The Boeing Company (BA)

“Factoring in that impact, we expect third quarter free cash flow to be positive and in the low hundreds of millions of dollars.”

“And we'll continue to work with GE on the engine delivery recovery this summer, which will be important for our rate 10 timing.”

“On 737, we're now ramping to 47 airplanes per month after a successful Capstone review in May and expect factory rollouts to reach 47 per month this summer.”

“We're confident in the $10 billion figure. We're confident that we're going to get there, and we're on the right track.”

“We continue to view the $10 billion free cash flow figure as very attainable with significant growth beyond that into the next decade as we execute on our record backlog and benefit from continued strong market demand.”

“We are investing accordingly to maintain our commitment to deliver this airplane in 2028.”

“These certifications paved the way for both airplane variants to start deliveries in 2027, and I'm confident these newest members of the 737 MAX family will deliver on the promise of greater efficiency and more capability for our customers.”

“On the 737-10, we recently completed our final test flight and expect certification following the -7.”

“In fact, on the 737-7, testing is done, and we expect to receive an amended type certificate from the FAA very soon.”

“BGS is already delivering solid free cash flow to us. So it's just a matter of staying the course with them and continuing to grow with the demand that we see, both on the commercial market side as well as on the government sustainment side.”

“On your question, David, I would expect from here the balance of the year for working capital to be a net source of cash.”

“I would expect there to be improvement — margin expansion each year sequentially throughout the rest of the decade as we approach and reach this high single-digit number.”

“We would expect that again, sequentially each year from here on out to continue to improve.”

“On BDS profitability, as I mentioned, maybe just look at 2026. As I mentioned just first in the prepared remarks, 3.5% in the second quarter. I would expect the balance of the year to be pretty much in the same zone there. So on a full year basis, including the VC-25B charge, we're in the range of about 2.5% for the year.”

“And we expect on the 787, that will actually surpass what they were in 2018 by the end of the decade as well.”

“All those taken together will drive us to margins that will approximate on the 737, what they were in 2018 by the end of the decade.”

“Right now, I would not point to you any supply chain constraints relative to moving to rate 52.”

“It consists of rising and improving delivery rates on the BCA programs, both the 737 and 787, given the guidance that we have related to deliveries.”

“Beyond 2026 and consistent with what we have discussed previously, free cash flow is expected to grow, primarily driven by higher commercial deliveries, steady improvements at BDS and continued growth at BGS.”

“Regarding free cash flow, we remain on track to achieve our outlook of $1 billion to $3 billion.”

“We're on track to be free cash flow positive for the year.”

“Earlier this month, we began low-rate MAX production on our North Line, which enables us to reach our next planned rate break of 52 per month.”

“In addition to certification flight testing under the phase TIAs, we expect approval to start ETOPS testing later this year.”

“On the 777-9, we remain on plan for first delivery in 2027.”

“Well, John, if you take — first starting with BDS, a lot of their cash flow improvement will track with their profitability improvement as well. And they'll get back to once you get to the end of the decade into delivering, I'll just say, maybe low single-digit billions of dollars type of contribution.”

“I don't, at this time, anticipate that's going to create a cost problem for us, but we do have some uncertainty here that we've got to work with NASA to get that put to bed.”

“So first of all, let me reiterate, we've done a really nice job of stabilizing at 42. That was our plan, and we've done a nice job of that. So the rate increase from 42 will be done by this summer.”

“To be clear, the wiring issue will not affect our full year delivery goals or plans to increase production to 47 per month this summer.”

“We continue to expect a production increase to 47 per month in Renton this summer and will benefit from buffer inventory during the transition.”

“We believe our internal and external supply chains are well positioned for this next rate increase.”

“And so we've got, I think, over this time period, over this next 18 months or less, a solid path to get back to positive booking margins on that program.”

“So there's no doubt that as we look at our 5-year outlook for defense, we're going to see upside from what we had planned last year.”

“We continue to view the $10 billion free cash flow figure as very attainable with significant growth beyond that into the next decade as we execute on our record backlog and benefit from continued strong market demand.”

“We're restoring trust with our customers, we're increasing production rates, and we're on track to generate a full year of positive cash flow.”

“For example, on KC-46 Tanker, we recently approached our best-ever factory performance going back to pre-pandemic levels of productivity, and we remain on track this year to deliver the most tanker aircraft since 2019.”

“And then beyond next year, we'll start to see that improve with the benefit of performance and productivity as well as synergy capture.”

“On your question on Spirit, this year, we talked about $1 billion of negative cash from Spirit, partly due to just operating performance and the other part being related to CapEx. As we head into next year, probably similar types.”

“Having said that, we still expect progressive improvement sequentially throughout the rest of the year. And that will, again, go carry over into next year where we expect the margins to turn positive mid next year.”

“Do you see 1Q as the low watermark for the BDS margin for the year? It's in that ballpark. I think for the year, it could -- yes, I mean, it could be a little bit better, kind of think about 3.5% for the year. So I would slight better from here on out.”

“Look, we're targeting 5 a month. And I think that's a reasonable -- with the overall market demand and our capacity, I think that's a reasonable goal and where we expect to be.”

“As Jay said in his prepared remarks, we're still -- there's no change in our forecast in terms of number of aircraft delivery in the full year.”

