at $1.9 billion by the end of Q2. In the last half of the year, we paid down $426 million on our term loan and completed another $900 million capital raise. After negotiating a $225 million discount on the Bombardier asset acquisition, mutually terminating the ASCO acquisition, and reducing our cash usage in the third and fourth quarter, we ended 2020 with a $1.9 billion in cash on hand. The third focus area was productivity. While challenging, the reduced production rates created an unprecedented opportunity to accelerate productivity and efficiency projects that would have been nearly impossible at higher production rates. During 2020, we completed the consolidation of warehouse space across our Wichita campus into our global digital logistics center and consolidated more than 500,000 sq ft of warehouse space into a seven-story, 150,000 sq ft facility. In this new facility, we have leveraged technology similar to what other world-class distribution centers use, which translates into a more accurate and timely part handling and delivery system to the mechanics building product on our factory floor. On the 737 MAX, we have a new 10-station hybrid automated assembly line for floor beams. A 737 MAX 8 has 47 floor beams with more than 400 different configurations. This new assembly line will improve quality and our ability to manage all of these configurations. It will be operational by the end of this quarter. At our Prestwick facility, we have implemented a new state-of-the-art resin transfer molding technology for A320 spoiler production. The team is making good progress on the development of the production line that will efficiently produce hundreds of spoilers per month at peak rate. The most immediate efforts are focused on completing the first part qualification process, then once that's complete, moving toward production at rate by the end of the first quarter. Additionally, we have accelerated our company digitalization efforts. Last year, we implemented a manufacturing execution system, or MES, on the 737 MAX fuselage line. The system is a digital tool to track data and production metrics, which simplifies many of the reporting activities performed by managers. As a complement to the MES, we have put in place digital manufacturing operating system boards to give our managers visibility into real-time production process and facilitate discussions in daily meetings. We've also implemented digital workflow solutions to manage part movements across our main Wichita factories. Another recent change we have started is the deployment of digital work instructions. We have transitioned from a manual, text-heavy set of documents to new digital work instructions that provide graphics, pictures, and detailed instructions tied to 3-D digital models for our mechanics and inspectors. From implementing integrated tools for operations management to visualization of the fabrication and assembly process, our digitization projects underway are expected to reduce the time needed to build product and enhance quality for our customers. Another significant project has been improving the production flow in our main 737 MAX factory. We have freed up over 125,000 sq ft of manufacturing space in this fuselage factory by shifting subassemblies to new locations. For example, we moved the fabrication of the MAX forward fuselage to a new facility on our campus, where we also build the forward fuselage for the 767. We are also shifting the construction of the MAX wing box out of the main MAX factory to our Tulsa site. These moves are enabling a simplified 737 fuselage production flow. Previously, the movement of parts and subassemblies crisscrossed the factory, and sometimes the same part traveled a similar path multiple times before moving to the end of the line. The new production flow reduces the number of moves needed, drives a more efficient use of time, and improves productivity and quality. We are also working closely with many of our partners in the supply chain to help them navigate this challenging time in the industry. In the last 12 months, we have provided assistance to hundreds of suppliers. This support includes contract extensions, purchases of finished goods and raw materials, and vendor financing through our partner at Bank of America. Recently, Bank of America secured a guarantee from the US Export-Import Bank, EXIM, to help finance this program. Our suppliers are critical partners to our success, and this level of support is important as we work to secure our supply chain as production rates recover over the next few years. We are also putting additional emphasis on environment, sustainability, and governance, also known as ESG. An additional improvement we implemented last year was to put an agreement in place to power our entire 12.8 million sq ft Wichita site with 100% wind power. In addition, water recycling is another area where we have integrated systems and adopted practices to minimize water consumption and improve water efficiency. With our reverse osmosis system, Spirit Wichita recycles more than 2 million gallons of highly purified water each day and recycles 575 million gallons annually, which has enabled us to reduce our fresh water demand by more than 70%. At our Spirit Belfast site, we have one of the largest roof-mounted solar arrays in the region. In 2020, 70% of the Belfast plant's electricity came from clean energy. At our Prestwick site, where we've just built a new aerospace innovation center, the team installed a second bank of solar arrays to supplement an existing bank at our Prestwick finishing center. 100% of the power consumed on our Prestwick site is from solar or wind power. Having worked to stabilize the business in 2020, we are also focused on positioning Spirit for the long term. On page five of the presentation, we have summarized Spirit's strategy. Our vision is to be a diversified design and manufacturing champion. In terms of where we want to compete, our strategic priorities are to focus on Boeing, Airbus, Defense, aftermarket, business and regional jets, and non-aerospace manufacturing, where our skills and capabilities translate. In terms of how we want to compete, our execution requirements focus on make/buy, an advantage supply chain, world-class manufacturing, seven distinctive technologies, digitization, and talent and inclusion. At Spirit, our DNA has always included a strong emphasis on safety, quality, customer focus, and delivery. We augment these basic elements of our DNA with our values, transparency, collaboration, and inspiration, with an encouragement to our employees to speak out. Overall, our objectives are to diversify, de-lever, and drive improved margins. Let's look at how we've been diversifying Spirit. During the past year, we made excellent progress on our diversification strategy with the acquisition of the Belfast, Morocco, and Dallas sites from Bombardier, and the acquisition of FMI, a leader in high-temperature materials. After closing the deal with Bombardier last October, our integration team quickly started working with our new team members and created a list of 450 integration tasks, ranging from rationalization of our facility footprint to systems integration to ensure a smooth transition. Since the October close, they have completed around 65% of the tasks. By the end of the first quarter, we expect to be 75% complete. We have in the room with us today, our COO, Sam Marnick, who is leading this overall integration. If you have questions on the integration later, she will be able to answer them. The acquisition of the Bombardier assets accelerates our diversification. The addition of the A220 wing, which leverages composite resin transfer infusion technology and is fully integrated with all systems and flight control surfaces, positions Spirit as one of Airbus's largest suppliers. With the experience gained on the A220 program, we believe Spirit has a competitive position for future narrow body aircraft as we build knowledge and expertise on composite wing production. The acquisition has also roughly doubled our aftermarket business and is very complementary to our current capability. Previously, Spirit worked on Boeing work in North America, and the Belfast site focused on Airbus work in Europe. Our merged team now gives us the opportunity to offer the combined aftermarket capabilities across more products and geographies. We believe we are in a good position to achieve our objective of $500 million in aftermarket revenue by 2025 at accretive margins. In addition, Spirit's business jet work statement expanded by roughly 4 times with the acquisition, and we have become one of the largest suppliers to Bombardier. From the mid-size to very large business jet categories, our capability and scale as a business jet supplier can provide great value to the manufacturers in this segment of the industry. Our belief is that business jets are likely to recover sooner than commercial aviation following the pandemic. Our objective is to have the business and regional jet work achieve $500 million of revenue by 2023, also at accretive margins. The Bombardier acquisition has also resulted in a stronger defense business, which we had not previously expected. Our Belfast team recently was selected by the U.K. to