Boeing Q2 2025 Earnings Report

Boeing EPS Results

• Actual EPS: -$1.24
• Consensus EPS: -$0.92
• Beat/Miss: Missed by -$0.32
• One Year Ago EPS: -$2.90

Boeing Revenue Results

• Actual Revenue: $22.75 billion
• Expected Revenue: $20.13 billion
• Beat/Miss: Beat by +$2.62 billion
• YoY Revenue Growth: +34.90%

Boeing Announcement Details

• Quarter: Q2 2025
• Date: 7/29/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, July 29, 2025
• Conference Call Time: 10:30AM ET

Boeing (NYSE:BA) Company is a leading global aerospace and defense firm that designs, manufactures and sells commercial airplanes, defense systems, satellites and space vehicles. Headquartered in Chicago, Illinois, the company operates through three primary segments: Commercial Airplanes, Defense, Space & Security, and Global Services. Boeing’s integrated product portfolio and services support civilian and military customers in over 150 countries.

In its Commercial Airplanes segment, Boeing produces a family of narrow- and wide-body jets, including the 737, 777 and 787 Dreamliner series, serving major airlines worldwide. The Defense, Space & Security division develops military aircraft such as fighter jets and rotorcraft, unmanned aerial vehicles, missile defense systems, manned and uncrewed spacecraft, as well as satellites for communications and reconnaissance missions. Through Global Services, Boeing offers maintenance, repair and overhaul (MRO) solutions, training and simulation, digital analytics, spare parts distribution, and modification services to help operators optimize fleet performance and reduce operating costs.

Founded in 1916 by William E. Boeing in Seattle, Washington, the company pioneered early commercial aviation and played a key role in military aircraft development during both world wars. Following the 1997 merger with McDonnell Douglas, Boeing expanded its defense and space capabilities, contributing to programs such as the Saturn V rocket, the space shuttle external tank and the International Space Station. In 2001, Boeing relocated its corporate headquarters to Chicago to enhance its global business focus.

Boeing’s manufacturing and service operations span North America, Europe, Asia Pacific and the Middle East, supported by a broad network of suppliers and strategic partners. The company serves commercial airlines, government agencies and space exploration organizations, delivering end-to-end solutions from product development to aftermarket support. Boeing is led by President and Chief Executive Officer David L. Calhoun, whose leadership team continues to drive innovation in aerospace technology, safety, and sustainability initiatives across the industry.

Boeing Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Boeing delivered 150 commercial jets in Q2 and 280 in the first half, the highest quarterly and half-year totals since 2018, driving revenue up 35% year-over-year to $22.7 billion.
• Positive Sentiment: The 737 MAX production line reached a stabilized rate of 38 aircraft per month with plans to seek FAA approval for 42, while the 787 program ramped to seven per month and the 777X test fleet has completed over 1,400 flights toward certification next year.
• Positive Sentiment: BCA booked 455 net orders in Q2, including a record wide-body order for up to 210 airplanes, boosting its backlog to over $522 billion, equivalent to more than seven years of production.
• Positive Sentiment: Boeing Defense & Space saw improved margins with $19 billion in quarterly bookings, secured a $2.8 billion Space Force contract, and is positioned to benefit from a $150 billion increase in defense spending through FY29.
• Negative Sentiment: Certification of the 737 MAX 7 and 10 has been delayed to 2026 due to engine anti-ice design issues, although Boeing expects no material impact on production rates or delivery plans.

Presentation

[Operator]

Thank you for standing by. Good day, everyone, and welcome to The Boeing Company's Second Quarter twenty twenty five 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.

[Operator]

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.

[Eric Hill, VP - IR at The Boeing Company]

Thank you, and good morning. Welcome to Boeing's quarterly earnings call. With me today are Kelly Orford, 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 risks and uncertainties, including the ones described in our SEC filings.

[Eric Hill, VP - IR at The Boeing Company]

As always, we will leave time at the end of the call for analyst questions. With that, I will turn the call over to Kelly Orkberg.

[Kelly Ortberg, President & CEO at The Boeing Company]

Well, thanks, Eric, and it's great to have you on board, and thanks to everyone for joining in today's call. First, I wanna express our sincere condolences to the loved ones of everyone onboard Air India Flight one seventy one as well as those affected on the ground. Our team continues to provide technical assistance to the ongoing investigation led by India's Aircraft Accident Investigation Bureau or AAIB, and we're supporting our customers in any way we can.

[Kelly Ortberg, President & CEO at The Boeing Company]

So now let's shift our focus to the quarter. It's clear our recovery plan is taking hold. We're making steady progress to stabilize our business, strengthen development program execution and change our culture to set up for the future. In May, we announced our largest wide body order ever for up to 210 commercial airplanes, which adds to the momentum from recent wins in our defense business like the f 47. Our market demand remains strong.