“As a reminder, we're expecting to increase our deliveries on the tanker from around 14 last year to about 19 this year.”

“Beyond 2026 and consistent with what we've discussed previously, cash flow is expected to grow primarily driven by higher commercial deliveries, steady performance improvements at BDS and continued growth at BGS.”

“Of note, we assume the expected DOJ payment to occur in the second half of the year.”

“We expect second quarter free cash flow to improve with the second half of the year turning positive.”

“Regarding our cash flow outlook, we continue to expect positive free cash flow of $1 billion to $3 billion this year, aligned with the expectations I shared last quarter.”

“This approach, combined with continued operational improvements, support steady progress towards high single-digit operating margins as we execute against a record $86 billion backlog.”

“We remain on track for first delivery in 2027 and continue to focus on managing the production system for increased rates.”

“We continue to expect an increase to 10 per month later this year.”

“On the 787, we delivered 15 airplanes in the quarter, in line with expectations shared last month and remain on track to deliver 90 to 100 airplanes in the year.”

“Following completion of these initial units, we will be led by our safety and quality plan to increase rate to 52 per month when the entire production system is ready.”

“Overall, the factory is performing well, and the program continues preparations to increase production to 10 airplanes per month later this year.”

“On the 787 program, we did see some impact to deliveries in the quarter due to delays of premium seat certifications, but we still expect to meet our full year delivery range of 90 to 100 airplanes.”

“We are working together with the supplier and the FAA to fold this into our certification plan, and we remain on track for schedule of first delivery in 2027.”

“We are pleased with the progress so far and remain on plan for the newest members of the 737 MAX family to be certified later this year with deliveries expected to start in 2027.”

“And I should note, we're already seeing higher demand in our defense business given the increased operational tempo, which over time will be a good offset to any potential commercial MRO weakness that results from these higher fuel prices.”

“Within 2026, we expect first-quarter free cash flow will be a usage similar to 2025, driven by normal seasonality.”

“Accordingly, we continue to believe the $10 billion free cash flow mark is very attainable, including impacts of the Spirit acquisition, which aligns with my remarks last month.”

“What I'll tell you there is that we continue to expect that that's going to improve. The cash margins are going to improve on our programs.”

“I don't see a big step up in CapEx relative to that multiyear PAC-3 because, for the most part, we've made the major investments already going forward in terms of CapEx.”

“We will be pricing that in the fall time frame according to the current schedule.”

“We delivered 14 tankers in 2025, and we are planning to deliver nineteen in 2026.”

“Overall, we expect BCA deliveries to be up close to approximately 10%. All in.”

“As far as the 787, a little bit simpler there. We're expecting around anywhere between 90 to 100 aircraft, and that'll be dependent upon real-time production rollouts.”

“Our expectation for deliveries on that program is around 500 aircraft.”

“Right now, 737 and 787 cash margins are depressed, and that's reflected in our free cash flow. We do assume and expect, given what's in the backlog, that those will improve over time to support these cash flow types of numbers that we're talking about.”

“And we're working to stabilize at this rate eight now, and our plan, as we said, is to go to rate 10 here in the next year.”

“And again, I think it will be a tougher rate ramp to go from 47 to 52 than it was to go from 38 to 42 because of that inventory level.”

“And as we've said, going from 47 then to 52, that will be where we'll have to see improved performance from the supply chain, and, you know, we've got time.”

“Similarly with BDS, that'll that's actually coming down and improving from 26 over 25.”

“The key thing there is while it is a higher cash burn this year, it'll improve over time with it turning positive in 2029.”

“Adjusting for these impacts would result in high single digits 2026 free cash flow and highlights the strong underlying cash generation potential of our business.”

“We expect sequential improvement from 2025 to 2026 and gradual improvements thereafter.”

“2026 is planned to be a higher use than 2025, but we expect the net cash use to improve over the next few years before turning positive in 2029.”

“We expect 2026 to be a use of cash, with the second half turning positive and accelerating sequentially.”

“These higher investment levels will continue into 2026, and we expect to spend closer to $4 billion this year, including the incorporation of Spirit.”

“Consistent with the profile we have discussed previously, cash flow is expected to grow year over year, primarily on higher commercial deliveries, better performance at BDS as that business continues to stabilize, and continued steady growth at BGS.”

“For clarity, this outlook contemplates an unfavorable impact of roughly $1 billion in 2026 associated with incorporating Spirit.”

“As we continue turning the corner in 2026, we expect positive free cash flow of $1 billion to $3 billion, aligned with the expectations I shared last month.”

“Our improving cash flow performance in 2025 provides a solid setup to deliver positive free cash flow for the full year in 2026.”

“We still expect the business to return to historical performance levels as we continue to drive execution and transition to new contracts with tighter underwriting standards.”

“We still expect to deliver the remaining airplanes in 2026, which is aligned with our customers' fleet plans.”

“The factory increased the production rate to 42 per month in the quarter, and the program is on course to increase production to 47 later this year.”

“Importantly, as we work through this issue, we continue our certification flight testing, and we don't expect this to impact our delivery in 2027.”

“We still anticipate certification for both the 737-7 and 737-10 in 2026.”