lead Project Mosquito in the prototype design and manufacture of the U.K.'s first unmanned combat aircraft, which is also referred to as a loyal wingman. The 3-year, $41 million deal to develop the aircraft highlights the significant capabilities our new Spirit Belfast colleagues bring to military production. Overall, we expect that the Bombardier assets will have about $700 million of revenue in 2021, and expect the purchase business to grow at approximately 15% annually, with future margins north of 10%. And in the future, the assets of what we have purchased will be included within our existing segments. For this year, it will be wing at about 43%, fuselages at about 28%, and propulsion at 29%. The addition of the skilled and experienced team members in Belfast, Morocco, and Dallas will position Spirit well for many years of potential growth. While the Bombardier asset acquisition was our largest, the FMI acquisition, which we completed last January, has opened new opportunities for our defense business. The integration of FMI is complete, and we are very pleased with the response we have received from customers. The combination of FMI's high temperature composite capability with Spirit's industrialization expertise, has expanded the products and capabilities to current and potential customers. We now have a very robust pipeline of opportunities, especially in hypersonic weapons. Most recently, NASA selected FMI to provide thermal protection systems to support several emerging space missions under the Science Mission Directorate. We are thrilled to be selected to support NASA and contribute to the future of deep space exploration. FMI has been a great addition to the Spirit family, contributing to our 20% defense growth in 2020, and projected 15% growth in 2021. If we look at the programs of record for the programs that we are on, they would generate future defense sales of approximately $6 billion. Our overall defense capabilities, along with our open commercial capacity, will be important elements in our plan to grow our defense business to $1 billion of revenue by the mid-2020s, with typical defense margins. On page 7, we have summarized our revenue split over three years so that you can see the expected benefits of our efforts to diversify Spirit. In 2019, Boeing Commercial represented 74% of our revenue. In 2021, we expect Boeing Commercial will account for 44% of revenue, based on current production rate plans. We expect that in 2021, Airbus will account for 23%, defense for 18%, and aftermarket and business jets will each represent about 8% of revenue. Emerging from this crisis, we believe Spirit will be a more diversified company with several new and profitable revenue streams. We are also focused on delevering. As we recover from the effects of recent challenges, we have begun to work on our current debt level and plan to pay down $1 billion over the next 3 years. We have started the process by redeeming the $300 million floating rate note, which was due in June of 2021, using cash from our balance sheet. We expect this process to be complete by tomorrow, February 24. From there, our next debt maturity is $300 million, due in 2023, and by that point in time, we expect narrow-body production rates to be at much higher rates than they are today. Our next maturity after that is not until 2025. We remain committed to regaining an investment-grade credit rating. Our third objective is to drive margins. As the vaccine rollout continues and air traffic begins to resume, domestic travel will recover first. We expect that this trend will favor single-aisle aircraft, such as the 737 MAX and the A320. They will be the first to recover as they perform the bulk of domestic flights. We believe Spirit will benefit from this trend because 85% of our backlog is narrow-body aircraft. With all the productivity actions we have taken, we expect our margins will recover back to the historic levels of about 16% once the MAX production rate reaches the low 40s. While the Bombardier acquisition will be slightly dilutive overall to this level, we still expect to achieve our historic targets in aggregate. Although we expect that international traffic will take longer to recover, which will put pressure on wide-body production, which typically serve those routes, we are actively repurposing our production capacity for wide-body composite aircraft to defense applications. This transition will replace the hours we have lost due to wide-body rate declines and should have a positive impact on margins in the future. With that, I'll turn it over to Mark to continue through our detailed financial results and our expectations for 2021. Mark? Thank you, Tom, and good morning, everyone. I hope everybody is doing well and staying healthy. As Tom mentioned in his opening remarks, Spirit, as well as the overall aviation industry, faced one of the most challenging years in aviation history. Throughout 2020, our teams responded by making significant adjustments to adapt our cost structure to lower production levels, putting in place productivity improvements, and working towards diversifying our business through M&A activity and growth in our defense business. We also took several meaningful actions to strengthen our liquidity position. We began by reducing the cash dividend to a penny per share, suspending the share repurchase program, and deferring about $120 million of capital expenditures. We then negotiated with Boeing to receive a $225 million cash advance and defer $123 million repayment to 2022. Then in April, we raised $1.2 billion of senior secured second lien notes and paid down our $800 million revolver. In the last half of the year, we paid off our term loan and terminated the existing senior credit facility, while concurrently completing a $900 million capital raise, consisting of $500 million senior secured first lien notes and a new $400 million senior secured term loan B credit facility. Additionally, we utilized the CARES Act and the UK deferral programs, which were made available in response to COVID-19. This allowed the deferral of $33 million in payroll taxes to 2021 and 2022, as well as the deferral of $32 million of VAT payments to 2022, and a $16 million benefit related to the employee retention credit. These actions have provided us with increased financial flexibility and liquidity and have enhanced our ability to address the potential longer and lower rates of production. Given the 737 MAX return to service in many parts of the world, as well as the various measures taking place to address the pandemic, we are hopeful that 2021 will start the early stages of a multiyear recovery. Looking ahead to 2021 and beyond, we are focused on our long-term growth and diversification strategies, as Tom just discussed. Now, let's move to our 2020 results. Please turn to slide 8. Revenue for the year was $3.4 billion, down 57% from 2019. This reduction was primarily due to the lower production rate on the 737 MAX, resulting from the continued grounding of the program and the significant impacts of the COVID-19 pandemic. Production rates across all of our commercial programs were negatively impacted by COVID-19. We delivered 71 737 shipsets during the year, compared to 606 in 2019. Overall deliveries decreased to 920 shipsets, compared to 1,791 shipsets in 2019. While commercial deliveries were down, our defense business grew by over 20% in 2020 and is helping with our overall diversification objective. Let's now turn to earnings per share on slide 9. We reported earnings per share of -$8.38, compared to $5.06 per share in 2019. Adjusted EPS was -$5.72 per share, compared to positive EPS of $5.54 per share in 2019. Adjusted EPS excludes the impacts of the acquisitions, restructuring costs, the non-cash voluntary retirement plan charges, and the deferred tax asset valuation allowance. 2020 operating margins declined compared to 2019 as a result of costs incurred related to the low rate of MAX production, including excess capacity costs of $279 million, as well as lower production rates across all of our commercial programs due to the impacts of COVID. We recognized forward loss charges of $370 million, primarily driven by lower future production rates announced on the 787 and A350 programs, and we incurred costs due to the COVID-related factory closures of $34 million. Additionally, we recognized restructuring expenses of $73 million for cost alignment and headcount reductions to support lower production rates, as well as a non-cash voluntary re-retirement program charge of $87 million. During the fourth quarter of 2020, a Valuation Allowance on deferred tax assets of $150 million was established. This non-cash Valuation Allowance was recorded based on the required accounting analysis to assess recoverability of our deferred tax assets against future taxable income. This is an accounting assessment which places emphasis on our recent losses. I want to remind everyone that this Valuation Allowance does not limit our ability to utilize deferred tax assets in future periods. It also does not change our outlook on future results and has no impact on cash flows or future tax returns. Once income generation returns, we can expect to see the allowance reverse, resulting in an