Q3 2025 The Boeing Co Earnings Call

October 29, 2025

Speaker #1: Thank you for standing by . Good day everyone , and welcome to the Boeing Company . Third quarter 2020 conference Call . At this time , all participants are in a listen only mode .

Operator: Thank you for standing by. Good day, everyone, and welcome to The Boeing Company's third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's call is being recorded. The management discussion and slide presentation, plus the analyst question and answer session, are being broadcast live over the internet. To ask a question on today's call, please press star then one on your telephone. At this time, I am turning the call over to Mr. Eric Hill, Vice President of Investor Relations, for opening remarks and introductions. Mr. Hill, please go ahead.

Speaker #1: Please be advised that today's call is recorded. Question and answer sessions are being broadcast live over the internet. To action on today's call, please press star.

Speaker #1: Then one . At this time I am turning the call over to Mr. Eric Hill , Vice President of Investor Relations , for opening remarks and introductions .

Speaker #1: Mr. Hill , please go ahead .

Speaker #2: Thank you and good morning . Welcome to Boeing Quarterly Earnings call . With me today are Kelly Hartberg . Boeing's president and chief executive Officer .

Speaker #2: And Jay McGarvey, Boeing's Executive Vice President and Chief Financial Officer. This quarter's webcast earnings release and presentation will include relevant disclosures, and non-GAAP reconciliations are available on our website.

Eric Hill: Thank you and good morning. Welcome to Boeing's quarterly earnings call. With me today are David Calhoun, Boeing's President and Chief Executive Officer, and Brian West, Boeing's Executive Vice President and Chief Financial Officer. This quarter's webcast, earnings release, and presentation, which include relevant disclosures and non-GAAP reconciliations, are available on our website. Today's discussion includes forward-looking statements that are subject to risk and uncertainties, including the ones described in our SEC filings. As always, we will leave time at the end of the call for analyst questions. With that, I will turn the call over to David Calhoun.

Speaker #2: Today's discussion includes forward looking statements that are subject to risks and uncertainties , including the ones described in our SEC filings . As always , we will leave time at the end of the call for analyst questions .

Speaker #2: With that , I will turn the call over to Kelly Ortenberg .

Speaker #3: Thanks , Eric , and good morning , everyone . Thank you for joining today's call . I'd like to take a moment to welcome our new CFO , Jay Molavi .

Speaker #3: It's been great to have Jay on board and officially welcome him to his first quarterly earnings call for Boeing . So now let's take a closer look at our business as we enter the final quarter of the year .

Operator: Thanks, Eric, and good morning, everyone. Thank you for joining today's call. I'd like to take a moment to welcome our new CFO, Brian West. It's been great to have Brian on board and officially welcome him to his first quarterly earnings call for Boeing. Now let's take a closer look at our business as we enter the final quarter of the year. Our sustained focus on safety and quality is driving better performance across the enterprise, and we are re-earning the trust of our stakeholders, including customers, regulators, and employees. Our focus on culture change continues to energize our teams and improve how we work together. By August of this year, we had delivered more commercial airplanes than all of last year. Our defense business is well-positioned in the current geopolitical environment, and our service business continues to deliver in a robust aftermarket.

Speaker #3: Our sustained focus on safety and quality is driving better performance across the enterprise . And we are earning the trust of our stakeholders , including customers , regulators and employees .

Speaker #3: Our focus on culture change continues to energize our teams and improve how we work together . By August this year , we had over commercial airplanes than all of last year .

Speaker #3: Our defense business is well positioned in the current geopolitical environment, and our service business continues to deliver in a robust aftermarket across all of our market segments.

Speaker #3: We continue to see strong demand , which is reflected in our growing backlog . We marked important milestones in our recovery as operations generated positive free cash flow in the quarter .

Speaker #3: For the first time since 2023 and earlier this month , we jointly agreed with the FAA to increase . 737 production to 42 airplanes per month while we're turning the corner , we're well aware of the work ahead of us to fully recover our performance , particularly on our commercial development and certification programs .

Operator: Across all of our market segments, we continue to see strong demand, which is reflected in our growing backlog. We marked important milestones in our recovery as operations generated positive free cash flow in the quarter for the first time since 2023. Earlier this month, we jointly agreed with the FAA to increase 737 production to 42 airplanes per month. While we're turning the corner, we're well aware of the work ahead of us to fully recover our performance, particularly on our commercial development and certification programs. We'll talk more about our status, but I want to emphasize that we're exploring every lever to deliver better performance on all of our programs. Now turning to the businesses, let me start with Boeing Commercial Airplanes. We're making meaningful progress in line with our safety and quality plan, and our investments here continue to improve the health of our factories.

Speaker #3: We'll talk more about our status, but I want to emphasize that we're exploring every lever to deliver better performance on all of our programs.

Speaker #3: Now, turning to the businesses, let me start with Boeing Commercial Airplanes. We're making meaningful progress in line with our safety and quality plan.

Speaker #3: And our investments here continue to improve the health of our factories . Notably , we've seen 75% reduction in traveled work on our 737 and a reduction of 60% .

Speaker #3: All airplane programs supported by greater stability successfully ramped up the 737 production to 38 airplanes per month . As we had planned . We then focused on enablers such as improved quality training and workplace coaches to help stabilize at that rate and demonstrate that all of our key performance indicators are healthy .

Operator: Notably, we've seen a 75% reduction in traveled work on our 737 and a reduction of 60% across all airplane programs. Supported by greater stability, we successfully ramped up the 737 production to 38 airplanes per month as we had planned. We then focused on enablers such as improved quality, training, and workplace coaches to help stabilize at that rate and demonstrate that all of our key performance indicators are healthy. Once we were satisfied with the sustained health and stability of the production system, we then presented our discipline plan to the FAA to increase production to 42 airplanes a month. We continue to be guided by our safety and quality plan, and we'll monitor our performance against these six KPIs as we methodically move to higher rates. As a reminder, we expect rate increases beyond 42 per month will go in increments of five.

Speaker #3: Once we are satisfied with the sustained health and stability of the production system , we then presented our disciplined plan to the FAA to increase production to 42 airplanes a month .

Speaker #3: We continue to be guided by our safety and quality plan and will monitor our performance against these six KPIs as we methodically move to higher rates as a reminder , we expect rate increases on 42 per month , will go in increments of five .

Speaker #3: And while rate increase breaks won't be earlier than six months apart, we will remain disciplined, and we won't move to higher rates until we achieve stability and readiness.

Speaker #3: Also in the quarter , the FAA announced it will allow delegation to Boeing to issue airworthiness certificates for some 737 Max and 787 airplanes .

Operator: While rate increase breaks won't be earlier than six months apart, we will remain disciplined, and we won't move to higher rates until we achieve stability and readiness. Also in the quarter, the FAA announced it will allow delegation to Boeing to issue airworthiness certificates for some 737 MAX and 787 airplanes. Our team continues to work under the oversight of the FAA in building safe, high-quality commercial airplanes that comply with all airworthiness certification requirements. We appreciate the FAA's confidence in Boeing, and earning limited delegation authority is a responsibility we take very seriously. On the 787, the team is performing well, and the program continues to work towards demonstrating stability at rate seven.

Speaker #3: Our team continues to work under the oversight of the FAA in building safe , high quality planes that comply with all airworthiness certification requirements .

On the 787% the team is performing well and the program continues to work towards demonstrating stability at rate seven.

As we've previously shared we will be guided by our Kpis before we transition to planned higher rates.

Operator: As we previously shared, we'll be guided by our KPIs before we transition to planned higher rates and aim to move to eight per month in the near future, having recently completed a successful rate eight capstone review with the FAA. At the same time, we're investing in the expansion of our South Carolina site to ensure we're prepared to meet exceptional market demand, and we look forward to an exciting future for the 787 program. Turning now to our development programs. On 777X, as we announced earlier this morning, we have delayed our expectations for certification and first delivery, resulting in a $4.9 billion non-cash charge during the quarter. As we previously said in the third quarter, completion of our certification program is taking longer than expected.

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And the first three resulting in a $4 9 billion.

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As we've previously said in the third quarter completion of our certification program is taking longer than expected we.

We have worked to understand the implication.

We anticipate first delivery of the triples.

Time will occur in 2027.

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Our remarks.

Operator: We have worked to understand the implications to our go-forward plan and now anticipate first delivery of the 777-9 will occur in 2027. Brian West will have further details on this in his prepared remarks. We've accumulated more than 4,000 flight hours, more than double a typical flight test program, and so far there are no major technical issues on the airplane or on the engine. In the quarter, we completed critical testing of the airplane's brakes, engines, takeoff performance, and aerodynamic performance. However, we still have a significant portion of the flight test certification program to go, and our team is executing plans to complete this certification as part of the schedule we shared today. The airplane and the engine are performing well. Demand for the airplane remains strong, and we remain confident that the 777X will be the next flagship airplane for our global customers.

The accumulated more than 4000 flowers.

Typical flight test program and so far there are no major technical issues on the airplane or on the engine.

In the quarter, we completed critical testing of the airplanes brakes engines takeoff performance and aerodynamic performance.

However, we still have a significant portion of slight test certification program to go and our team is executing plans to complete this certification as part of the schedule we shared today.

The airplane and the engine are performing well.