“we'll use the same disciplined processes, including monitoring our KPIs, to assess readiness for the next planned rate increase to 10 airplanes per month, which is targeted for later this year.”

“For production above 47, we'll add our new North Line in Everett, where facility and tooling investments are now complete, and we're executing a deliberate staffing plan to support production there.”

“I suspect we will get to a multiyear similar to what you've seen elsewhere with the government on the PAC-3 contracts.”

“we are seeing encouraging operational performance trends, which, if sustained, should enable us to meet our customer delivery commitments and set us up well for the next tanker order beyond the current program of record.”

“So I'm planning that we will exit the year very soundly at the 42 a month rate.”

“We don't see any showstoppers here, but we expect to get that done.”

“So our next rate increase will be from this 8, which we should be at 8 by the end of the year and then we'll move to 10 next year.”

“We don't think we can do that faster than 6 months.”

“Regarding cash flow, we still expect the fourth quarter to be positive before any impact from a potential DOJ payment.”

“We think it's pretty straightforward to get through the certification of the design. We've got a lot of test data, a lot of analysis that will help us move quickly through that. And as I said, we're still planning on getting that done here in '26.”

“With this charge, we now have a higher confidence that we'll complete the certification within the financial estimate.”

“We expect that to increase next year, Doug. Again, I think in the -- when we kind of give you the '26 framework in January, we can provide more color, but there will be some higher CapEx in '26 related to both this as well as the growth in expansion in St. Louis.”

“And I think we're looking at really 2028 before we're really utilizing that expanded facility.”

“We think that the market demand will allow us to get to rates in the teens and that's what we're focused on putting the capital in place, getting the facilities in place.”

“We want to make sure that we're stable here at 8 a month rate before we go to 10. So we're planning to do that sometime next year.”

“I do think on 787, the move from 8 to 10 will be more challenging for us with the supply chain, particularly seats.”

“Is that 2026 usage of cash on 777X, so it's about similar to 2025 usage when all is said and done? Yes, that's a good way of looking at it, but perhaps maybe a little bit higher, but in that zone.”

“So I would expect, starting in 2029, neutrality will go to a benefit of positive free cash flow for the program.”

“So next year will be a heavy use year. The year after that will be better in 2027. And then we would expect ourselves to get closer to neutral in 2028.”

“This converts to a tailwind later in the decade as we deliver delayed units.”

“As far as the cash profile, we see 2 impacts. The first is related to delivery timing, where we expect headwinds of about $2 billion in 2026 as deliveries move to the right.”

“As we previously shared, we anticipate certification for the 737-7 and the -10 to happen in 2026.”

“We have worked to understand the implications to our go-forward plan and now we anticipate first delivery of the 777-9 will occur in 2027.”

“As a reminder, we expect rate increases beyond 42 per month, will go in increments of 5. And while rate increased breaks won't be earlier than 6 months apart, we will remain disciplined and we won't move to higher rates until we achieve stability and readiness.”

“So the order environment is going to be very good.”

“I think the $3 billion net is the right reasonable assumption right now.”

“I would say, overall, BCA margins are expected to be negative for the year, as we've said before, although less so as we go quarter-by-quarter.”

“We've said rate increases beyond that will go in increments of 5, no earlier than 6 months.”

“I expect to be going to the FAA soon to start the negotiation or discussions on the rate increases.”

“So the market demand is strong for 87 and increasing rates is part of our plan to address that market.”

“And as long as the global trade environment remains favorable and we make progress on the rate increases, we expect the fourth quarter to turn free cash flow positive and sets us up to exit the year with a very nice positive momentum heading into 2026.”

“And on the input cost side, we continue to work closely with our suppliers to promote continuity of supply and pursue options to mitigate tariff cost pressures. And as we said, any financial impact is not significant.”

“As we've said, we will build other MAX models for affected customers and don't expect an impact on our planned production rates with the financial impact of this revised time line reflected in the program margins this quarter.”

“Importantly, the operational KPIs continue to progress, and we still expect to be in a position to request approval to go above 38 per month in the coming months.”

“As we previously said, we don't expect a material impact to our production plans, and we're prepared to build other 737 models for our customers.”

“We expect to be in a position to request approval from the FAA in the coming months to increase to 42 aircraft per month.”

“Yes, Noah, look, I see nothing structural that says we can't get back -- get to that $10 billion.”

“Look, we've said that -- and Brian said it in his prepared remarks, we want to get our BDS business back to high single-digit margins. See, nothing that's going to keep us from doing that.”

“And that 777X, we still expect that as we move towards EIS, that is going to go up as we expected.”

“Overall, the defense portfolio is well positioned for the future, and we still expect the business to return to historical performance levels as we continue to stabilize production, execute on development programs and transition to new contracts with tighter underwriting standards.”

“777X inventory was up about $900 million in the quarter and will continue to grow as we move towards entry in service, as we've previously shared.”

“We expect to deliver about half of these units this year and the other half in 2026, in line with our customers' fleet planning requirements.”

“The engine anti-ice solution has taken us longer, and we now expect certification next year.”

“Work on the solution is taking longer than expected, and we now are expecting certification in 2026.”

“But look, if we continue to see this 0 for 0, I think we'll be able to beat that $500 million bogey that we've established here.”