increase to reported earnings. Now turning to free cash flow on slide 10. Free cash flow for the year was a use of $864 million, including the acquired Bombardier assets, compared to a source of $691 million in 2019. The free cash flow usage of $864 million is in line with what we discussed in the third quarter earnings call of $800 million-$900 million for the full year, which excluded Bombardier. This year-over-year decrease is primarily due to the negative impact of working capital requirements, significantly lower deliveries across all of our commercial programs, and $73 million of restructuring costs, partially offset by $215 million received as a result of the February 2020 MOA with Boeing, as well as some favorable cash tax. As we discussed on last quarter's call, we expected free cash flow use in the fourth quarter to be higher than in the third quarter. Cash flow usage in the fourth quarter was $181 million, primarily driven due to higher cash tax interest payments of $80 million on additional debt, the absence of some favorable timing on deliveries, as well as cash outflow of about $50 million related to the Bombardier acquisition, which included one-time cash outflows of approximately $26 million for restructuring activity and $11 million related to equipment lease buyouts at the purchased Bombardier sites. Looking at cash from operations, if we exclude the interest paid on debt and the consolidated cash use of Bombardier, cash from operations improved $44 million from the third quarter to the fourth quarter of 2020. This reflects our continued improvement in our operating performance. As a reminder, our cash interest payments are more heavily weighted in the second and fourth quarters of the year. We expect cash interest to be $200 million in 2021. Looking ahead into 2021, we expect our free cash flow to be negative, but significantly improved from 2020. In addition to the operating cash flow, we have a planned payment of approximately $135 million for the Bombardier pension, which we expect will be offset by cash tax benefits due to our operating losses recorded in 2020. As discussed on last quarter's call, we are expecting this cash tax benefit to be approximately $300 million as a result of the carrybacks permitted by the CARES Act. We anticipate the first half of 2021 to be our most challenging, with improvements as we progress into the later half of the year, as single aisle production rates increase as projected. As we have previously indicated, we expect cash flow to be positive in 2022. Let's now turn to our cash and debt balances on slide 9. We ended the fourth quarter with $1.9 billion of cash on hand and $3.9 billion of debt. The balances reflect the significant liquidity actions I previously described, including those taken during the last half of 2020, including the payoff of the $430 million term loan under the prior credit facility, a capital raise of $900 million in new senior secured debt, and the payment of $275 million for the Bombardier acquisition. The new Term Loan B credit facility provides us with increased flexibility, as it has less restrictive terms than our previous credit facility, which we terminated during the back half of 2020. We believe this liquidity position and increased flexibility puts us in a good position to navigate future challenges within our industry. Additionally, as Tom mentioned in his opening remarks, we have been assessing our cash and debt levels and have made a plan to delever the company over the next few years. This delevering process will start by using cash on hand to redeem the $300 million floating rate notes which mature this June. We expect the redemption to be completed on Wednesday, February 24. Lastly, as we have stated in the past, we remain committed to regaining an investment-grade credit rating in the future. Now, let's turn to our segment performance on slide 12. Fuselage segment revenue in the year was $1.7 billion, down compared to 2019, primarily due to lower production volumes on the 737, 787, and A350 programs. Operating margin for the year was -26%, compared to +11% in the prior year. This decrease was primarily a result of forward losses recognized on the 787 and A350 programs. Lower profit recognized on the 737 program, including excess capacity costs of $175 million, and restructuring expenses of $41 million for cost alignment and headcount reductions. The Fuselage segment recorded $18 million of unfavorable cumulative catch-up adjustments, and $274 million of net forward losses during the year. Propulsion revenue in 2020 was $785 million, down compared to the previous year, primarily due to lower production volumes on the 737 and 777 programs. Operating margin for the quarter was -5% compared to 20% in 2019. The segment recorded $8 million of unfavorable cumulative catch-up adjustments and $37 million of net forward losses. The decrease in segment profitability and operating margin were primarily a result of lower margin recognized in the 737 program, including excess capacity costs of $61 million and the reduction in production rates on the 777 program. Finally, wing revenue was $799 million, down compared to 2019, primarily due to lower production volumes on the 737, A320, and A350 programs. Operating margin for the quarter was negative 9% compared to positive 14% in 2019. The segment recorded $59 million of net forward losses. The decreases in segment profitability and operating margin were primarily a result of forward losses recognized in the 787 and A350 programs, lower margin recognized in the 737 program, including excess capacity costs of $43 million. I also want to discuss the purchase accounting treatment for the newly acquired Bombardier assets. This transaction, which requires us to apply business combination guidance under ASC 805, which resulted in an evaluation of the fair value of the underlying assets and liabilities that were acquired. We have completed our initial assessment, and certain adjustments were required related to inventory, property, plant, and equipment, intangibles, goodwill, liability balances, and forward loss liabilities. Per the business combination rules, the assessment will be completed within 12 months of the closure of the acquisition. The preliminary assessment resulted in goodwill of $487 million and intangibles of $188 million. The non-cash intangible expense will amortize on a straight line basis of approximately $11 million per year. Also, as part of the opening balance sheet adjustments, we established a forward loss liability on the balance sheet of $282 million, primarily related to the A220 program, which had an impact on the goodwill balance. The establishment of the forward loss liability was impacted by the change in the A220 production schedule, which is primarily driven by the COVID-19 pandemic and the associated fixed overhead costs within the factories, the deterioration in the performance between the time the deal was announced and when it was closed, as well as other factors. The liability represents anticipated losses for expected customer orders over the next three to five years. Of the $282 million, approximately $56 million in non-cash was due to business combination guidance on the evaluation of the fair value of underlying assets and liabilities, which will be unwound from the forward loss liability as units are delivered over the next five years. In addition, the forward loss liability includes approximately $50 million of non-cash depreciation. This is our initial assessment, and we continue to focus on capturing synergies, including analyzing each site's capacity and structure to reflect the current production rate environment, as well as maturing our cost reduction projects, which will help improve our profits on the programs. In addition, as our business recovers from the effects of COVID-19, we expect each of these programs to benefit from our cost reduction efforts and result in improved margins. As we announced last quarter, we negotiated a $225 million purchase price reduction to the original acquisition price, taking into account market changes driven by the COVID-19 pandemic. In addition, we've always said that this acquisition was a three-way negotiation, including Airbus, who were supportive in these discussions to make sure we could come to a mutually agreeable outcome. Finally, we also recognized $5 million of excess capacity costs in 2020. We expect to continue to incur these excess capacity costs going forward as production rates remain low, consistent with the accounting treatment we follow on the 737 program. So what I've just described summarizes the accounting treatment for the individual elements of the acquisition. But going back to Tom's previous remarks, we project this acquisition will generate roughly $700 million of revenue in 2021, which we expect to grow at approximately 15% annually, with future gross margins approaching 10% or better. Strategically, it has accelerated our diversification with more Airbus content, new defense work, and expanded aftermarket and business jet work packages. Overall, we remain excited about this acquisition. In closing, 2020 was a challenging year that required us to take difficult but necessary actions to adapt to the changes brought on from both the MAX grounding and the COVID-19 pandemic. 