<unk> for the airplane remains strong and we remain confident that the triple seven X will be the next flagship airplane for our global customers.

This is obviously a disappointment, but we just need more time to complete the certification process.

With this charge, we now have a higher confidence.

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737, 7%.

Operator: This is obviously a disappointment, but we just need more time to complete the certification process. With this charge, we now have a higher confidence that we'll complete the certification within the financial estimate. Better news on the 737-7 and 737-10 programs. With more than 3,000 hours of lab testing and analysis, we now have a final deck of design changes to permanently address the engine anti-ice issue. This effort remains on the critical path, and we're now following the lead of the FAA as we work to certify the suite of design updates. As we previously shared, we anticipate certification for the 737-7 and the 737-10 to happen in 2026. Looking now at our defense business, we continue our active management approach, and we're making progress to de-risk our development programs.

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Changes to permanently address the engine and ice issue.

This effort remains on the critical path and we are now following believes the FAA as we work to certify the suite of design updates as we previously shared.

State certification for the 737 dash seven and the Dash 10 to happened.

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Our defense business, we continue our active management approach and we're making progress to de risk our development program, we again demonstrated.

On our <unk> in the quarter and our Bds team is working hard everyday to earn trust.

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We also continue to proactively engage with our customers and suppliers in many cases, we've been able to revise contract baseline to <unk>.

Operator: We again demonstrated stability on our EACs in the quarter, and our BDS team is working hard every day to earn trust of our customers. We also continue to proactively engage with our customers and suppliers. In many cases, we've been able to revise contract baselines to lower execution risk and create win-win outcomes for the customer and for Boeing. We still have work to get these programs through the development phase, and as I've said before, you're never done until you're done, but we clearly are making progress. In the quarter, BDS had several notable milestones, including delivery of the 100th KC-46 Pegasus tanker across our combined U.S. Air Force and global customer base. We're proud our platform continues to provide unique value and capability to our customers. We also secured key contract awards in the quarter. The U.S.

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Create win win outcomes for the customer and for Boeing.

We still have work to get these programs through the development phase and as I've said before Youre never done until you're done, but we clearly are making progress.

In the quarter Bds had several notable milestones including delivery of the 100, the KC 46 tanker across our combined U S Air Force and global customer base. We're proud our platform continues to provide unique value and capability to our customers.

We also secured key contract awards in the quarter.

The U S Space Force award of $2 8 billion on track for the evolve strategic Satcom.

Solidifying our position as the leader in the National Security space.

More recently, we signed multi year contracts valued at $2 7 billion.

Produce additional pack III seekers, leveraging the advanced investments, we've made to ramp up quickly and meet the demand.

Operator: Space Force awarded Boeing a $2.8 billion contract for the Evolved Strategic SACCOM program, solidifying our position as a leader in the national security space. More recently, we signed multi-year contracts valued at $2.7 billion to produce additional PAC-3 seekers, leveraging the advanced investments we've made to ramp up quickly and meet the demand. In St. Louis, we are executing our contingency plan as our IAM-represented workforce remains on strike. While, of course, we'd prefer not to be in this position, the team continues to work in support of our customers. We are building JDAMs without IAM workforce at about the same production rate as before the work stoppage, and the team is progressing on our MQ-25 and T-7A development programs. We'll continue to manage through this with focus on supporting our customers. Now moving on to Global Services.

In St. Louis we are executing our contingency plan as our iam represented workforce remains on strike.

While of course, we prefer not to be in this position. The team continues to work in support of our customers. We are building <unk> without iam workforce at about the same production rate as before the work stoppage and the team is progressing on our MQ25, and <unk> 700, <unk> development programs will continue to.

Manage through this with focus on supporting our customers.

Now moving on to global services Bgs had another strong quarter delivering exceptional performance for our company as they support our defense and commercial customers.

U S Navy awarded Boeing contracts totaling more than $400 million for the repair of the F 18 landing gear and outer wing panels.

We're still on track to close the sale of Jefferson and the other portions of our digital business later in this quarter.

Operator: BGS had another strong quarter delivering exceptional performance for our company as they support our defense and commercial customers. The U.S. Navy awarded Boeing contracts totaling more than $400 million for the repair of the F/A-18 landing gear and outer wing panels. We're still on track to close the sale of Jeppesen and the other portions of our digital business later in this quarter. At the same time, the BGS team continues to secure deals for the digital capabilities that will retain related to fleet maintenance, operations, and repair. A good example, we recently announced an agreement with EVA Air that includes digital diagnostic tools and advanced analytics to improve efficiency and maintenance operations. Now, lastly, I'll share another update on our company's culture change. This remains a topic of interesting conversations with many of our stakeholders. I'm pleased with how the employees have embraced culture change.

At the same time Bds team continues to secure deals for the digital capabilities that will retain related to fleet maintenance operations and repair but good example, we recently announced an agreement with Iba error that includes digital diagnostic tools and advanced analytics to improve the efficiency and maintenance operations.

Lastly, I'll share another update on our company's culture change. This remains a topic of interest in conversations with many of our stakeholders I am pleased with how the employees have embraced culture change youll recall that we use feedback and direct employee input to help shape, our new values and behaviors earlier.

This year.

Since then as I've traveled around the company I am excited to see how many teams are using the values and behaviors to affect change in their daily work.

For example, I have come across production teams that are using their daily tier meetings to call out, which values and behaviors helped them work better with each other and.

Operator: You'll recall that we use feedback and direct employee input to help shape our new values and behaviors earlier this year. Since then, as I've traveled around the company, I'm excited to see how many teams are using the values and behaviors to affect change in their daily work. For example, I have come across production teams that are using their daily tier meetings to call out which values and behaviors help them work better with each other. During my recent visits in Miami and some of our global sites, teams told me how championing our values around safety and quality is strengthening our relationships with our customers. I'm confident that with our new values, behaviors, and the processes we're putting in place with performance management, leadership development, and new training opportunities, we'll continue to see positive culture change.

During my recent visits in Miami and our some of our global sites teams told me how championing our value.

And quality is strengthening our relationships with our customers.

I'm confident that with our new values figures and the processes.

Place storm expansion leadership development, and new training opportunities will continue to see positive culture change.

Before we close out the year, we're also going to do another voice of employee survey.

February to get a feel for how we're doing on the culture change and get feedback on the areas that are working and where we still need to improve.

This work is going to take time to really take hold and while I don't expect overnight improvement will continue to listen to our people and use the values and behaviors.

Operator: Before we close out the year, we're also going to do another voice of employee survey like we did back in February. We'll get a feel for how we're doing on the culture change and get feedback on the areas that are working and where we still need to improve. All this work is going to take time to really take hold, and while I don't expect overnight improvement, we'll continue to listen to our people and use the values and behaviors. Now, before I finish my prepared remarks, I'd like to say thank you to our employees for their dedication to safety and quality and enabling another quarter of improved performance. While we're all disappointed with the 777X delays, it shouldn't overshadow the progress we're making. Our customers are giving us great feedback on the quality and delivery performance. We're increasing production rates.

Now before I finish my prepared remarks, I would like to say, thank you to our employees for their dedication to safety and quality.

Another quarter of improved.

The performance.

While we're all disappointed with the triple <unk> delays it shouldn't overshadow the progress.

Our customers are giving us great feedback on the quality and delivery performance, we're increasing production rates, we turn cash positive in the quarter and we're winning in the market well.

Well positioned to build on the momentum delivering on our more than $600 billion backlog and restore Boeing to the company. We all know it can be now let me hand, it over to Jay to further discuss our operating results J. Thanks, Kelly. Good morning, everyone. Let me start by saying that it has been an honor to join Boeing at such an important time in.

Operator: We turned cash positive in the quarter, and we're winning in the market. We're well-positioned to build on the momentum, delivering on our more than $600 billion backlog, and restore Boeing to the company we all know it can be. Now, let me hand it over to Brian West to further discuss our operating results. Brian?

The Companys history, and I'd like to thank the team here for the warm welcome. These last few months throughout.

Throughout my career I've always been impressed with Boeing's appeal.

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David Calhoun: Thanks, David, and good morning, everyone. Let me start by saying that it has been an honor to join Boeing at such an important time in the company's history, and I'd like to thank the team here for the warm welcome these last few months. Throughout my career, I've always been impressed with Boeing's people, products, and services, and iconic legacy. I'm very excited to partner with David in support of our continued recovery and delivering for our global customers and stakeholders. Boeing is in a much stronger position than it was a year ago, and it's my job to help David and the leadership team build on that progress. I'd also like to thank Brian West for his role in getting us to where we are and for his support throughout this transition. Now, let's start with the total company financial performance for the quarter.

I am very excited to partner with and support of our continued recovery and looking for our global customers and stakeholders.

Is it a much stronger position.

And it's my job to help Kelly and the leadership team.

Good luck.

I'd also like to thank you.

First for his role in getting us to where we are and for his support throughout this transition now.

Now, let's start with the total company financial performance for the quarter.

Revenue was up 30% to $23 3 billion.

Primarily driven by improved operational performance the business.

Including higher commercial deliveries and volume.

The core loss per share of $7 47.

Primarily reflects the $6 45 impact of the $4 $9 billion charge on a triple <unk> program.