“I don't think we'll be at the inventory levels we want. But I don't see right now that any aircraft program is going to be held up over these fasteners.”

“But as we look a little further out good alignment, plenty inventory, feel pretty confident about supply chains out of it.”

“I think what's really important is any delivery timing won't disrupt our production rate increases on these programs and we're making really good progress operationally and we're tracking to achieve the right milestones that Kelly mentioned and both programs in the coming months.”

“There is no change to our previously shared certification timeline on any of the commercial programs.”

“Now you know it's going to take a while to get this capacity back into the system.”

“Those rate increases would be no earlier than probably six months in between.”

“In terms of the range that you mentioned we're not going to adjust that full year range right now. We're good with where it's at.”

“And as we've said we expect the second half free cash flow to turn positive and then accelerate as we exit the year driven by a few really important levers.”

“As it pertains to China specifically. And we talk about 50 or so airplanes that it could be north of a billion dollars. But as I said it's all contemplated within a conservative plan that we put together.”

“I'd also say that keep in mind that over time any input related costs will work its way through to price escalators. So it should mostly neutralize over time.”

“And for 2Q we've already delivered five so far in April and we expect 2Q to be a bit higher than where we were at in 4Q '24 delivery.”

“And for the second quarter specifically we expect to deliver in the high 20s for April and the quarter should be more or less in line with 1QX China which is in the low to mid 90s.”

“There is strong demand for these airplanes and we are actively assessing options should we need to redirect the 41 China airplanes that are already built or currently in production.”

“Regarding free cash flow, we set a conservative plan for the year and had a strong start operationally which we believe puts us in a position to largely offset any potential cash flow impact of China deliveries this year as well as higher expected input costs due to tariffs.”

“777X inventory was up approximately 800 million in the quarter and will continue to grow as we move towards entering service as we've previously shared.”

“The program continued to stabilize production at five per month in the quarter and we remain intent on demonstrating stability in the production system and supply chain prior to making the next rate increase to seven over the next few months.”

“I feel really good about our overall plan for the year even though I expect the China situation will take away some of the headroom we've built with our strong first quarter deliveries at BCA.”

“We've bounded our exposure and until we get more clarity, we're going to do our best to keep the China situation from impacting our production flow.”

“We do have suppliers in countries subject to the new U.S. tariffs, most notably in Japan and Italy where our suppliers do significant structures work on our wide body airplanes. We are currently paying the 10% tariff on those components, but we should recover tariff costs for those aircraft that are subsequently exported, which is a large portion of our wide body.”

“As we highlighted last quarter, we continue to work through seat certification issues affecting some deliveries and I expect this will be a challenge for us for the balance of the year.”

“We're poised to move to seven per month this year provided our KPIs indicate a stable production system and they're currently looking very good.”

“We'll ensure that the KPIs are showing a stable production system and then request an increase to 42 per month with the FAA later this year.”

“So we definitely want to get the 87 back up to double digit production rates and none of what we're seeing right now is knocking us off those plans.”

“So our rate increase plan remains unchanged. We'll go to 38 a month here. We'll get to the stability and then our first rate increase will be from 38 to 42 and then we'll do five per month increments after that. So 42 to 47, 47 to 52.”

“Overall the defense portfolio is well positioned for the future and we still expect the business to return to historical performance levels as we continue to stabilize production, execute on development programs, and transition to new contracts with tighter underwriting standards.”

“We made important progress in 1Q and the game plan is to get BDS back to high single digit margins over time.”

“We do have a couple more, Rich, that we're looking at. I would say that they're probably not going to be as big as Jep but we've got a couple more things that I'd like to action in the portfolio.”

“We will continue to monitor the demand situation and if tariff related impacts expand beyond China, we would expect to see additional pressure.”

“This is not going to be a major restructuring of the Boeing Company.”

“We won’t go to the FAA for a rate increase. We won’t request one if we don’t see these KPI’s performing the way that we want to.”

“I will tell you though, as we move forward, we will expect any kind of inflation pressure to be offset by an expectation that we continue to drive productivity. So we think we'll be able to manage that mix.”

“And Scott, in terms of cash flows, as is typical on our new program, heavy cash usage the year before EIS, which is going to be for 2025.”

“And I think that sets us up well for the upcoming integration, which will happen sometime, still we're projecting middle of the year.”

“But there are some areas, you named one, there are some areas where we can streamline the organization, or we may be better off focusing our energy elsewhere and we'll be actioning those over the coming months and year.”

“Now, in terms of your broader question on the full weight of the charges, they are going to tend to flow through. I think BDS for 2025 from cash flow performance is going to look a little bit like 2023.”

“And then BGS, we tend to have a better second half than first half, so it's going to be a nice steady but growing profile for the second half.”

“Now, BDS is going to move positive despite a continued drag from the charges, primarily from the benefit of favorable receipt timing that's natural and seasonal in that part of the business.”

“As we go to the second half, BCA is expected to flip positive, because then we'll get the benefit of the working capital as deliveries accelerate while we still invest in the 777X program.”

“Now, in terms of profile, as we've discussed and you mentioned, the first half will be negative. The second half will be positive.”