2021 continues to be a complex and dynamic situation, and we will continue to assess potential scenarios to identify areas of opportunity and develop action plans to mitigate risk. Further, we will stay focused on our growth and diversification strategies. With that, I will turn it back over to Tom for some closing comments. Thanks, Mark, and now I'll make some closing comments before we take questions. We reacted to the multiple challenges in 2020 by restructuring our cost base and strengthening our liquidity. We also executed on many different projects to drive productivity improvements and continued to diversify our business while protecting our employees. 2021 will be a bridge year for Spirit, as we recover from the effects of the 737 MAX grounding and the COVID pandemic. Now that the 737 MAX has safely returned to service in many parts of the world, we look forward to improved production rates for that program. We are encouraged by the various measures being taken to address the COVID-19 pandemic and hope to see a much improved environment for air travel as the year progresses. In summary, our focus going forward is to continue diversification efforts, start to delever over the next 2-3 years, and drive segment margins to our previous targets. With that, we'll be happy to take your questions. We will now begin the question-and-answer session. At this time, if you would like to ask a question, please press star then one on your touchtone phone. If you would like to withdraw your question, please press star then two. As a courtesy, we please ask that you please limit yourself to one question. If you have additional questions, you may reenter the queue. Our first question comes from Jonathan Raviv with Citi. Please go ahead. Hey, thanks, and good morning here. A question on the margin commentary. Just any perspective on the margin performance on an underlying basis in 4Q versus 3Q? And Tom, you said 16%, I think, on the call. Just squaring that since I think I had 16.5% in my head with MAX in the 40s. Is that the A220 dynamic you just described, or wide body being replaced by military? Just any thoughts on what that normalized margin number should be in our heads now? You're right, 16.5% is what our target is. We just rounded it for the sake of the presentation, but 16.5% is what we think is achievable once we get the MAX production rates into the low 40s. Okay, thanks for that clarification. And just can you just. Sorry, just one more question. On the A220, is that program going to be generating profit at all in its future or only after the 3.5 years to get to that 10% or better gross margin? Well, right now we've set up the forward loss that goes out 3-5 years. And so we expect that during that time, we're going to continue to work on all the projects that we have identified in terms of capturing synergies, which we said it would be at about 6% of revenue. While we've identified a lot of those, those projects are not all mature, and so as those projects mature, we should see improved performance on the program. The other thing is, rates are still quite low on the A220 program. You know, Airbus has given us the best guidance they can over the next few years, but again, as we see the market recover and air traffic resume, we expect to see the A220 rates get back to where they were projected to be previously, and that will also improve the profitability of the program. So after the 3-5-year program, absolutely, we expect the A220 to be profitable. Thank you. Our next question comes from David Strauss with Barclays. Please go ahead. Morning. Tom, can you, can you touch on the, the MAX and the 787? Obviously, Boeing's sitting on a lot of inventory of both at this point. Do you expect your MAX deliveries to actually pick up, relative to the 71 in 2020? And how are you thinking about your 787 rate, given you're, you know, somewhere around 7 a month and Boeing's not delivering any airplanes? Thanks. Right. Well, with regard to the MAX, Boeing has said that they're going to prioritize delivery of the units that they have built and not delivered, and they have been doing that. They, as you saw in December and in January, were able to deliver upwards of 40 units. So that's quite encouraging. As I said, we did produce 71 MAX ship sets in 2020. We've got about 130 units stored at our site in Wichita, ship sets. Boeing has paid for those already, but those are in storage. We will burn those down over the next 18 months or so. We do expect rates to be higher in 2021 on the MAX than they were in 2020. Boeing hasn't been specific yet. What they have said is that they expect to be at about 31 aircraft per month in early 2022 on the MAX. We are lagging them by about 5 shipsets per month, so that we can burn down the inventory that's here in Wichita. So that's, that's, that's where we are, but we do expect that the MAX deliveries for us, even though Boeing is going to be delivering out of their inventory, we expect the MAX deliveries for us will be higher in 2021 than they were in 2020. On the 787, Boeing has indicated that they are going through some extensive reviews of the build process and the units that has delayed some shipments. We've continued to ship, but it did impact our shipments in the fourth quarter. We expect that once the reviews are complete, that Boeing will be able to resume shipments of the 787 again, and we will continue to ship to our current schedule, which is at about 5 per month. All right. Thank you. Our next question comes from Seth Seifman with J.P. Morgan. Please go ahead. Good, thanks very much, and, good morning. Good morning. I was curious about, you know, morning. You mentioned that the abnormal production costs would, would continue in 2021, I guess, as we would expect. But relative to that sort of $50-ish million level for the fourth quarter, how is, is there any more color you could give us on, on, you know, how that should proceed through the year? Yes. So, Seth, you know, we had about $280 million of total excess capacity costs that we incurred in 2020. With the modest pickup in 737 production rates, which we'll see later in the year, we'll see some improvements in 2021 compared to 2020. You know, we haven't given out specifics, but you know, I would say we could see a 30% reduction in that number. But we also have to kind of factor in that A220 is gonna be in a similar situation, where that factory is set up to produce at more than 10 shipsets per month, and we're roughly at 4, and therefore, we're gonna have a little bit of headwind on excess capacity costs on the A220. So overall, we'll see an improvement in excess costs, which will help profitability and will help cash. And you know, as we move through the year, the excess cost will be a little higher in the first half and less in the back half of the year. I think an easy way to think about it is we established that excess cost allowance for production rates that are below 52 aircraft per month for the Max. They will be in effect until the Max rates get back to 52 and above. But as the rates climb, the excess costs will go down in proportion to how close we are to 52 aircraft per month. So that's just an easy way to think about it. Great. Thanks. Thanks very much. Our next question is a follow-up from David Strauss with Barclays. Please go ahead. Okay. Hi, David. Is there no one else in the queue that needs to ask a question? Well, go ahead. If you have another question, we can take it now. Okay. Jump on in, David. Okay. So I wanted to ask about cash flow and, you know, the 2021 walk that you had given us prior, you know, in terms of the $300 million cash tax benefit, you know, offset by the BRRR, I guess, along with around a $500 million working capital tailwind. Is that all still in place? I mean, I think that rise gets us to, like, a $200-$300 million burn in 2021. Is that the right ballpark? That's right, David. We're holding to what we communicated in the third quarter. Based on what we know today, we have no change in that view. Does the Bombardier pension contribution, is that gonna flow through operating cash flow, or does that go somewhere else? It will flow through operating cash flow. And that's included in the walk as well? That's right. Okay. Thank you very much. Okay. Our next question comes from Carter Copeland with Melius Research. Please go ahead. Ah, I made it in! Thanks, guys. Hey, Carter. Carter, good to hear from you. I, I didn't know if I was gonna make it in there. We're already going to follow-ups. So, Tom, I'm gonna cheat slightly and just ask you a two-parter clarification, just for extra color on two of the things you talked about. One, the integration timeline and tasks that you laid out, with respect to the Bombardier assets, and just some color on what integration tasks you—what sorts of integration tasks you've completed and what remains, just to kind of give us a sense of, you know, what the various risks are there. And then the other is, on all the stuff you talked about on the Max line, moving around the workflow, all of those efforts, are there any metrics you can give us on, what you anticipate that means for, direct labor? What it means for flow times, what it means for... anything that you've