David Calhoun: Revenue was up 30% to $23.3 billion, primarily driven by improved operational performance across the business, including higher commercial deliveries and defense volume. The core loss per share of $7.47 primarily reflects the $6.45 impact of the $4.9 billion charge on the 777X program, which I'll discuss in more detail shortly. Free cash flow was positive $238 million in the quarter, primarily reflecting higher commercial deliveries and working capital that improved compared to both the prior year and the prior quarter. Importantly, this was the first positive free cash flow quarter since the fourth quarter of 2023 and serves as an important progress point in our company's recovery. These free cash flow results were better than expectations in July, driven by higher commercial deliveries as well as the potential DOJ payment shifting to the fourth quarter.

Which ill discuss in more detail shortly.

Free cash flow was positive $238 million in the quarter, primarily reflecting higher commercial deliveries and working capital that improved compared to both the prior year and the prior quarter.

Importantly, this was the first positive free cash flow.

Since the fourth quarter of 2023 and serves as an important progress point in our company's recovery.

These free cash flow results.

Expectations in July driven by higher commercial deliveries as well as the potential Doj payments shifting to the fourth quarter.

Turning to BCA on the next page.

BCA delivered 160 airplanes in the quarter.

<unk> quarterly delivery total since 2018.

Revenue was up nearly 50% to $11 1 billion.

Everything deliveries compared to last year.

Operating margin of negative 383% was impacted by the charge on a triple <unk> program.

David Calhoun: Turning to BCA on the next page, BCA delivered 160 airplanes in the quarter, the highest quarterly delivery total since 2018. Revenue was up nearly 50% to $11.1 billion, primarily reflecting higher deliveries compared to last year. Operating margin of negative 48.3% was impacted by the charge on the 777X program. BCA booked 161 net orders in the quarter, including 50 787 airplanes for Turkish Airlines and 30 737-8 airplanes for the Norwegian Group. Backlog in the quarter ended at $535 billion and includes more than 5,900 airplanes, with the 737 and 787 both sold firm into the next decade. Now, let's click down to the commercial programs. The 737 program delivered 121 airplanes in the quarter, including 41 in September. On production, the factory stabilized at 38 per month in the quarter.

BCA booked 161 net orders in the quarter, including 50, 787 airplanes to Turkish Airlines and.

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Sorry.

Backlog in the quarter ended at 535 billion.

And includes more than 5900 airplanes with the 737 and 787, both sold firm into the next decade.

Now, let's click down to the commercial programs.

787 program.

Our airplanes in the quarter, including 41 in September.

On production the factory stabilized at 38 per month in the quarter.

Importantly, we jointly agreed with the FAA in October to increase of 42 per month and the program is now focused on continuing to drive a stable production system as they transition to this new rate.

Spirit continues to deliver fuselages with improved quality and flow.

Up well for both our future production rate and.

And the plan to re integration.

David Calhoun: Importantly, we jointly agreed with the FAA in October to increase to 42 per month, and the program is now focused on continuing to drive a stable production system as they transition to this new rate. Spirit continues to deliver fuselages with improved quality and flow, which sets us up well for both our future production ramp and the planned reintegration. That transaction is still expected to close this year. The quarter ended with approximately five 737-8s built prior to 2023, down 15 from the second quarter. Importantly, we completed the rework on the last of these airplanes and shut down the shadow factory in the third quarter. On the -7 and -10, inventory levels were stable at approximately 35 airplanes.

That transaction is still expected to close this year.

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Approximately 35 airplanes.

As Kelly said, we have made good progress.

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We delivered 2000 claims in the third quarter.

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Down 5% from last quarter.

We still expect to deliver these airplanes through 2026, which is aligned with our customers' fleet planning requirements.

David Calhoun: As Brian West said, we have made good progress on the suite of engine anti-ice design updates over the past few months and continue to work with the FAA on the certification path for these programs. On the 787, we delivered 24 airplanes in the third quarter and ended with approximately 10 787 airplanes in inventory that were built prior to 2023, down five from last quarter. We still expect to deliver these airplanes through 2026, which is aligned with our customers' fleet planning requirements. Finally, on 777X, during the quarter, we recorded a $4.9 billion loss provision net of a cost-based extension benefit to reset the development and production schedule on the program, with first delivery now expected in 2027 versus the prior expectation of 2026.

Finally on Triple seven X during the quarter, we recorded a $4 $9 billion loss provision net of our cost base extension benefit to reset the development and production schedule on the program with first delivery now expected in 2027% versus the prior expectation of 2026.

And in color.

The approval to begin the second phase of certification flight testing in early 2025.

And had anticipated authorization to start the next major phase of certification flight testing in the third quarter.

However, this authorization has been delayed as Boeing and the FAA work through the supporting analysis that enables the next faced a certification flight testing.

Given this delay and our assessment of the timeline to enter future certification phases, we have shifted our flight test and production schedules to reflect these learnings.

David Calhoun: To provide more background and color, we received approval to begin the second phase of certification flight testing in early 2025 and had anticipated authorization to start the next major phase of certification flight testing in the third quarter. However, this authorization has been delayed as Boeing and the FAA work through the supporting analysis that enables the next phase of certification flight testing. Given this delay and our assessment of the timeline to enter future certification phases, we have shifted our flight test and production schedules to reflect these learnings. We now expect the next major phase to start later this year or early 2026. The certification program delay, coupled with our reassessment of production costs, constitute the basis of the incremental loss provision this quarter.

We now expect the next major phase to start later this year or early 2026.

The certification program delay coupled with our reassessment of production costs constitute the basis of the incremental loss provision this quarter.

Sure.

Additional customer concessions.

Cost of incremental rework on build aircraft learning curve adjustments in the carrying cost of production operations spread out over a longer period of time.

On a comparable basis to last year's total charges on the program. The costs are higher due to rework on bill aircraft incremental production disruption and learning curve adjustments.

As far as the cash profile, we see two impacts the first is related to delivery timing.

David Calhoun: The charge amount includes additional customer concessions, the cost of incremental rework on built aircraft, learning curve adjustments, and the carrying cost of production operations spread out over a longer period of time. On a comparable basis to last year's total charges on the program, the costs are higher due to rework on built aircraft, incremental production disruption, and learning curve adjustments. As far as the cash profile, we see two impacts. The first is related to delivery timing, where we expect headwinds of about $2 billion in 2026 as deliveries move to the right. This converts to a tailwind later in the decade as we deliver delay units. Second, the cash roll-off of the $4.9 billion accounting charge is expected to be spread into the next decade. While disappointing, the reset allows us to operate to a higher confidence plan and allows our customers to manage their operations accordingly.

We expect headwinds of about $2 billion in 2026 as deliveries moved to the right.

This converts to a tailwind later in the decade as we deliver delay units.

Second the cash roll off of the <unk>.

Dollar accounting charge is expected to be into the next escape.

While disappointing.

Set allows us to operate with higher comps.

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We're now happy to certification credit.

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Let's shift over to BDSI.

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And revenue.

Six nine months.

An improved operational performance or volume.

Operating margin of one 7% was up significantly compared to last year also reflecting the better operating performance in the third quarter. These.

David Calhoun: As David Calhoun mentioned, this confidence also stems from our completion of dry run flight tests. While we have not received certification credit with the FAA for those flights, we have obtained important verification data to support technical risk burndown. Okay, let's shift over to BDS on the next page. BDS delivered 30 aircraft and two satellites in the quarter, and revenue grew 25% to $6.9 billion on improved operational performance and higher volume. Operating margin of 1.7% was up significantly compared to last year, also reflecting the better operating performance in the third quarter. These results also included immaterial impacts associated with the IAM work stoppage as we continue to execute our contingency plans. BDS booked $9 billion in orders during the quarter, and backlog grew to a record $76 billion.

These results also included immaterial impacts associated with <unk>.

And work stoppage as we continued to execute our contingency plans.

Bds booked $9 billion in order during the quarter and backlog grew to a record 76 billion.

Overall, we continued to make progress stabilizing our fixed price development programs, even with minor cost updates on a few programs such as for the tanker, which absorbed additional average shared costs.

So the next update.

We are proactive management approach and retiring risk and developing win win opportunities for both us and our customers.

We remain focused on delivering these important capabilities to our customers. He met several important milestones in the quarter.

For example on the T 700 program we achieved.

Customer milestones under the MLA and started assembly on the first production representative test aircrafts.

David Calhoun: Overall, we continue to make progress stabilizing our fixed price development programs, even with minor cost updates on a few programs, such as for the tanker, which absorbed additional Everett shared costs from the 777X update. We have seen benefits from our active management approach in retiring risk and developing win-win opportunities for both us and our customers. We remain focused on delivering these important capabilities to our customers and met several important milestones in the quarter. For example, on the T7A program, we achieved four additional customer milestones under the MOA and started assembly on the first production representative test aircraft. The remainder of the portfolio continues to benefit from exceptional demand supported by the global threat environment confronting our nation and allies. Performance on these programs also continues to stabilize and build on the improved operational performance that began earlier this year.

The remainder of the portfolio continues to benefit from exceptional demand supported by the global threat environment.

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Performance.

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Bill.

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Overall, the defense portfolio is well positioned for the future.

Evidenced by our record backlog.

And we still expect the business.

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Moving to global services.

Stage.