“So, 2025 free cash flow is largely going to be consistent with what we'd said at our October earnings call, with the two adjustments that I noted, which is CapEx a little bit higher based on some growth programs that we're anxious to invest in, and the impact of a few hundred million based on the updated BDS charges.”

“So January is off to a very solid start, and delivery should be in the high 30’s for the month.”

“Importantly, we expect to exit the year with real momentum in the business as we return to normal production rates.”

“We still expect the first half to be a use of cash, with the second half turning positive and accelerating as we exit 2025.”

“As noted previously, we expect the cash profile to look similar to prior development programs, with a first year prior to first delivery typically the largest use of cash driven by inventory build associated with the production ramp, which will unwind as deliveries accelerate.”

“We ended the quarter with 25 airplanes in inventory built prior to 2023 that require rework, down five from last quarter. Our ability to finish the rework and shut down the shadow factory was also impacted by the work stoppage and we expect to complete this work in early 2025.”

“On the -7 -10, inventory levels were stable at approximately 35 airplanes and testing on the anti-icing design solution is ongoing with certification expected to follow later in the year.”

“As production stabilizes and rates increase over time, we plan to deliberately return buffer inventory to more normal levels.”

“While still more work in front of us, we continue to be confident that BDS margins can improve to high single-digit levels in the medium to longer term.”

“And then beyond that, we're going to expect them to get better in 2026.”

“I would say that over time, the benefit you're going to start to see is a margin improvement at BCA, because you don't have these two very expensive shadow factories up and running anymore. They'll be done. So that'll be something that will be 2026 and beyond.”

“In terms of 2026, when it goes into service, keep in mind the initial airplanes are going to be changing corp airplanes, which are going to be, you know not high-cal cash flow airplanes. But once you get through those and you get out of 2026 and into 2027, you are really going to start to generate pre-cash flows, and that's going to accelerate as deliveries accelerate.”

“Now, 777X interior in general is a more complex interior, but that's baked into our overall certification program for the aircraft. So we got time to go work the seat certification issues, and we've learned from our 787 what those issues are. So I think we'll be able to manage that for the initial deliveries.”

“Sheila Kahyaoglu : Got it. So breakeven could be possible in ‘26 or maybe ‘27. A - Brian West: Yeah, for sure.”

“And then once we get through 2025, it'll be in a much different spot, because a lot of that headwind from the charge will be behind us.”

“We still expect the business to return to historical performance levels as we stabilize production, execute on development programs, and transition to new contracts with tighter underwriting standards.”

“I'm very hopeful that we're going to see a much more stable performance here this next year.”

“You know, 2025 in some ways could look like 2023, maybe a bit better if things go our way.”

“I do feel better about our ability to better manage the performance in 2025.”

“We're constantly evaluating our capital structure and liquidity levels to ensure that we could satisfy our debt maturities over the next 18 months while keeping confidence in our credit rating as investment grade.”

“I'm confident that we have a good path forward to manage the realities of our business and retain our investment-grade rating.”

“We're confident that overtime, the business performance and capital structure will return to levels fully aligned with an investment-grade profile.”

“I think they'll get easier for the sequential rate increases after that throughout the year. And as Brian said, we should exit next year in a much more, I'll call it, normal or recovered fashion.”

“So our expectation is, once we get back to work, we ramp production and move through next year, we'll get back on track.”

“And we expect the first half to be a cash usage and the second half to turn positive and then build real momentum as we exit the year and return to more stable production rates.”

“We're focused on maintaining $10 billion of cash in addition to our revolver capacity as we historically have.”

“We still expect the business to return to historical performance levels as we stabilize production, execute on development programs and transition to new contracts with tighter underwriting standards.”

“Broadly, the demand for our defense products remains very strong, supported by the threat environment contracting our nation and our allies.”

“Importantly, we expect to exit next year with real momentum in the business as we return to normal production rates.”

“While we expect 2025 to be another use of cash, we anticipate a significant improvement over this year.”

“We're confident that over time, the business performance and capital structure will return to levels fully aligned with an investment-grade profile.”

“The demand for these products continue to be very strong, supported by the geopolitical threat environment confronting our nation and our allies.”

“But when we start to deliver with predictability, all that will begin to unwind.”

“In the fourth quarter, we're going to have stronger deliveries. We're going to have real working capital improvement.”

“On the free cash flow outlook for the year, we are now expecting a larger use of cash than previously forecasted.”

“The team is focused on profitable, capital-efficient high IP offerings, and we still expect it to grow at solid mid-single-digit revenue levels and throw off mid-teen margins with very high free cash flow conversion.”

“We still expect to return strong historical performance level as we roll to new contracts with tighter underwriting standards.”

“Inventory in the quarter grew approximately $800 million in line with recent quarterly trends and will continue to grow as we move towards entry into service as we've previously contemplated.”

“We'll continue to follow the lead of the FAA as we progress through the certification process and still expect first delivery in 2025.”

“We still expect to finish the rework and shut down the shadow factory by year-end with most of these airplanes delivering this year.”

“The program produced below five per month in the quarter as expected and still plans to return to five per month by year-end.”

“We still expect to deliver most of these airplanes by year-end as we work towards shutting down the shadow factory.”

“On production, we gradually increased during the quarter and still expect to be higher in the second half, as we move to 38 per month by year-end.”