looked at and kind of zeroed in on and said, "This is what's compelling about that particular change or some other particular change." Thanks. Okay, good. All right, so to start on the integration question, let me turn it over to Sam Marnick, who's our Chief Operating Officer. Sam is leading the integration and can provide you some color on the type of tasks that we're undertaking and what's been completed. So, Sam? Yeah. Hey, good morning, Carter. So as Tom mentioned previously, there's about -- on the integration, there's about 450 activities, and really, they're organized into 22 functional work stream areas. Typical work stream areas that you'd imagine, like accounting, you know, IT, human resources, all of those kinds of things. By the end of Q1, we should be about 75% through the integration activities, Carter, but there are some activities that will take quite a bit longer. So for an example with that, of that, would be some of the accounting that needs to be done. Another example would be IT and the transition services agreement. So we have a transition services agreement for 18 months. Obviously-... We're gonna try and get off of that quicker, but that will be a longer integration activity. At the same time as doing the integration activities, obviously, we're also simultaneously doing the synergy activity work streams as well, and they both kind of feed each other. And the integration activities where we've seen a lot of success is because this is very much a, you know, a business that we're used to, Carter. The teams are very much already integrated in terms of things like metrics and cadence. So we're all working from the same kind of measures already. We're also really making some great progress on some of the combinations. So when Tom talked about the aftermarket business, for example, already we're doing repairs in Dallas, we're doing repairs in Belfast that are traditionally done out of the Spirit Wichita site. So all in all, we're seeing some really good progress on the integration. Hopefully, that gives you a little bit of color. There are some activities, though, that will spread out into the latter part of the year that will take longer to come off systems, for example. Right. Yes, Sam, just as a quick follow-up to that, are there any LTAs that the previous organization was engaged in that, you know, you wanna make your way out of, or is that not an issue of significance? Those are all things that we're working through on the integration activities. There are some things that obviously we'll be looking at, whether that's supply chain or other such agreements. As we're working through our positions for the future here, we'll be addressing all of those and seeing which make sense for us and which don't. And as we're working through the synergies, for example, as we make decisions over make, buy, and that impacts those types of agreements, we'll look at those as they come up, Carter. And one thing I would say, sometimes long-term agreements, Carter, might be in place, but with Spirit, we have a lot of scale, we have a lot of new programs and opportunities to work with suppliers to create win-win situations where we can get what we're seeking, and they can get something that helps them as well. So, we're confident we can manage through any situations that exist. Let me get to your second question, which is, you asked all of these things that I talked about in terms of automation and robotics and digitization of the factory floor and process redesign, how that will translate into metrics and what the benefits will be. And so the type of metrics that we are gonna see improve, primarily will be looking at things like, first of all, labor productivity. We measure realization, so in other words, how many hours do we perform versus how many hours do we have available? With all the disruption that we've seen in the past few years, realization, which should be close to 100%, has obviously dropped a lot. With all the changes that we're making, we expect to see our realization start to approach the 90%-100% level again. The other big area is really about quality. All the changes we're making ultimately are gonna drive better quality performance. So fewer defects, less scrap and rework, less repair, fewer escapes to our customers. All the ways that our customers measure quality, we will be able to see significant improvements. That also translates into dollars. I mean, if you reduce scrap and rework, obviously that, that helps out the bottom line as well. The other thing we'll see in terms of labor productivity is a reduction in overtime. When the factory is disrupted, and it's not performing and, and work gets out of sequence, you have to work harder at that. That creates a lot of overtime. We're expecting overtime to be less than 8% going forward. We, we had time periods in the last couple of years as rates were going up, where overtime could even reach into the 30% range. So that's gonna be a significant reduction. And then we're gonna see improvement in, in some of the line items, like things like perishable tools and shop supplies. Ultimately, though, all of those things will translate into margin. So when we say we're gonna get to 16.5% margin, this is one of the ways that we're gonna get there, is by making all of these improvements to our production system. Great. Thanks for the color, Tom. All right. Thanks, Carter. Our next question comes from Myles Walton with UBS. Please go ahead. Thanks, good morning. Based on the comments that defense is growing 15% and is, I guess, gonna stay at 18% of sales, I guess the implication is $4 billion of 2021 sales is sort of your benchmark target, which would imply, you know, that the Bombardier sales come through and the rest of the business sort of is flat year-on-year. Is Is that the way you're thinking about it, that the wide-body declines are being offset fully by the narrow-body growth? Yes, effectively. Yeah, Miles, we'll definitely we're seeing a lot of pressure on the twin aisle, in particular, 787 and 777. And so that's gonna be a pretty big headwind coming into the year. And we are seeing some single aisle recovery on top of it. So I would say maybe a little bit of benefit above and beyond the headwind on the twin aisles, but roughly speaking, the single aisle improvement is gonna be offset by the twin aisle reductions on the 777 and the 787. The point I was making was that with the wide bodies down, particularly the composite aircraft, we have open capacity. We have automated fiber placement capacity, trim and drill capacity, nondestructive inspection capacity, and we can repurpose that toward defense programs. We've been doing that. We've been winning defense work, and that's why I mentioned, in terms of the programs that we're on now, the program of record has future sales of over $6 billion. So, you know, we're very confident that the growth of the defense business can help offset some of the wide-body softness right now and will also create a very profitable revenue stream for us going forward. ... And on that, I know that the head of the B-21 program actually publicly in Air Force Magazine talked about Spirit, in particular, switching, you know, supply of workforce over to B-21 from other commercial assets. And I'm just curious, you don't have to comment on this program specifically, but the profitability of defense in general, how is that trending? Where is that relative to your mature commercial programs, and where is that, you know, when you do get to $1 billion in sales, where is the profitability profile of defense relative against your more mature programs? Well, what we said is defense programs have typical defense margins, so that's in the kind of 12%-14%, but those tend to be very stable, very long term, and less cyclical than you see on the commercial side. Okay. All right. Thanks. Our next question comes from Greg Conrad with Jefferies. Please go ahead. Good morning. Morning, Greg. You gave some helpful color around kind of the accounting from Bombardier, but it looks in Q4, you added back about $51 million of cash usage. And I think on the last call, you talked about expecting Bombardier to be a positive contributor to cash. You mentioned margins and kind of revenue growth, but how do you kind of view the cash profile of that business going forward? Yeah. So on our third quarter call, you know, we knew that when we acquired at the end of October, that there was going to be some severance-related costs that would be a headwind on cash in the fourth quarter. And based on our current look here into 2021, we expect the Bombardier assets, Belfast, Morocco, and Dallas, to be a positive cash flow contributor in 2021. Thank you. Our next question comes from Robert Spingarn, with Credit Suisse. Please go ahead. Thank you. Yep, Tom, while we're talking about the targets for defense and for biz jet, the $1 billion and the $500 million, could you just give us a general sense of the big programs in there? I assume the biz jet's mostly 7500, but wanted to clarify that, and then if you could just give us a rank order in defense. Right. So let's just start with defense. The programs that we have for defense right now, we have the military derivatives of the commercial programs from Boeing. So