Bgs continues to perform well again delivering strong financial results in the quarter.

Revenue was up 10% to $5 4 billion, primarily reflecting.

And government volume.

Operating margin was 17, 5% in the quarter up 50 basis points compared to last year unfavorable commercial volume and mix.

David Calhoun: Overall, the defense portfolio is well-positioned for the future, as evidenced by our record backlog, and 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. Moving to global services on the next page, Boeing Global Services continued to perform well, again delivering strong financial results in the quarter. Revenue was up 10% to $5.4 billion, primarily reflecting improved commercial and government volume. Operating margin was 17.5% in the quarter, up 50 basis points compared to last year on favorable commercial volume and mix. Both our commercial and government businesses again delivered double-digit margins. The business also received $8 billion in orders with a year-to-date book-to-bill of 1.2. Okay, shifting to cash and debt. Cash and marketable securities ended at $23 billion, and the debt balance ended at $53.4 billion.

Both our commercial and government businesses again delivered double digit margins.

The business also received $8 billion in orders with a year to date book to Bill of one two.

Okay shifting to cash and debt.

Cash and marketable securities ended at $23 billion and a debt balance ended at $53 4 billion.

Company also maintains access to $2 billion.

Chris facilities, all of which <unk> undrawn.

We remain.

Yes.

Okay.

Hello.

The fourth quarter.

Any impact incentive payments.

This outlook continues soon.

Okay.

Great.

This ramp up we've seen it.

Okay.

For the year.

Net net even with the higher capex, our better than expected performance year to date supports updating our 2025 outlook to a free cash flow usage of about $2 $5 <unk>.

David Calhoun: The company also maintains access to $10 billion of revolving credit facilities, all of which remain undrawn. We remain committed to strengthening the balance sheet and supporting our investment-grade rating. Regarding cash flow, we still expect the fourth quarter to be positive before any impact from a potential U.S. Department of Justice payment. This outlook continues to assume significant capital expenditures for future products and growth, particularly in St. Louis and Charleston. This ramp-up was seen in our third-quarter CapEx spend, which we now expect to be closer to $3 billion for the year. Net-net, even with the higher CapEx, our better-than-expected performance year-to-date supports updating our 2025 outlook to a free cash flow usage of about $2.5 billion, barring the impact of a prolonged government shutdown. Okay, let's sum it all up. Another quarter of progress in our recovery.

The impact of a prolonged government shutdown.

Okay, let's sum it all up.

Okay.

Progress on our Cogs.

While it is true.

Okay.

We just recently.

This includes limited.

A delegation to issue 737, 87 airworthiness certificates.

Transitioning to higher 737, and 787 production rates.

Delivering improved.

Company as well as generating positive free cash flow in the quarter.

Protein markets.

Okay.

Sure.

Yes.

Stephanie portfolio <unk>.

Long term incrementals underpinned our confidence in managing the business with a long term view built on safety quality and delivering for our customers with that let's open up the call for <unk>.

David Calhoun: While the 777X recent setback was disappointing, our overall performance continues to trend favorably. This includes receiving limited Federal Aviation Administration delegation to issue 737 and 787 airworthiness certificates, transitioning to higher 737 and 787 production rates, delivering improved performance across the company, as well as generating positive free cash flow in the quarter. Broadly speaking, the markets we serve continue to be significant, and our backlog of more than $600 billion demonstrates the strength of our portfolio. Long-term, these fundamentals underpin our confidence in managing the business with a long-term view built on safety, quality, and delivering for our customers. With that, let's open up the call for questions.

Yeah.

We will now begin the question and answer session in the interest of time and to allow for broader participation. We ask that you limit yourself to one single part question. Our first question comes from the line of Myles Walton from Wolfe Research. Your line is open.

Thanks, Good morning, Jay and Peter.

And Jay what is the negative cash flow in 2026 on the Triple seven X in totality or versus this year.

As you look out how soon after first delivery can that program get to a neutral position from a cash perspective.

Sure.

As I mentioned before.

Headwind.

Correct.

Okay.

Paul.

Operator: We will now begin the question and answer session. In the interest of time and to allow for broader participation, we ask that you limit yourself to one single part question. Our first question comes from a line of Miles Walton from Wolfe Research. Your line is open.

Okay.

Our usage, it's a little bit higher.

Okay.

Breakeven morality.

Okay.

[Analyst 1]: Thanks. Good morning, Brian, and David, and Eric. Brian, what is the negative cash flow in 2026 on the 777X in totality or versus this year? As you look out, how soon after first delivery can that program get to a neutral position from a cash perspective?

Okay.

Sure.

Okay.

Okay and Thats all.

Proving up payments from air travel reason advances so again.

Brian West: Sure. Thanks for the question, Miles. As I mentioned before, it's a headwind relative to our prior expectations of $2 billion. I would expect the overall absolute cash flow to be a usage that's a little bit higher than that. As far as how we get to, let's call it, let's say, a break-even neutrality type of free cash flow, we've talked about this a little bit in the past. Next year will be a heavy use. The year after that will be better in 2027, and we would expect ourselves to get closer to neutral in 2028. That's all on the back of improving payments from aircraft deliveries and advances. Going into next year, we'll build up inventory. There'll be limited advances and delivery payments. In 2027, we'll start to see those benefits, and those will continue to ramp up in 2028 and beyond.

We'll build up inventory there'll be limited.

Vantages and delivery payments for 2027 starts seat to see those benefits and those will continue to ramp up in 'twenty and beyond.

2029.

Neutrality will go to <unk>.

Our positive free cash flow.

Program.

And so look all told next year is going to be heavy but it will continue to improve from here.

Year from from that point.

Okay.

Clarify one thing.

Okay.

This is John.

Similar to the 2025.

Okay.

Perhaps maybe a bit high.

Okay perfect. Thank you.

Your next question comes from the line of Ron Epstein from Bank of America. Your line is open.

Okay.

Yes.

Okay.

Back on the Triple seven mm Hmm.

Bombarded with so apologize for that but what's driving this.

What changed.

Jeff.

Good morning.

Okay.

Whats going on with the program.

Okay.

I guess, what changed to really make the phone now.

Brian West: I would expect starting in 2029, neutrality will go to a benefit, a positive free cash flow for the program. All told, next year is going to be a little bit heavy, but it'll continue to improve year over year from that point.

Yes.

I will let me in the prepared remarks, there is no new <unk>.

No new issues with the airplane itself or the engines.

It has a program ironically, we have more hours.

The majority of this airplane is probably higher than any other airplane we've been through the test program. The issue is solely around getting the certification work complete.

[Analyst 1]: Okay. Sorry, just to clarify one thing, is that 2026 usage of cash on the 777X, so it's about similar to 2025's usage when all is said and done?

We had anticipated getting TIAA of Google, that's what's needed to actually get credit.

Brian West: Yeah, that's a good way of looking at it. It's perhaps maybe a little bit higher, but in that zone.

[Analyst 1]: Okay. Perfect. Thank you.

Those particular tests, we have not been able to achieve the certification credit.

Operator: Your next question comes from a line of Ron Epstein from Bank of America. Your line is open.

And and.

And that's because we haven't gotten the approval.

[Analyst 2]: Yeah, hey. Good morning, everybody. Maybe back on the 777, I'm certainly going to get bombarded with these, so apologies for that. What's driving this now? What changed from just, you know, two, three months ago to reevaluate what's going on with the program? I guess that's the question. What changed to really make the focus on this now?

Hello.

We've taken a step back we very related.

Okay.

It was good.

For the FAA to have the opportunity to review all the data submissions that are required so we stepped back and we.

<unk>.

Okay.

And the philosophy here is.

To be a continuous quarters.

Bruce.

To make sure we have a solid.

Brian West: Yeah, Ron, first of all, let me reiterate what I said in the prepared remarks. There's no new issues with the airplane itself or the engines, the test program. Ironically, we have more hours, and the maturity of this airplane is probably higher than any other airplane we've been through the test program. The issue is solely around getting the certification work complete. We had anticipated getting TIA approval. That's what's needed to actually get cert credit when we fly those particular tests. We have not been able to achieve the certification credit, and that's because we haven't gotten the TIA approval. Look, we've taken a step back. We very much underestimated how much work it was going to take for us to get the TIA approvals and for the FAA to have the opportunity to review all the data submissions that are required.

Sure.

Level of comp.

You get this certification.

Now.

This is still not in our control.

Great.

Okay.

Yeah.

To improve.

I think I've talked to the administrator Bedford and and I think he also agrees that we need to look for ways to streamline.

The process, but in effect. This is a result of us realizing that the plan we had in place to get the certification approvals just was not realistic going forward.

And then just one clarification, if I may on the TAA whats really slowing that down is it on the FAA.

Or is it that there was something that you guys didn't understand about.

It's a little of both Ron I would say is that this is the first airplane that we've gone through this incremental TIAA process like this and I think there was learning in what analysis and data we had to have complete and submitted to get the TIAA approval. So some of that for us and I think it's taking longer.

Brian West: We've stepped back, and we've rebaselined this program to incorporate those learnings, as Brian West said. The philosophy I want here is, I don't want this to be a continuous quarterly issue for us, to make sure we have a solid financial estimate here that we have a high level of confidence that we can get this certification work done. Now, recognize that some of this is still not in our control. We're working very closely with the FAA. I'm hopeful that there's opportunities for us to improve upon some of this. I think I've talked to Administrator Bedford, and I think he also agrees that we need to look for ways to streamline the process. In effect, this is a result of us realizing that the plan we had in place to get the certification approvals just was not realistic going forward.