“Now, we also know that it will turn positive about a year after EIS as deliveries begin to ramp.”

“Stepping back, the game plan to get BDS back to high single-digit margins in the medium to long term remains unchanged.”

“Sounds realistic to me. But they're in charge.”

“But the improvement plan that we all see gets us where we need to be by the fourth quarter, and we have a lot of confidence in it.”

“Similarly, on MQ-25, we will get to the build, we will get to the software integration, and we will be able to get through an important milestone with the customer as we exit this year.”

“This calendar year, we have a full integration of those 2 distribution companies in mind... This will be another important productivity stepping stone for the business that, in my view, provides for a sustainable margin improvement.”

“So as we exit 2Q, we will know exactly what numbers are coming out of Wichita and what expectations are.”

“We continue to progress along the program time line and still expect first delivery in 2025.”

“We still expect to finish the reworked airplanes and shut down the shadow factory by year-end, with most of these airplanes delivering in the year.”

“We still expect to deliver most of these inventoried airplanes by year-end as we work towards shutting down the shadow factory.”

“Production [ ordering ] below 38 per month for the first half of the year and will be higher in the second half as we move back to 38 per month, with the timing of rates beyond 38 predicated on the work we're doing with the FAA.”

“These continued efforts will cause April deliveries to be more in line with February levels as we complete our work.”

“Our commercial business will be more stable. Our defense unit will be progressing towards more historic levels of performance. And our services team will continue to deliver exceptional results.”

“By the end of this year, we expect to have largely delivered our 737 and 787 inventory, effectively shutting down our 2 large shadow factories.”

“While near-term delivery shortfalls hurt and will affect our performance during our first half of the year, the long-term benefits from a synchronized supply chain will be substantial.”

“We expect this will continue to improve.”

“If we get ourselves to 38, which is our first objective, and we do it in a steady fashion moving up another 12 in my view, is doable in the window that we're talking about. So that's the bet we're making, and I'm confident we can get there.”

“However, given our continued focus on safety, quality and stability, we continue to expect that this goal will take us longer than we originally planned and later in the '25, '26 window, primarily tied to the 737 and 787 production delivery ramps of 50 per month and 10 per month, respectively.”

“We still expect to return to the strong historical performance levels as we roll into new contracts with tighter underwriting disciplines as we move into the '25, '26 time frame.”

“Our game plan to get BDS back to high single-digit margins by the '25, '26 time frame remains intact.”

“We expect to achieve rate increases, including 10 per month by 2026.”

“Now if we get to a moment because the slowdown has gone on too long, if we get to a moment where the buffers exceed that requirement, we will curtail but not until they exceed that requirement.”

“Right now, we plan for, obviously, not to be quite what it was in 2023.”

“The impact you're not going to see in 2024, just because we still have to move that work through the system. But as we exit, it will largely behind us.”

“Our defense business will continue to improve as we mature fixed-price programs and transition recently challenged programs with better underwriting disciplines that we've already started to see and BGS will continue to generate strong free cash flow.”

“We booked $77 million of abnormal costs in the quarter and have approximately $300 million left to go that will wind down by year-end, in line with our expectations.”

“And there are around 25 airplanes produced in 2023 that are still in WIP, given the disruptions in the second half of last year. And we expect these to deliver in 2024.”

“Today, we're producing 737s at a rate of 38 per month and we will remain at that rate until the FAA and Boeing is satisfied with our quality and manufacturing process.”

“The program successfully transitioned production to five per month in the quarter and still plan to steadily work our way to 10 per month in the 2025, 2026 timeframe.”

“Our view that, that could be within a year.”

“Our belief we stand here today, the bottom end will look a lot like it did last year and maybe a little bit of growth.”

“I do believe that as – I do believe next year will be better, and I do believe we'll exit next year better.”

“We do have a good line of sight to finish in the year, and the team is laser-like focused on meeting this updated set of numbers.”

“That is what our shadow factories are focused on in a big way to make sure that we can bleed that down to basically nothing by the end of next year.”

“We're going to exit this year with a little more than 100 of the return-to-service airplanes that we had at the end of 2020.”

“And in terms of the margins on both unit and program, they'll be positive.”

“October will be a little bit light, as I mentioned, with November and December being picked up.”

“Now as we move forward, that range of three – call it three, four-ish billion of R&D, that’s going to modestly go up over the next couple years.”

“BDS, as you point out, we expect cash flows next year to be better than there this year, but still likely a drag, mostly factoring in the impact of some of the charges that you mentioned that we just got to put behind us.”

“But we expect to be higher. It’s too early to be that specific, but it will be underwritten by higher BCA deliveries, both on the 37 and the 87.”

“we’ll definitely update guidance for next year as we get into the early part of next year, put these non-conformances in a rear view mirror once and for all, get to a stable rate at 38, and then we’re going to be anxious to build from there as fast as we can.”

“all of this will underwrite our continued strong liquidity position and enable us to further delever the balance sheet early next year.”

“BGS will still be generating mid-teen margins, executing on its high cash conversion, capital efficient, disciplined growth model.”

“On the tax expense side, we still expect full year tax expense of approximately $250 million.”