the P-8 is a 737, and we make 70% of the structure. The KC-46 tanker is a derivative of the 767, and we make the forward fuselage on that. We also have. We build the whole fuselage for the CH-53K, which is a heavy lift helicopter for the Marines. Then we are one of seven suppliers that was named to the B-21 Raider program, which is an important program for national security. In addition to that, we have one work packages on several new classified programs, which we can't go into in detail, in terms of what they are, but that's why we wanted to give you the program of record number of $6 billion. In terms of Bombardier, in terms of business jet programs, we are on the Global 7500, make the horizontal stabilizer. The Global 5000 and 6000, we do the wings, the fuselage, and the tail. We do the nacelles and the fuselage for the Challenger. We make the fuselage for the Learjet 75. Obviously, that's gonna be ending, but we'll do that throughout the course of this year. We make the nacelles for the BR710, which is on several different aircraft. We make the nacelle for the A330, and then we also make the nacelles for the new MC-21, which is a regional aircraft in Russia. In addition, on the business jet program, we've announced that we're gonna be the partner with Aerion for their forward pressurized fuselages. And then we've won two additional business jet programs, which have not been announced publicly, but will be very significant contributors in the future. Okay, and then just a clarification. On the A220 and the forward loss, is that calculated on a continued rate of 4 per month throughout this several year period, or does it gradually have the rate rising toward 10 in that number? No, we. Yeah, so Rob, you know, we've taken the current outlook that Airbus has given us, and so we expect over the next couple of years for the A220 production rates to climb higher than they currently are, and that's factored into the overall loss calculation. Got it. Got it. Thank you very much. Our next question comes from Kristine Liwag with Morgan Stanley. Please go ahead. Hey, guys. Mark, for the Bombardier assets to be free cash flow positive in 2021, what integration and synergy milestones are embedded in your outlook? Well, I would say we have, you know, modest assumptions as it relates to the actual synergies. You know, I know that on the Bombardier acquisition, we talk a lot about the Airbus A220, but I want to remind folks that, you know, there are other two important aspects of that acquisition. It's the business jets that Tom just described. We're on a variety of different business jet programs, many of which are profit, you know, nicely profitable programs. And then the significance, which I continue to say is really the jewel of the acquisition in my eyes, is the aftermarket business, which is substantial, doubles our aftermarket business and has margins consistent with, you know, our aftermarket peers. So although the A220 program is gonna be a bit challenging from a cash flow standpoint in 2021, you know, assuming 4-5 rate per month, we have, you know, two-thirds of that business generating profitable growth. And so, that will help us on the margin side, as well as, you know, we're gonna see some tailwind on destocking of some inventory that we built up on the A220 program in 2020, as we thought those production rates would come up. So some modest benefits on the synergies. You know, we're looking at a 24- to 36-month timeframe for us to squeeze out fully those synergies. We see nice profitability coming from the business jets in the aftermarket. We're seeing some working capital tailwinds, and that's gonna all culminate into some positive cash flow here. And you know, Tom mentioned it, we've won a nice little piece of defense work in 2021 that's gonna help us be cash flow generate some cash flow on the defense side of things. I see. So if we were to adjust out, you know, the working capital tailwind for the year, what should, and taking out A220 because it's its own, I guess, animal, how do we think about the run rate of free cash flow conversion for that two-thirds of the business that's profitable? Is that, you know, mid-teens or, I guess, double digit cash margin? How should we think about that? I don't want to guess, Kristine. I haven't looked at it that way. To be honest, we have been really focused on purchase accounting. We're working long hours with our external auditors to get the purchase accounting wrapped up here. We're spending time focused on our 2021 projections, which is the near term. Then, as Sam Marnick talked about, we're starting to tap the longer term strategy around the synergies and all the cost projects that we have. I would tell you that a really, really long list of projects on the A220 from site consolidation, overhead reduction, supply chain, we have a whole host of projects that we think over the next couple of years will drive some value on that program to help us get to profitability, along with we've got our fingers crossed that that program will continue to sell well in the marketplace. And if we can see those production rates climb into the 100, 125, 130, you know, we can be profitable. And I would just say, you know, if you listen to the Airbus, they're kind of in the same situation that we are. They talked about getting the profitability in the middle of the 2020s. So, you know, our goal is to get there and try to get there sooner than that. So sorry, I couldn't answer your question. I just don't have those statistics offhand here. But you know, maybe on future calls, we can help clarify that as we continue to get our arms around this business. You know, we've just had it for a couple of months here, and we've got a lot of work to do here, but we feel really good about the acquisition. Thank you for the color. Our next question comes from Douglas Harned with Bernstein. Please go ahead. Good morning. Thank you. Hey, Doug. Hi. You know, on the 787, and this is, this has been, somewhat of a challenge here with a lot of inspection work going on at Boeing. You know, our understanding is that, you know, the issues around non-conformities extend across a lot of areas, including section 41 and the forward cargo door. Can you, can you talk about, you know, with the issues on the 787, are these, are there Spirit specific issues here? Are these instead more a broader process question that extends across suppliers? And, and how have you worked to help, and what's the path to resolution of these issues that you're involved with? Well, we've been working very closely with Boeing in terms of trying to understand the whole production system and doing the analysis that they have requested. Our understanding is they're also doing analysis in other sections of the aircraft, but those are not really visible to us, so we're focusing on our work package with Boeing. And what we're doing is based on feedback that they've gotten from their own investigations in other parts of the aircraft; they've asked us to perform similar engineering analysis on the sections that we do. And we're doing that analysis. We are working with them to understand the results. In some cases, it may require rework. We have started some rework just so that they can resume their deliveries sooner. As we get all of the engineering analysis done, we'll determine in the long term what type of rework is done. But this is the type of thing that happens: you identify a potential issue, you do the engineering analysis, and you understand whether the area is acceptable as it is, or if it could require some rework. In addition, to the extent that we need to change some of our production process in the future, we will do that. We're learning a lot from this engineering analysis in terms of things like tools and processes, and we will make any improvements that we think are necessary as a result of that analysis going forward. Do you, do you have a sense here, given that, you, you furloughed people on the program and, you know, do you have a sense of what the timeline is based on, you know, the work that you're doing to, you know, address these issues? When do you see when you can get back to what I would call more normal production? ... Well, the furloughs that we have made on the program really relate to the production rate decreases that Boeing has announced. I mean, we were at 14, then 10, and now we're basically at 5, and so that's really what drove the furloughs. So we're continuing to do the work on the program in addition to the engineering analysis that I just described. But the furloughs that you referenced are not due to this, but they're rather due to the production rate declines that Boeing announced with the program. Oh. Oh, okay, I see. So, oh, okay, so these are basically going on in parallel, I guess yeah. Yeah. Yeah, Doug, what really happened here is the original production schedule had us going from about 10 to five a month in April, and then based on the latest schedule that we got from Boeing that they communicated late last year, that moved the production break or reduction down to five a month earlier in the January, February timeframe. So, you know, we had a plan to kind of transition some of those employees in April over to the 737 program as those rates went