As well for the FAA to go through those minerals in <unk> and <unk>.

Get the approval so I'm certainly not thrown the FAA under the bus with this this is.

Our learning collectively for the both of US in terms of what it takes to get through the new process and again as I said.

We've tried to do our best to.

To put a conservative estimate here in place that accommodates us continuing having.

A slower a slower process than what we had originally planned for these TIAA approvals now I don't anticipate because of the maturity of the airplane once we get the approvals I think the flight testing.

I should go reasonably quickly.

But again, it's the analysis the paperwork to submit will and the approval process is really.

The big learning here.

Got it thank you very much.

[Analyst 2]: For just one clarification, if I may, on the TIA, what's really slowing that down? Is it on the FAA side, or is it that there was something that you guys didn't understand about, you know, what would be?

Your next question comes from the line of Robert Stallard from vertical research. Your line is open.

Thanks, so much good morning.

Hey, Rob.

Okay.

Brian West: Yeah, probably, it's a little of both, Ron. I would say it's that this is the first airplane that we've gone through this incremental TIA process like this. I think there was learning in what analysis and data we had to have complete and submitted to get the TIA approval. Some of that's for us, and I think it's taken longer as well for the FAA to go through those submittals and get the approval. I'm certainly not throwing the FAA under the bus with this. This is a learning collectively for both of us in terms of what it takes to get through the new process. Again, as I said, we've tried to do our best to put a conservative estimate here in place that accommodates us continuing having a slower process than what we had originally planned for these TIA approvals.

Thank you Ron I hate the dib on a follow up on Kevin.

The charges of $4 $9 billion is perhaps a larger than was anticipated. So wondering if you could maybe walk through some of the moving parts here and then probably for Kelly in conjunction that how are you expecting to manage the triples Fedex supply chain.

Tonight. Thank you.

Let me start with the with the magnitude of the charges that build upon the comments that I made during the prepared remarks.

With the delay in the certification we revise our production plans on the program with a focus on mitigating additional pre certification airplane builds and provisioning for a higher confidence long term production plans.

Alright.

The charge and when you kind of break that down to scheduled delay simply had a broad impact through the elements of the production system.

The longer period of performance for holding period. However, you want to describe it combined with the slow ramp rate. It adds substantial carrying cost to the program. It also affected the learning curve with a slower rate.

Brian West: I don't anticipate because of the maturity of the airplane, once we get the approvals, I think the flight testing should go reasonably quickly. Again, it's the analysis, the paperwork, submittal, and the approval process is really the big learning here.

And either aircrafts that are going to be reworked RSO I'm going to be held for a longer period of time, adding cost to them.

As we mentioned we have a higher confidence plan from a schedule and cost perspective on here so that we.

[Analyst 2]: Got it. Thank you very much.

We've got ourselves protected.

Operator: Your next question comes from a line of Robert Stoller from Vertical Research. Your line is open.

When you compare this to other charges, particularly those that we had last year as I mentioned during my prepared remarks, we are carrying higher provisions for the build aircraft required we work the production disruption and the learning curve all of which are simply better informed by current experience.

[Analyst 3]: Thanks so much. Good morning. Hey, Rob. And welcome back, Brian. Thank you, Ron. I hate to do it, but I want to follow up on the 777X here. The charges of $4.9 billion is perhaps a little larger than was anticipated. I wonder if you could maybe work through some of the moving parts here. Then probably for Dave, in conjunction with that, how are you expecting to manage the 777X supply chain given this delay? Thank you.

So.

As you would expect the team is just not going to sit here and take this lightly and hasnt taken it likely they're going to be our.

Focus we are all focused on.

To improve the long term productivity on this program, while also working to mitigate the total delay impact to our customers to best we can with this baseline puts us in a position to to not beat it or potentially beat it.

Brian West: All right, let me start with the magnitude of the charges that build upon the comments that I made during the prepared remarks. With the delay in the certification, we had to revise our production plans on the program with a focus on mitigating additional pre-certification airplane builds and provisioning for a higher confidence long-term production plan. That's the primary driver of the charge. When you kind of break that down, the scheduled delay simply had a broad impact through the elements of the production system. The longer period of performance or holding period, however you want to describe it, combined with the slower ramp rate, adds substantial carrying costs to the program. It also affected the learning curve with the slower ramp. Even the aircraft that are going to be reworked are also going to be held for a longer period of time, adding cost to them.

Yes, and Rob Let me just talk a little bit about the supply chain I think the answer is we just have to flow the new revised schedule out to our suppliers and then we're going to have to negotiate on a case by case basis, the impact that has to the various suppliers and depending on the commodity impact.

B, a significant or might be fairly insignificant. So we're going to have to work through that I will just say that the.

The revised estimate in the charge here contemplated the impact of the supply chain as well.

Okay. That's great. Thank you very much.

Yeah.

Brian West: As we mentioned, we have a higher confidence plan from a schedule and cost perspective on here so that we've got ourselves protected. When you compare this to other charges, particularly those that we had last year, as I mentioned during my prepared remarks, we are carrying higher provisions for the built aircraft requirement rework, the production disruption, and the learning curve, all of which are simply better informed by current experience. As you would expect, the team is just not going to sit here and take this lightly and hasn't taken it lightly. They're our focus. We are all focused on doing everything we can to improve the long-term productivity on this program while also working to mitigate the total delay impact to our customers the best we can. This baseline puts us in that position to be able to not only beat it, but potentially beat it.

Our next question comes from the line of Noah <unk> from Goldman Sachs. Your line is open.

Hey, good morning.

Kelly Jay could you speak a little bit more about the 737.

Ramp from here and I guess does the remaining months of this year have.

42 production units or is or is there some spacing before we actually see that for any reason and then as you as you go higher.

On the one hand, it's not easy I'm, sorry, Shannon is still tough, but on the other hand, I think you are intentionally holding inventory for that reason.

And it seems like you have a lot of buffer.

In the stations at 42, a break to 47.

Beyond that you start to layer in a new law and so I guess.

<unk>.

[Analyst 3]: Yeah, and Rob, let me just talk a little bit about the supply chain. I think the answer is, you know, we just have to flow the new revised schedule out to our suppliers, and then we're going to have to negotiate on a case-by-case basis the impact that has to the various suppliers. Depending on the commodity, the impact might be significant or might be fairly insignificant. We're going to have to work through that. I'll just say that the revised estimate and the charge here contemplated the impact to the supply chain as well. Okay, that's great. Thank you very much.

Six months, you've spoken to you Kelly should we all be assuming that for the 42% to 47% to 52 or is each of those breaks or is that is that too aggressive of an assumption.

Okay. So let me start with the first part of the question, which is just when do we get to a 42 here for the balance of the year.

So recognize.

So when we say we're at a 42 right. That's a rate that will flow in the factory not every month, depending on the number of days in the month. The number of work days in the month would that necessarily equate to rollout of <unk> 42, and just recognize that for the we've got the holidays coming up in both November and December.

Operator: Your next question comes from a line of Noah Popinak from Goldman Sachs. Your line is open.

We as we speak are rolling at the 42 right. So we've.

[Analyst 2]: Hey, good morning. David, Brian, could you speak a little bit more about the 737 ramp from here? I guess, do the remaining months of this year have 42 production units, or is there some spacing before we actually see that for any reason? As you go higher, you know, on the one hand, it's not easy and supply chain is still tough, but on the other hand, I think you're intentionally holding inventory for that reason. It seems like you have a lot of buffer in the stations at 42 to break to 47. I think beyond that, you start to layer in a new line. I guess that six months you've spoken to, David, should we all be assuming that for the 42 to 47 to 52, or is each of those breaks, or is that too aggressive of an assumption?

As you know, we we test our supply and our own processes before we actually go to that rate. We do some some pre testing. So we've gone ahead and were loading now at.

The 42 right so.

I am planning that we will exit the year very soundly at 42, a month rate. So that's our plan and I think we're in good shape to do that.

As you as you mentioned then we will go.

To the next would be the 47 I mentioned in the prepared remarks, not earlier than six months, because we need time to go to the new rate demonstrates stability and then as we did this time test ourselves at a higher rate and in many cases when you test yourselves at the higher rate there is.

Actions you have to take to go to go improve and ensure that we're ready to go. So we don't think we can do that faster than six months and I will just reiterate what I said when we started this campaign here a year ago, it's way more impactful for us to move when we're not ready then to hold off.

Brian West: Okay, let me start with the first part of the question, which is just when do we get to 42 here for the balance of the year? Recognize, when we say we're at a 42 rate, that's a rate that we flow in the factory. Not every month, depending on the number of days in the month, the number of work days in the month, would that necessarily equate to a rollout of 42. Just recognize that we've got the holidays coming up in both November and December. We are, as we speak, rolling at the 42 rate. As you know, we test our supply and our own processes before we actually go to that rate. We do some pre-testing. We've gone ahead and we're loading now at the 42 rate. I'm planning that we will exit the year very soundly at the 42 a month rate.