“On 4Q specifically, we expect BCA margins to improve sequentially, but remain negative more in line with 2Q, and we're still not anticipating much in terms of BDS profitability.”

“We're squarely focused on a meaningful step up in operating performance, including deliveries, revenue, margins and cash flow, all of which we expect to improve as we finish out the year.”

“We also expect R&D to come in slightly above our original guide, tied to the higher 777X investments that I touched on earlier.”

“The overall financial outlook for 2023 is unchanged from what we previously shared, including $3 billion to $5 billion of free cash flow generation, although the updated 737 deliveries now point more toward the low end of the free cash flow range.”

“The total estimate is unchanged at $1 billion, and we expect to be done this quarter.”

“we plan to resume production later this year.”

“The total estimate is now $3 billion, up a bit, and we still expect to be largely done by year-end.”

“We still expect 70 to 80 deliveries this year.”

“We expect to complete the 737 transition to 38 per month by year-end, and we're maintaining plans to increase to 50 per month in the 2025, 2026 time frame.”

“we expect October deliveries to be in line with September and now expect to deliver between 375 and 400 airplanes for the year.”

“our timelines are unchanged on the 737-7 and the 737-10 and the 777X and 777-8 freighter.”

“and expect to meet our delivery range of 70 to 80 for the year.”

“We plan to complete the production transition to 38 per month by the end of the year, and still plan to reach the key rate of 50 per month by that 2025 and 2026 time frame.”

“we now expect 737 deliveries for the year to be in this 375 to 400 range.”

“But it’s not going to do anything to disrupt our free cash flow target.”

“On MQ-25, we’ll get through key build and flight test milestones and transition out of the development phase as we move through the 2025, 2026 time frame.”

“we’re preparing to execute a successful crewed flight test next year and then fulfill operational launch commitments, all of which will be completed as we exit 2025, 2026.”

“We fully expect to see recovery in these areas as we improve execution, deliver next generation capabilities, and roll into new contracts with stronger underwriting disciplines that more accurately reflect the prevailing economic conditions.”

“I’d like to point out that the team is executing a game plan to get BDS back to the high-single digit margins by the 2025, 2026 time frame.”

“We started transitioning production to five per month in October and still plan to reach 10 per month in the 2025, 2026 time frame.”

“Our defense margins has to get better next year period.”

“Although we still have confidence as we get out of the first half of this year, the second half will be better.”

“If we didn’t see progress on those learning curves, we wouldn’t be giving you the guidance that we are going to be back to where we were.”

“In terms of the rate itself, we squarely see the middle of that range as high confidence.”

“Net-net, we still have confidence in the $3 billion to $5 billion of free cash flow for the year.”

“We had a very strong second quarter and we are confident in the $3 billion to $5 billion target for the year.”

“And they are getting to production rates that are steady. And they are getting to that five per month by the end of the year is a big deal and no longer they are in the abnormal category.”

“Yes. Sure, Cai. So, we’re not going to have modest profitability in the quarter. I think we said that we’re not expecting much at all from the BDS portfolio, just to be clear, because these things aren’t going to solve themselves in the near-term.”

“And that will be substantially behind us as we move out of 2024.”

“In terms of where we’re headed, as we think about the back half of the year, we will still have some negativity, although sequentially better in the third quarter.”

“Right now, we’re squarely focused on meaningful operating performance improvement, including deliveries, revenue, margins and cash flow, all of which will improve as we progress through 2023.”

“These adjustments will continue to weigh on the tax rate for the remainder of the year.”

“On the third quarter specifically, we expect BCA margins to improve sequentially but remain negative, and we’re not anticipating much in terms of BDS profitability.”

“Relative to the first half of 2023, we continue to expect operating and financial performance to improve in the second half.”

“The 2023 overall financial outlook is unchanged from what we previously shared, including $3 billion to $5 billion of free cash flow generation.”

“We have lowered our total estimate from $1.5 billion to $1 billion, which reflects plans to resume production later this year rather than early 2024.”

“We booked $314 million of abnormal costs in the quarter in line with expectations and there is no change to the total estimate of $2.8 billion, which is largely done by year end.”

“We increased production to 4 per month during the quarter and still plan to reach 5 per month by year end.”

“Moving on to the 87 program, we had 20 deliveries in the quarter and still expect between 70 and 80 deliveries this year.”

“We still project full year 737 deliveries of 400 to 450 with sequential improvement in the second half.”

“Overall, this is not expected to change our production and delivery outlook.”

“Given the progress through the first half of the year, we are on the right path to reach our 737 and 787 delivery guidance for the year.”

“We remain confident in our defense business. Demand is strong and we will continue to improve operational performance to more normalized levels.”

“Overall, we feel good about our operational and financial outlook, including the free cash flow and delivery ranges that we set for 2023 as well as for that 2025 and ‘26 timeframe.”

“And then there will be, obviously, increases from there to get to the 10 by ‘25, ‘26.”

“And by the time we get through 2024, and we’re focused on that ‘25-26 timeframe, as we’ve said, BCA margins will look a lot like that before in that low double-digit area.”

“Ultimately, we expect our operational and financial performance to continue to accelerate, aligned with the plan we laid out at our IR Day last November.”

“If we get through that well and we execute well, then we will be talking to all of you about 60.”