up. But due to the fact that the production rate came down sooner, you could see some of the lower deliveries in the fourth quarter. You know, we're, our production system is tuning down to 5 a month, roughly 5 a month for the full year, 2021, and that was the main reason why we had to furlough some employees. We just... Production rates came down sooner than we expected, and, you know, we had to reduce the workforce to equate to current production levels. So that was the reason for the Forward Loss, not, not the inspection issues and the- Right and the analysis you're doing? That's correct, Doug. Okay. Okay, great. That's very helpful. Thanks. Our next question comes from George Shapiro with Shapiro Research. Please go ahead. Yes, I wanted to clarify, when you say the 16.5% margin you'll get when MAX gets in the low 40s, and you also said that you'll still have excess capacity costs until that gets to 52. So does that 16.5% include the excess capacity costs, or is that what you'd expect as a normalized number without the excess capacity? No, George, that, that would include the excess capacity costs. And, and, and- We think even with the Excess Capacity Costs, we can get to around 16.5%. That's for the whole sector, so that includes the zero margins on the bulk of your other programs? That is correct. Okay. And then are there any excess capacity costs for any of the other programs, or the numbers we're seeing are strictly for the MAX? What you saw in 2020 was primarily the MAX, but in 2021, 2022, and into 2023, we'll have excess capacity costs on the A220 program as well. Okay. It's just contained to 737 and A220. Okay, and there's no excess capacity costs on, like, the 787 rate coming way down because you're already in a loss position, is that it? No, George. The technical side of it is the new rules that came out regarding excess capacity costs. If Boeing would've told us, "Hey, we plan to get back to 14 aircraft per month on 787, because our building is able, capable of producing 14," we would then have excess capacity costs, right? And so you really have to look at it, is your -- what is your factory set to produce? And if your customer commits, like they have on 737, that they're gonna go back to 52 a month in the 2023, 2024 timeframe. Therefore, we have to do a separate calculation to put certain costs in excess and certain costs go into the program. But on 787, there is no commitment. Boeing has said, "Hey," you know, their plan is to get back to seven or eight a month. They've never come out publicly and stated that they wanna that they're gonna go back to 14, and because they're not gonna go back to 14, then all of the costs hit the program as opposed to hitting excess. I hope that helps. Yeah, that helps. Is that true then for, like, the 350 program with Airbus? That's right, and triple seven. Okay, that's very helpful. Thanks, Mark. Sure. Our next question comes from Hunter Keay with Wolfe Research. Please go ahead. Oh, thanks for getting me in, Mark. Just a couple of quick ones for you. Is there any shot that you can obtain some pension relief from the stimulus, or is that not applicable in this scenario, on the cash contribution, the $135 million? And then, you guys have said pre-MAX, actually, your minimum cash balance, I believe, was $400 million-$600 million. How How do you feel about that now going forward? Thanks. Sure. I would say that, you know, as it relates to either the CARES Act or any benefits from the UK, I'm not quite sure there's a path forward as it relates to any pension relief. But you are aware of the fact that, you know, we do have a pension plan in Belfast, and, you know, we're evaluating that pension scheme to see, you know, if we can come up with a different scheme that would be beneficial to our employees and also beneficial to Spirit. And so, those are some things that we're working on as it relates to our integration and synergies that Sam is leading. Yeah, but the $130 million pension payment for this year is locked. Yeah. I mean, we're committed to making that, and we'll, we'll be evaluating the program as we go forward. But there's no, no chance that that would change. That'll happen in the October timeframe.... And And then, and then Mark, the, the max, the $400 million-$600 million minimum capital for minimum cash on hand? Yeah, yeah. You know, the $400 million-$600 million was, you know, really when we think about our business as it relates to being a $7 billion-$8 billion company. The amount of cash that we're required to hold, you know, just to support the business on a normal run rate basis, fluctuates based on our revenues and our cost profile and the number of our employees. You know, if we're half the size that we were when we needed $400 million-$600 million, we're probably more in the $200 million-$400 million. I think that's the way you should think about it, Hunter. Okay, thank you. Our next question comes from Mr. Kai von Rumohr with Cowen. Please go ahead. Yes, thanks so much. So, when you did Bombardier, you talked of getting 600 BIPS of margin improvement over three years, and now you also talked about a gross margin of 10% as we get out there, was it 2024? That would imply that currently we're doing about 4% gross margin, which wouldn't seem to be consistent with generating any cash. How do I square those two issues? Well, I would say this, Kai, I don't think you're. I know how you did your math to get to 4% currently, but that's not what we're expecting right now. As time moves on, right, just like the 787, as the revenue mix in the Bombardier assets, more revenue is generated on the A220 program. As those production rates go up, that has a dilutive impact on margins. Today, with where the production rates are, right, it doesn't have as dilutive of an impact here over the next couple of years because of the% of the overall revenue to that business. We have the aftermarket and business jets that I talked about. But if at some point in time in the future, we're going to go from 40 deliveries a year to 130 deliveries a year, and we're going to be generating 0% margins on it, that will drive a dilutive impact on our overall gross margin. So you know, what the goal here is, the business is supporting the 10% gross margins currently. As time moves on, the A220 will put a lot of pressure on those gross margins. But as Tom talked about, we've got the synergies and cost reduction projects, which we believe will enable us, as we move out over the next 3-5 years, to turn that program first to break even and then profitable. Once we go do that, that will help us on the gross margin side in the next 3-5 years, so. Right. And the way I would look at it too, Kai, is once we get that program to profitability, and then the rates start to pick up in the back half of this decade, it's going to be a great long-term program for Spirit. Got it. So then I have to raise another question. You mentioned that, you know, you're expected to have destock on the A220 this year. I would assume, you know, given the changes, that you're going through destock on the 220, Boeing is essentially producing nothing on the 737 now. So are you also at nothing? And, you know, 787 is kind of going through this thing where they talk of 10 per month, but it kind of sounds like they're doing nothing. So is the first quarter going to be very, very light in terms of volume? No, Kai. You know, I don't want to get ahead of myself, but I would tell you, I don't expect the first quarter revenue- Mm-hmm. - to be significantly different than what we generated in the fourth quarter. Got it. Very helpful. Thank you. Sure. Our next question comes from Ron Epstein with Bank of America. Please go ahead. Yeah, good afternoon. Good morning, guys. Hey, Ron. On the Bombardier acquisition, did you guys say 15% growth? And if you did, off of what base and over how many years? Because Bombardier never got that out of it. Right. Well, Bombardier was in the development phase of the A220, so as that goes up, that's what's going to drive the revenue growth. We did say 15% growth. The base is basically off of this year, which will be in the $700 million range over the next five years. Gotcha. Gotcha. On the defense applications that you're using wide body capacity on, can you say what they are? And what do you do when the wide body demand comes back with the defense stuff that's using that capacity today? Right. Well, unfortunately, they're classified programs, so we can't go into more detail on them. They are obviously using composite technology. We have sufficient capacity in our factories, so that when the wide bodies come back, we'll be able to support those rates plus the defense. So, you know, we're confident about that, and then we'll see how far back the wide bodies come. But we're confident we can do both, even when we see the wide body volumes return. And by the way, that will be a great challenge for us to address at the time. Yeah, no, go ahead. Yeah, Ron, I would say this, you know, you -- and you've been out to our factories before. In many instances, you know, we don't have one- ... single point of failure in the factory, whether it's trim, trim and drill or broaches or layup machines. And so we always have a little bit of extra capacity, even at