And wait till we are ready and we will not go to the next rate until we show the maturity in the system I'd much rather be a month late then go a month early in this process and I think we've clearly demonstrated that if we are deliberate do the right thing make sure we're meeting.

Our key metrics, we can actually move faster than than we plan. So.

In terms of the follow on cadence.

I think youre right in that we've got a significant inventory right now and Thats clearly boosting us from going from 38 to 42 will also still help us when we go 42 to 47, but at that point I think we start to get more I'll say aligned with the supply chain in terms of.

Brian West: That's our plan, and I think we're in good shape to do that. As you mentioned, the next would be the 47. I mentioned in the prepared remarks, not earlier than six months because we need time to go to the new rate, demonstrate stability, and then, as we did this time, test ourselves at a higher rate. In many cases, when you test yourselves at the higher rate, there are actions you have to take to go improve and ensure that we're ready to go. We don't think we can do that faster than six months. I will just reiterate what I said when we started this campaign here a year ago, it's way more impactful for us to move when we're not ready than to hold off and wait till we're ready. We will not go to the next rate until we show the maturity in the system.

Inventory balances and their expectations. So we will have to watch that that'll be.

The rates above 47 I think.

We will be as much on how's our maturity looking but also how is the supply chain.

Ramping up we got time to work those those things I don't see anything right now that tells me, we can't do that but.

But.

That's how I kind of look at that so if you were doing a few pegging. These all in six months.

Increments I would say the first six months are going to be easier than the following rate increases in terms of hitting that six months exactly.

Okay.

And how will the process with the FAA compare going to $47 52 compared to when you're getting to 40, yes, we're going to use the we're going to use the exact same process. In fact, when we did the five to seven on the 787, we use the same metrics and the same capstone review process that we use just now move.

Brian West: I'd much rather be a month late than go a month early in this process. I think we've clearly demonstrated that if we are deliberate, do the right thing, make sure we're meeting our key metrics, we can actually move faster than we planned. In terms of the follow-on cadence, I think you're right, Noah, in that we've got a significant inventory right now, and that's clearly boosting us from going from 38 to 42. That will also still help us when we go 42 to 47. At that point, I think we start to get more, I'll say, aligned with the supply chain in terms of inventory balances and their expectations. We'll have to watch that. The rates above 47, I think, will be as much on how's our maturity looking, but also how's the supply chain ramping up. We got time to work those things.

<unk> from 38 to 42, I think both sides.

Well understand the process and think it's a good process. So we just use that same one as well on this mini breakup right eight on the.

The 787, so I feel pretty good that that.

The process is in place I don't think getting through that it might have taken a little bit longer with this first approval with the FAA, but.

They did a good job in moving pretty quickly they had to coordinate with a lot of stakeholders as well.

So I think.

I don't think the process is going to be an impediment in the future I think it's more are we ready.

As the supply chain ready and when that happens then I think we have a good process to go get approval.

Brian West: I don't see anything right now that tells me we can't do that. That's how I kind of look at that. If you were pegging these all in six-month increments, I'd say the first six months are going to be easier than the following rate increases in terms of hitting that six months exactly.

Thank you.

Our next question comes from the line of Peter Arment from Baird. Your line is open.

Hey, Thanks, good morning.

Kelly and welcome Jay.

Kelly, maybe could you talk a little bit about more about the.

What's left for certification on the Dash seven and 10, it sounds like you've got a lot of confidence around it but what are the milestones or the way we should be thinking about whats left here just given the enormous amount of testing hours and things that you've done here. Thanks.

[Analyst 2]: Okay. How will the process with the FAA compare going to 47 and then 52 compared to when you did getting to 42?

Brian West: Yeah, we're going to use the exact same process. In fact, when we did the 5 to 7 on the 787, we used the same metrics and the same capstone review process that we use just now, moving from 38 to 42. I think both sides understand the process and think it's a good process. We just use that same one as well on this mini break of rate 8 on the 787. I feel pretty good that the process is in place. I don't think getting through that, it might have taken a little bit longer with this first approval with the FAA, but you know, they did a good job in moving pretty quickly. They had to coordinate with a lot of stakeholders as well. I don't think the process is going to be an impediment in the future. I think it's more, are we ready?

Yes.

Second number of.

Hours of testing on this NII.

Designs. So what we've got to just go make modifications to the test aircraft and.

Theyre, both hardware and software modifications and then we go through the process. The certification of those steps with the FAA is pretty straightforward and the anti ice is still the critical path.

It is still the critical path for both certifications now if you take the.

Engine Nii's out of it there is still work to be done to complete the certification probably a little more work on the dash 10, and the dash seven but not near the magnitude of what we're experiencing with the.

With the Triple seven.

X program. So we think it's pretty straightforward to get through this.

Brian West: Is the supply chain ready? When that happens, then I think we have a good process to go get approval.

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 2006.

[Analyst 2]: Thank you.

Operator: Your next question comes from a line of Peter Arment from Baird. Your line is open.

[Analyst 2]: Hey, thanks. Good morning, Dave, and welcome, Brian. Hey, Dave, maybe could you talk a little bit more about what's left for certification on the -7 and 10? It sounds like you've got a lot of confidence around it, but what are the milestones or the way we should be thinking about what's left here, just given the enormous amount of testing hours and things that you've done here? Thanks.

I appreciate it thanks Kelly.

Your next question comes from the line of Seth Schiffman from JP Morgan Your line is open.

Okay, Thanks, very much and good morning, everyone.

Wanted to ask about the 87, you mentioned the recent capstone, our view and how we can think about kind of the way you went through the $3 seven the flow of rate increases coming on the 87 and what some of the kind of key things you're watching are there, whether it's internal or whether it's in the supply chain are having to deal with.

Brian West: Yeah, we've got, as I mentioned, a significant number of our hours of testing on this anti-ice design. What we've got to do is go make modifications to the test aircraft, and they're both hardware and software modifications. Then we go through the process, the certification of those steps with the FAA. It's pretty straightforward, and the anti-ice is still the critical path. The certification is still the critical path for both certifications. If you take the engine anti-ice out of it, there is still work to be done to complete the certification, probably a little more work on the 737-10 than the 737-7, but not near the magnitude of what we're experiencing with the 777X program. We think it's pretty straightforward to get through this certification of the design. We've got a lot of test data, a lot of analysis that'll help us move quickly through that.

Structures or engines or anything like that and then also.

Whether you've kind of burn through some of the concessions there and starting to get to a better place of cash profitability on that program.

Yeah, so the cadence of Av.

Production increases a little bit different story than on on Max Obviously, we werent shutdown on Max and so we didn't.

On 787 through the strike. So we didnt, we don't have the level of inventory that we had that we have on the on the Max program. So our next rate increase will be from this eight which we should be at eight by the end of the year.

And then we'll move to 10 next year I do think on 787, the move from eight to 10 will be more challenging for us with the supply chain, particularly seats were continuing as I've mentioned in previous calls.

Brian West: As I said, we're still planning on getting that done here in 2026.

[Analyst 2]: Appreciate it. Thanks, David.

We're continuing to.

Operator: Your next question comes from a line of Seth Seifman from JP Morgan. Your line is open.

Struggle with seat certifications I think that's going to be with us for a little bit longer we are making progress on that but I think seats will continue to be a constraining item for us and then just.

[Analyst 1]: Hey, thanks very much, and good morning, everyone. I wanted to ask about the 787. You mentioned the recent capstone review and how we can think about the way you went through the 737, the flow of rate increases coming on the 787, and what some of the key things you're watching are there, whether it's internal or whether it's in the supply chain, having to do with structures or engines or anything like that. Also, whether you've burned through some of the concessions there and are starting to get to a better place of cash profitability on that program.

The general supply chain on 787, because we don't have the buffer we want to make sure that we're stable here at eight a month right before we go to 10. So we're planning to do that sometime next year I'm not going to put a month on the on that yet maybe as we get some stability at rate eight will.

Fine tune that.

Alright.

Great. Thanks.

Our next question comes from the line of Sheila <unk> from Jefferies. Your line is open.

Brian West: Yeah, so the cadence of production increase is a little bit different story than on MAX. Obviously, we weren't shut down on MAX, and we weren't on 787 through the strike. We don't have the level of inventory that we have on the MAX program. 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. I do think on 787, the move from 8 to 10 will be more challenging for us with the supply chain, particularly seats. We're continuing, as I've mentioned in previous calls, to struggle with seat certifications. I think that's going to be with us for a little bit longer. We are making progress on that, but I think seats will continue to be a constraining item for us.

Hi, Good morning, Helen Zhang.

The cancer any free cash flow number was solid and Joe you mentioned positive free cash flowing.

<unk> <unk> payments so.

Curious what the slaughter rates are underpinning that positive free cash flow and just.

That a modest Q4 free cash flow exit rate just a modest number how do we think about 2020 what breakeven.

Low to mid single digit inflow of cash is that available.

Okay. Thanks, Sheila let me just kind of get a baseline you on the on.

In our discussions and our update for 2025, if you recall last quarter, we talked about a usage of $3 billion for the full year as I mentioned in my prepared remarks and would you just in.

Indicated as well Sheila is thats better by $500 million about $2 5 billion based on the better performance year.

Year to date.