“This last defect will slow them down in measures in weeks and months, not in years and will not impede their ability to get to our rate increases.”

“Demand is as robust, if not more than what we had thought back in November, and so we remain confident.”

“Demand remains very strong across all of our product lines.”

“I'm not surprised these margins have expanded, and I'm not expecting them to go down. I think the team is doing a great job.”

“Overall, we're set up very well to deliver a mid-single-digit revenue growth business with mid-teens margins and a high cash flow conversion just like we set out in November.”

“It's a matter of months, Kristine. Thanks for the question. It's a matter of months, and the inventory is all contemplated in our forward look.”

“The good news is that this will not take us off our path to liquidate that inventory in the 37 of 225 by the -- largely by the time we get out of 2025.”

“In the near term, getting back to production levels that are normal will be months.”

“2Q will also be negative. But as we move into the back half of the year, the margins will improve.”

“Broadly speaking, as we've said, margins will be a bit volatile this year and the next as we do a couple of big things.”

“On 2Q specifically, we expect core EPS will be roughly in line with 1Q '23 performance absent the tanker charge, as the 737 delivery impacts would be largely offset by higher wide-body deliveries.”

“From a quarterly perspective, we continue to expect financials to improve throughout the year.”

“Commercial demand remains strong across our key programs and services.”

“The 2023 financial outlook is unchanged from what we previously shared, including $3 billion to $5 billion of free cash flow generation.”

“The balance of the 1Q revenue is made up of a small number of established programs that are experiencing negative margins on certain contracts due to specific near-term supply chain and factory stability pressures that we've highlighted previously. It will take time to work through these issues, and we fully expect that these programs will improve through the course of this year and return to normal margin levels over time.”

“Finally, on the 777X program, efforts are ongoing. Both the program time line and the abnormal estimate of $1.5 billion are unchanged.”

“We still expect abnormal to be largely done by the end of this year.”

“We booked 379 of abnormal costs in the quarter, in line with expectations, and there's no change to the total estimate of $2.8 billion.”

“We're producing at 3 per month and still plan to reach 5 per month by year-end.”

“We had 11 deliveries in the first quarter and still expect 70 to 80 deliveries this year.”

“The second half deliveries are expected to be around 40 per month, with sequential quarterly improvement in the back half.”

“April and 2Q deliveries will be lower, but the first half monthly average will be about 30 airplanes per month, in line with what we said previously.”

“And although near-term deliveries will be impacted, we still expect to deliver between 400 and 450 737s this year.”

“In our November guidance, we did not predict significant supply chain improvement until well into 2024. We remain in the same place today and share that same view.”

“Our defense business is well positioned, and we'll continue to improve operational performance to more normalized levels.”

“And certification time lines have not changed on the 737-7, -10 or the 777X.”

“We think we've got a good plan in front of us, and we are very focused on 10. 10's the number, and there's like execution that's underwriting that.”

“We have a team that works full time planning the new routings in the factories, and we're confident we can get it to 10.”

“As you might imagine, when you go from 2 to 1 and you optimize that 1 and you don't transport parts from one to another, you expect higher margins, and we do, and I'm confident we will achieve that.”

“And Doug, as it turns to margin, on the program margin side, we fully expect by the '25, '26 time frame to have 87 margins that are higher than they were back in '18.”

“But overall, we feel good about the operational and financial outlook shared last November, including cash flow and delivery ranges set for 2023 as well as for the 2025, 2026 time frame, where we can see $10 billion in annual free cash flow.”

“There's progress in many areas of the supply base, but we will likely face pockets of variability through the rest of this year.”

“While the high end of the delivery range is pressured, ultimate performance will be dictated by the pace of the fuselage recovery.”

“And I think we will have a coordinated regulatory approach to the set, and so we're staying on our targets.”

“No, I'm sorry. Everything is on course for the 777X.”

“Well, as I said, will we be facilitized to handle that kind of volume at that stage? Yes, we'll stay well ahead of that.”

“Really -- Sheila, you really have to get through calendar year '24. And then a lot of the cloud, a lot of the things that we've been wrestling with, the things that impact the -- our margins and the lumpiness along the way, that all begins to clear as we get to the tail end of '24.”

“We think first flights for the 7 will be this year and probably for the 10 next year.”

“We expect it to happen partly in 2023, but the key thing to watch is just the stability of the supply chain is going to be a big, big deal that we're keeping our eye on. And that's going to be important as margins will tend to accelerate.”

“BDS margins will get better, and we're positioned for that as we head into the year.”

“It's not going to be all the way back to what normal might look like, but it's going to be improved sequentially.”

“As we move our way into 2023, we clearly expect those margins to get better.”

“It's going to take us a little bit longer than originally expected, which is why we are going to shift out, going to five per month a bit later in the year but we still see 70 to 80 in the cards, and so far so good.”

“That progression will occur over the course of the year when we are at high confidence, then we're going to get to the kind of rates that we -- that are built into our guidance.”

“Let me take a shot at the -- I'll talk cash margins, and let's start with the 787. So near term, they're pressured but positive, and we got to work through all the things that we've been describing. In long term, they're going to be higher than they were back in 2018, driven by productivity, pricing in the Dash 10 model.”