the higher rates. And so really, as Tom said, you know, we're not quite sure when the Twin Owl production rates will come back up, and a lot of our composite automation that we have is very applicable to current classified programs. So, you know, we're gonna be able to use up some floor space, and we're gonna be able to utilize those machines on a couple of these classified programs that are just slowly starting out, but we believe over the next couple of years, could lead to some really big things, as Tom indicated, with the program of record in the future, you know, could contribute to $6 billion plus to Spirit. And so that's how we're gonna go manage it. And obviously, we've made a commitment to our commercial customers to support specific rates, and we will do that, but we will be able to do that and allow us to grow defense in those highly automated factories. Got it. Okay. All right, thanks! Our next question comes from Noah Poponak with Goldman Sachs. Please go ahead. Hello, everyone. Hello. Hello. Just thinking about this, $1 billion of annualized cost that you have pointed to, being able to extract, and squaring that up with the discussion of a 16.5% segment operating margin if the MAX monthly production rate is in the low 40s. The last time the MAX production rate was in the low 40s, for Boeing and for you, Spirit had approximately $1 billion of adjusted segment operating income or total company EBITDA. And so I guess I'm wondering, you know, if you... And in that period of time, the segment operating margin was up, you know, depending on the exact year and some moving pieces, it was approximately 16.5%. So if in the forward, you know, I know the wide bodies will be much lower, but, you know, there's no margin there. You've given us a list of new things that are coming in at a decent margin. So outside of the MAX, you're mixing up. And then the discussion on the MAX is the same rate. If the cost out is literally the size of the entire EBITDA you used to have at—with similar MAX conditions, why wouldn't that future segment EBIT margin be significantly higher than the 16.5, or what it used to be when you used to be at 42 a month? Yeah. No, I would just say the headwinds on the wide body are probably a little bigger than you're thinking about right now. I mean, if you go back to 2016, the triple seven was at 8 aircraft per month. It's now at 2. And- Yeah. and back then, the 787 was at 12 and was still in a kind of a forward loss position, but generating good revenue. And A350 was actually profitable when it was at a rate of about 8 at that time. So, you know, we've got now more headwinds on the wide body that we have to offset. And, you know, and we said a little bit of dilutive time which we'll have for the A220 during that time. But we think once we get the MAX back into the low 40s, we can offset those and get back to the 16.5% margin targets. Okay, so it's just more on the wide body than what I was thinking, right? Well, on the triple seven- Um, okay. program, it's always been a good program for us, and going from 8 to 2 is a significant headwind. Right. Tom, you had in your prepared remarks, you went. It was really helpful. You went through a lot of the specifics of things you've done on the cost side and automation and digitization. It sounded new in that you were detailing it with specificity today, but the targets are the same. I mean, how much of that is new in process right now on top of the costs you had been thinking about before, versus you're just giving us the details and the examples of what you were already thinking you were gonna do? It's more the latter. I mean, these programs are all long-term programs. Like that global digital logistics center I mentioned, we've been working on that for 2.5 years. It's just coming online now. The floor beam automation center we've been working on for about 2 years, it's just coming online. The spoiler line that I mentioned over in Prestwick, again, more than 2 years, but it's just coming online. So it's just a concurrence of events that these things all happen to be coming online right now, but we've been working on them, and I wanted to provide you the details so you could see the specifics of how we're gonna be driving these productivity improvements in the factory that will also help on our quality. But, you know, and I mentioned, too. Got it ... while we've been working on these things, some of the process flows, those have really been in the last 12 months. As production rates went down, we looked at our factory, our main factory, Plant Two, we call it, where we build the fuselage for the 737, and we said, "We've got some time now. Production rates are low. How could we reimagine this factory? How could we redesign it, since we have the opportunity, so that it could be much more efficient in the future?" And that's when we moved out the forward fuselage and the wing box, and we've now started to really completely overhaul the flow in Factory Two. We couldn't have done that if we were at 52 aircraft per month, but at seven aircraft per month, we had the capacity to do it, and we went and did it. Got it. Okay, thanks so much. Thanks. Our next question comes from Michael Ciarmoli with Truist. Please go ahead. Hey, good afternoon, guys. Thanks for- Hey, Michael taking the question. ... One quick one. You know, everything that's going on with the 787, I guess back to Doug's question, does that change or could it potentially change your cash breakeven there? I think it was for line unit 1,405. And then maybe just to tie a bow on all this commentary, you know, all these moving pieces, do you guys think you can get to positive operating margins or operating income in the second half 2021, or should we be more calibrated, you know, into 2022, just given low rates on the narrow body, still some uncertainty, and obviously the wide body pressure? Right. Let me take 77 first. You're right, the line unit is 1,405. We have a price increase, which will get us up to the level where we think our costs will be. That was always the goal. Obviously, with the production rate dropping, it creates more of a headwind, but with the production rate dropping, it also pushes out when line unit 1,405 happens, and so we have more time to achieve it. So that's still our goal. One of the ways that we'll offset some of the volume decline on the 787 is, what I said earlier, is, is using some of that capacity on defense programs, which will help absorb some of that fixed cost, which will help the 787 profitability. So the goal is still- Okay. when we hit line unit 1405, is that we will be breakeven or better. Got it. Right. Now, your second question, maybe just repeat it, please. Yeah, just thinking about, you know, generating positive operating income and positive margins here. Just, should we be calibrated towards, you know, second half 2021, even fourth quarter 2021? Or just given, you know, headwinds with wide bodies and maybe modest rate ramps on narrow, should we be more calibrated towards early 2022? Well, I mean, we said we'll be... 2022 is when we're targeting cash flow profitability. Mark mentioned that our interest payments happen in Q2 and Q4, the big interest payments. And so that puts us, gives us a little bit of headwind in Q4. So even if we were seeing some good momentum on the production side, we'll have those headwinds on the interest cost side. So I think what our. You know, we'll stand by, we'll be cash flow positive in 2022. Yeah, Michael- Okay. Maybe to be more specific, we should see improving operating margins as we progress throughout the year. If the production rates hold, we should see higher single aisle rates in the third and fourth quarter. And so I don't want to get too specific about, you know, when we'll see positive operating margins, but I will tell you, we should see them pick up nicely in the third and fourth quarter, before we break into, into 2022, where we should see continued benefits of the single aisle rates, both on the 737 and 8, A320. Don't want to get too specific, but, you know, we, we should see things start to build nicely as we move into the back half of the year. No, perfect. That's helpful. Thanks, guys. Our final question will come from Peter Arment with Baird. Please go ahead. Yeah, good morning, Tom, Mark. Tom, hey, just regarding all the transformation efforts that you're doing and kind of related to the cash question, you know, do we think about, you know, Spirit still as a company that can generate 7%-9% of free cash flow once volume comes back? Or just given all the kind of metrics and improvements you've been making, should we be thinking about the business differently, particularly given the acquisition, et cetera? That's our goal, and even with the acquisition, that's still our target. You know, we said we wanna diversify, delever, drive margin, but by doing those things, that will enable us to generate cash. And, you know, we think the 7%-9% range is a good target for when the business is stabilized, air traffic has recovered, and our production rates have gone back up. Appreciate all those details. Thanks for your time. Thank you. The conference has now concluded. Thank you for attending today's presentation. 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