What I'll do is a bridge you from the third quarter into the fourth quarter, so $200 million.

Brian West: Just the general supply chain on 787, because we don't have the buffer, we want to make sure that we're stable here at 8 a month rate before we go to 10. We're planning to do that sometime next year. I'm not going to put a month on that yet. Maybe as we get to some stability at rate 8, we'll fine-tune that.

When you go from that number we expect.

Nice inflow based on seasonality, particularly at Bds with.

With the tanker award and so we would expect an uptick there about in excess of $1 billion from Bds.

Partially offsetting that is BCA volumes right now, we're holding anywhere to slightly down from the third quarter in terms of deliveries to maybe flat, but more importantly in there even if we're flat we will see lower receipts because you've got a kind of a just a mixed headwind, where we're expecting lower triple seven deliveries in the fourth quarter.

[Analyst 1]: Great. Thanks.

Operator: Your next question comes from a line of Sheila Kahlu from Jefferies. Your line is open.

[Analyst 4]: Hi, good morning, David and Brian. The Q3 free cash flow number was solid. Brian, you mentioned positive core free cash flow in Q4 pre the DOJ payment. Curious what BCA rates are underpinning that positive free cash flow. I'll bet a modest Q4 free cash flow exit rate, just a modest number. How do we think about 2026? Is it break-even? Is it some low to mid-single-digit inflow of cash? Is that still doable?

<unk>.

So there'll be somewhat of a headwind the next as interest expense our interest payments.

We have a seasonality aspect to it.

So the payments in the fourth quarter will be more similar to what we saw in the second quarter. So it's about $900 million plus in the fourth quarter and that's a step up.

An outflow of about $600 million.

And it finally, we forgot the Doj payment we've talked about that in the past, which is about 700. So when you reconcile all those items before the Doj potential Doj payment you are in the range of positive $500 million.

Brian West: Okay, thanks, Sheila. Let me just baseline you on our discussions and our update for 2025. If you recall, last quarter we talked about a usage of $3 billion for the full year. As I mentioned in my prepared remarks, and what you just indicated as well, Sheila, that's better by $500 million to about $2.5 billion based on the better performance year to date. What I'll do is I'll bridge you from the third quarter into the fourth quarter. $200 million. When you go from that number, we expect a nice inflow based on seasonality, particularly at BDS with the tanker award. We would expect an uptick there about in excess of $1 billion from BDS. Partially offsetting that is BCA volumes. Right now, we're holding anywhere to slightly down from the third quarter in terms of deliveries to maybe flat.

With the payment that will swing us it's a negative net net but again operationally, we'll see better performance in the fourth quarter relative to the third in a pretty good exit rate as we think about next year.

As I think about next year look it's encouraging what we've seen so far the performance has improved throughout the year, we see that particularly in the free cash flow on an operating basis.

But it's early for me to really make a strong kind of call on that right now I'm still going through the planning process.

A lot more than I need to get into in terms of the puts and takes on a full year basis for next year and I'll give you just a lot more color on that in January but as I mentioned things are trending favorably and we are bullish on our outlook.

Great. Thank you.

Brian West: More importantly, in there, even if we're flat, we will see lower receipts because we've got a kind of just a mixed headwind where we're expecting lower 777 deliveries in the fourth quarter. That'll be somewhat of a headwind. The next is interest expense or interest payments. We have a seasonality aspect to it. The payments in the fourth quarter would be more similar to what we saw in the second quarter. It's about $900 million plus in the fourth quarter, and that's a step up in outflow of about $600 million. Finally, we've got the DOJ payment. We've talked about that in the past, which is about $700 million. When you reconcile all those items before the potential DOJ payment, you're in a range of positive $500 million. With the payment, that would swing us into a negative net net.

Our next question comes from the line of Scott <unk> from Deutsche Bank. Your line is open.

Hey, good morning, Yeah, just to follow up on that last question. Jay I was wondering if you could share your perspective on this $10 billion free cash flow target.

Company sat out there for a while and just more specifically is that a target that youre willing to endorse and if so do you think that this is on a trajectory to achieve in the next handful of years.

Great. Thanks, Scott for the question maybe.

Maybe taking a step back in the two five months that I've been here overall as I mentioned on the prior question. We've made great progress. This year, we still have plenty of runway to go as we stabilize the business and complete the development programs.

Right now my observation is the foundation is in place and that will lead to steady and gradual improvement over the over the upcoming years and I expect the financials to flow again.

Brian West: Again, operationally, we'll see better performance in the fourth quarter relative to the third and a pretty good exit rate as we think about next year. As I think about next year, it's encouraging what we've seen so far. The performance has improved throughout the year. We see that particularly in the free cash flow on an operating basis. It's early for me to really make a strong kind of call on that right now. I'm still going through the planning process. There's a lot more that I need to get into in terms of the puts and takes on the full year basis for next year. I'll give you just a lot more color on that in January. As I mentioned, things are trending favorably and we're bullish on our outlook.

Again, it just like for next year, it's really a little early for me to comment on a specific long term framework, but I'm confident in the underlying cash generation capability for us to return to historical levels that you've seen before.

Got a break a great backlog and operational excellence will be the key to unlocking our cash flow potential over.

Over the coming months I plan on assessing our operating plans and the cash flow of drivers who developed the framework.

I look forward to presenting that to you at the appropriate time, but just a little early for me to do that right now.

Thank you.

[Analyst 4]: Great. Thank you.

Our next question comes from the line of Cristina <unk> from Morgan Stanley. Your line is open.

Operator: Your next question comes from a line of Scott Duschel from Deutsche Bank. Your line is open.

Hey, good morning, everyone, Hi, Kelley and Hello again Jay.

[Analyst 1]: Hey, good morning. Just to follow up on that last question, Brian, I was wondering if you could share your perspective on this $10 billion free cash flow target that the company set out there for a while. More specifically, is that a target that you're willing to endorse? If so, do you think the business is on a trajectory to achieve it in the next handful of years?

Kelly you mentioned that the Jefferson deal is closing next quarter. You also received approval from the EU for the spirit deal two weeks ago, taking a step back can you share your thoughts on how you think about deploying portfolio. Today you are priorities for M&A and also any color on the effect of these two items and free cash flow next year.

Brian West: Great. Thanks, Scott, for the question. Just maybe taking a step back in the two and a half months that I've been here. Overall, as I mentioned in the prior question, we've made great progress this year. We still have plenty of runway to go as we stabilize the business and complete the development programs. Right now, my observation is the foundation is in place, and that will lead to steady and gradual improvement over the upcoming years. I expect the financials to flow. Just like for next year, it's really a little early for me to comment on a specific long-term framework, but I'm confident in the underlying cash generation capability for us to return to historical levels that you've seen before. We've got a great backlog, and operational excellence will be the key to unlocking our cash flow potential.

Well look I think the two items here that we've got it imminently in front of US our focus from an M&A perspective here right now getting through the Jefferson close we're pretty close on that I think thats likely going to close a little bit before the spirit transaction and as you said.

<unk>.

We've got EU approval on spirit, but we're still waiting on the U S.

Approval with spirit, we don't see any showstoppers here, but.

We expect to get that done and then we're on to the integration phase we have the D integrate the Jefferson business from our digital business. We've got great plans to do that and then the reintegration of our.

Spirit.

Spirit business and that'll be a come over the next couple of months.

Brian West: Over the coming months, I plan on assessing our operating plans and the cash flow of the drivers to develop a framework. I look forward to presenting that to you at the appropriate time, but it's just a little early for me to do that right now.

After we get into the close so that's our focus right now I don't have any other.

Areas to point you to in terms of M&A.

[Analyst 1]: Thank you.

For us right now.

Okay, great. Thank you.

Operator: Your next question comes from a line of Christine Lieweck from Morgan Stanley. Your line is open.

Your next question comes from the line of Doug Harned from Bernstein. Your line is open.

[Analyst 4]: Hey, good morning, everyone. Hi, David, and hello again, Brian. David, you mentioned that the Jeppesen deal is closing next quarter. You also received approval from the EU for the Spirit deal two weeks ago. Taking a step back, can you share your thoughts on how you think about the Boeing portfolio today, your priorities for M&A, and also any color on the effect of these two items on free cash flow next year?

Good morning, Thank you.

Kelly at the beginning you talked a little bit about investment in Charleston.

And on the 787, though.

R R.

My understanding had been that you can really go from seven to 10, a month in Charleston without that much.

<unk> Capex adds but go into 12, and 14 will require more more in and an expansion of the facility. So when you're looking at Charleston, right now.

Brian West: I think the two items here that we've got imminently in front of us are our focus from an M&A perspective right now. Getting through the Jeppesen close, we're pretty close on that. I think that's likely going to close a little bit before the Spirit transaction. As you said, we've got EU approval on Spirit, but we're still waiting for the U.S. approval with Spirit. We don't see any showstoppers here, but we expect to get that done. You know, we're onto the integration phase. We have to de-integrate the Jeppesen business from our digital business. We've got great plans to do that. The reintegration of our Spirit business will come over the next couple of months after we get into the close. That's our focus right now. I don't have any other areas to point you to in terms of M&A for us right now.

What needs to be done to go into 12% to 14, a month and then the investment you are discussing today is that related to the 10, a month or are you already making steps towards going to those higher rates. Yes, we're already we're already making steps for the higher rate Youre right. We can we could probably.

If we thought capping at 10 was as far as we go we would not be investing in expanding our Charleston. So we're going to have a formal groundbreaking but essentially what youre going to see if you've been to Charleston.

We're going to double.

Foot print manufacturing footprint now, we don't need double but it also gives us a lot more flexibility for some storage space as well so a major expansion of the Charleston facility and it's all around getting to rates higher than 10, we think that that the market demand.

[Analyst 4]: Great. Thank you.

Operator: Your next question comes from a line of Doug Backhus from Bernstein. Your line is open.

We will allow us to get to rates in the teens and.

Doug Backhus: Good morning. Thank you. You know, Brian, at the beginning, you talked a little bit about investment in Charleston. On the 787, though, our understanding had been that you can really go from 7 to 10 a month in Charleston without that much, you know, material CapEx adds. Going to 12 and 14 will require more and an expansion of the facility. When you're looking at Charleston right now, you know, what needs to be done to go to 12 to 14 a month? The investment you're discussing today, is that related to the 10 a month, or are you already making steps toward going to those higher rates?

That's what we're focused on putting the capital in place getting the facilities in place obviously at the facilities come online they will help us that rate down, but we don't need that and I think we're looking at really 2028.

Before we're really utilizing that expanded facility.

Can you dimension it all the Capex trajectory you are talking about for this.

Okay.

We expect that to increase next year, Doug I think when we kind of give you. The 26 framework in January can you provide more color.

But there will be some higher capex in 'twenty six related to both this.

As well as the growth and expansion in St. Louis.

Okay, great. Thank you.

Brian West: Yeah, we're already making steps for the higher rates. You're right. We could probably, if we thought capping at 10 was as far as we'd go, we would not be investing in expanding Charleston. We're going to have a formal groundbreaking, but essentially what you're going to see, if you've been to Charleston, we're going to double the footprint, the manufacturing footprint. We don't need double, but it also gives us a lot more flexibility for some storage space as well. A major expansion of the Charleston facility, and it's all around getting to rates higher than 10. We think that the market demand will allow us to get to rates in the teens, and you know, that's what we're focused on, putting the capital in place, getting the facilities in place. Obviously, if the facilities come online, they'll help us at rate 10, but we don't need that.

Okay.

Your next question comes from the line of Gautam Khanna from TD Cowen Your line is open.

Yes, Thanks, good morning, and welcome Jay.

Thank you.

Jamie I know you've touched certification as a potential constraint on 87 production hikes I was just wondering more broadly if you can talk about where you see.

The pinch points in the supply chain today and kind of across the program to move forward and rate are you most concerned that bottlenecks may emerge.

Thank you, yes, so so again.

Made a few comments on this already.

You do need to break down between the 737 supply chain and <unk>.

787% of the wide body supply chain, because we have this excessive amount of inventory. So look I think in general I would just comment that the supply chain.

Brian West: I think we're looking at really 2028 before we're really utilizing that expanded facility.

<unk> is doing well, we do have constraints still around seating, but we know what those are we've got specific actions with the suppliers.

Doug Backhus: Can you dimension at all the CapEx trajectory you're talking about for this?

And some of that is on Boeing to get the actual seed installations are certified on the aircraft. So we're working through those there's nothing else I would highlight I mean, we have to watch the continued demand on on the engines in both the forward fit and the aftermarket and the durability upgrades that are going on in the March.

Brian West: We expect that to increase next year, Doug. You know, again, I think in that when we kind of give you the 2026 framework in January, we can provide more color. There will be some higher CapEx in 2026 related to both this, as well as the growth and expansion in St. Louis.

So that'll be an area that we'll continue to work.

Doug Backhus: Okay, great. Thank you.

<unk> and CFM on but there's nothing I would particularly our focus on but this really is one of these things where that could change tomorrow, we have to keep.

Operator: Your next question comes from a line of Gautam Khanna from TD Cowen. Your line is open.

Brian West: Yeah, thanks. Good morning and welcome, Brian.

Tip tabs on all of our supply chain, we need all the parts, but I think I think in general we're doing well I think people also are gaining confidence in our ability.

Doug Backhus: Thank you.

Brian West: Brian and Brian, I know you touched on seat certification as a potential constraint on 787 production hikes. I was just wondering more broadly if you can talk about where you see the pinch points in the supply chain today and kind of across the programs as you move forward in rate, where are you most concerned that bottlenecks may emerge? Thank you. Yeah, I made a few comments on this already. I think you do need to break down between the 737 supply chain and the 787 or the wide body supply chain because we have this excessive amount of inventory. I think in general, I would just comment that the supply chain is doing well. We do have constraints still around seating, but we know what those are.

To meet our production output so the fear of people discounting or our production and the supply chain I think is diminishing going forward as well.

Thank you.

Rob time for one more question here.

Certainly your final question comes from the line of Scott <unk> from Melius Research. Your line is open.

And Kelly and Jay.

Jay you've been at the company for two five months now I'm just curious what are your early observations what are your priorities and given that the company will end the year with about $33 billion of cash after Jefferson is sold.

How are you thinking about the balance sheet and what you want to do with that cash balance.

Brian West: We've got specific actions with the suppliers, and some of that is on Boeing to get the actual seat installations certified on the aircraft. We're working through those. There's nothing else I would highlight. We have to watch the continued demand on the engines in both the forward fit and the aftermarket and the durability upgrades that are going on in the market. That'll be an area that we'll continue to work with GE and CFM on. There's nothing I would particularly focus on. This really is one of these things where that could change tomorrow. We have to keep tabs on all of our supply chain. We need all the parts. I think in general, we're doing well. I think people also are gaining confidence in our ability to meet our production output.

Yes, let me let me then Scott kind of work maybe backwards here on the cash balance sheet I think with the completion of both transactions, we expect the cash balance to be closer to probably be in that 28 range. So our twenties not as high as 33.

As far as observations look I've come in here Theres been a lot of enthusiasm as I mentioned in my prepared remarks. The team has embraced me with open arms. It's made my transition is as seamless as it can be as fair amount that I need to get up to speed on in the company and again, everyone is helping me do that.

As far as some of the culture changes that we've seen as Kelly mentioned I see a lot of enthusiasm I see a lot of excitement about the recovery to the Companys embarked on people are committed theyre dedicated and they want to be part of the improvement. So it's easy to walk in at least easier for someone like me to walk in coal to an environment like this.

Brian West: The fear of people discounting our production in the supply chain, I think, is diminishing going forward as well.

Where everyone is really operating and working on the same direction.

Overall in terms of what I need to focus on by priorities in the short term, it's really getting up to speed and be too if I can put myself in a position to be a valued contributor.

Operator: Thank you.

Doug Backhus: Rob, time for one more question here.

Operator: Certainly. Your final question comes from a line of Scott Mickus from Melius Research. Your line is open.

Maintaining the focus.

Restoring the health of our balance sheet.

[Analyst 1]: Morning, David and Brian.

Doug Backhus: Morning.

It is enabling and driving the planned improvements of our recovery and ensuring that they are sustainable.

[Analyst 1]: Brian, you've been at the company for two and a half months now. I'm just curious, what are your early observations? What are your priorities? Given that the company will end the year with about $33 billion of cash after Jeppesen is sold, how are you thinking about the balance sheet and what you want to do with that cash balance?

And finally, it's keeping an eye on the future while maintaining the focus on the short term and medium term recovery.

Again first things first get up to speed and then contribute and drive us.

A participant in this recovery and again, we're on a good path here, so I'm very excited to be here.

Brian West: Yeah, let me then, Scott, kind of work maybe backwards here. On the cash balance sheet, I think with the completion of both transactions, we expect the cash balance to be closer to probably in that $28 billion range, so high $20s, not as high as $33 billion. As far as observations, you know, look, I've come in here, there's been a lot of enthusiasm. As I mentioned in my prepared remarks, the team has embraced me with open arms. It's made my transition as seamless as it can be. There's a fair amount that I need to get up to speed on in the company. Again, everyone is helping me do that. As far as some of the culture changes that we've seen, you know, as Brian West mentioned, I see a lot of enthusiasm. I see a lot of excitement about the recovery that the company's embarked on.

Alright, thank you.

That completes the Boeing company's third quarter 2025 earnings conference call. Thank you for joining you may now disconnect.

Okay.

Yeah.

Brian West: People are committed, they're dedicated, and they want to be part of the improvement. It's easy to walk in, at least easier for someone like me to walk in cold to an environment like this where everyone is really operating and working in the same direction. Overall, in terms of what I need to focus on, my priorities in the short term, it's really getting up to speed so I can put myself in a position to be a valued contributor. It's maintaining the focus on fully restoring the health of our balance sheet. It's enabling and driving the planned improvements of our recovery and ensuring that they are sustainable. Finally, it's keeping an eye on the future while maintaining the focus on the short-term and medium-term recovery. Again, first things first, get up to speed, and then contribute and drive us and be a participant in this recovery.

Brian West: We're on a good path here. I'm very excited to be here.

[Analyst 1]: All right, thank you.

Operator: That completes The Boeing Company's Third Quarter 2025 Earnings Conference Call. Thank you for joining. You may now exit.

Q3 2025 The Boeing Co Earnings Call

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