[Kelly Ortberg, President & CEO at The Boeing Company]

We're just over halfway through 2025, and I'm pleased with our progress. We're starting to see real momentum, and the nice thing is that we're seeing it across the business. At the same time, we also have to acknowledge the remaining work ahead of us on this recovery. And while we continue to manage through a dynamic environment, we're certainly encouraged with the very recent trade deals. Turning now to BCA.

[Kelly Ortberg, President & CEO at The Boeing Company]

We're seeing the benefit of our ongoing investments to stabilize our production system as we continue to remain on track with the safety and quality plan that we established and submitted to the FAA. A few highlights are we've reduced traveled work at rollout by 50%. We've addressed employee feedback from our safety and quality stand downs. We've employed structured on the job training, and we simplified more than 1,500 work instruction documents. This is critical to our performance to deliver safe and high quality aircraft on time to our customers and steadily execute our planned production increases.

[Kelly Ortberg, President & CEO at The Boeing Company]

With more stability in operations, we delivered 150 commercial jets in the quarter and two eighty in the first half of the year. That makes it the most deliveries in the second quarter and first six months of the year since 02/2018. More importantly, almost every customer I talked to has said they're seeing higher quality airplane deliveries. On July, you'll recall our plan was to methodically ramp up to 38 per month, stabilize at that rate, and then request an approval from the FAA for the next rate increase to 42 aircraft a month. In the quarter, we achieved a rate of 38 airplanes per month, and we're now focused on demonstrating stability at that rate.

[Kelly Ortberg, President & CEO at The Boeing Company]

We'll continue to use key performance indicators that have been agreed to with the FAA to measure the health of the production system. Those KPIs continue to steadily progress in line with our expectations we set at the beginning of the year. We expect to be in a position to request approval from the FAA in the coming months to increase to 42 aircraft per month. On July, we successfully completed a capstone review in the quarter, and the program is now at production rate of seven airplanes per month. Like our team in Renton, our team in Charleston is now focused on stabilizing at the new production rate and using KPIs that we're tracking, and they still look good.

[Kelly Ortberg, President & CEO at The Boeing Company]

They're all green. We'll continue to track those over the near term before preparing for the next rate increase. Turning now to our commercial development programs. We continue to progress with our 777X flight test program and remain focused on the work ahead to get the airplane certified and delivered to our customers. With our full test fleet activated, including four dedicated airplanes, the program has completed more than 1,400 flights and 4,000.

[Kelly Ortberg, President & CEO at The Boeing Company]

Flight testing continues with no new technical issues to report. So good progress so far, but we still have a lot of work to do. Production of the first triple seven x dash eight freighter is underway with the first hole drilled in the wings bar this month, and work on major assemblies at Boeing and key suppliers is in progress. On seven three seven dash seven and dash 10, we continue to mature the technical solutions for engine NA ICE and certification path for the seven three seven MAX family derivatives. Work on the solution is taking longer than expected, and we now are expecting certification in 2026.

[Kelly Ortberg, President & CEO at The Boeing Company]

As we've previously said, we don't expect a material impact to our production plans, and we're prepared to build other seven thirty seven models for our customers. Switching now to Boeing Defense's space. As you know, we recently named Steve Parker as our permanent defense business CEO. Steve's a terrific leader and has guided the team in our recovery, helping to stabilize our defense business, improve our customer relationships while developing his people with a focus on building a strong culture. And I look forward to his continued leadership in this turnaround.

[Kelly Ortberg, President & CEO at The Boeing Company]

We had another good quarter on our fixed price development programs and held our EACs for the second consecutive quarter. Our renewed efforts around baseline and risk management of these programs are producing early results. Again, like in commercial, we have a lot of work to get these programs through the development phase, but I do like the direction we're headed. On m q twenty five, the team began ground testing and successfully worked through the production move to our new facility, bringing the program closer to first flight for the US Navy. On t seven, we finalized the MOA with US Air Force to build for production representative aircraft and now have completed five milestones associated with the original agreement.

[Kelly Ortberg, President & CEO at The Boeing Company]

As we've said, active management is a win win for both us and our customers and show us how this approach works to derisk some of our development programs while delivering capability to our customer. On KC-forty six, we delivered five tanker aircraft in the quarter. Recent global events remind us this platform continues to deliver unparalleled capability, versatility, and operational flexibility for the warfighter no matter where we are. As the customer gains confidence in our stability and operations, US Air Force recently shared its sole source approach for the next batch of KC-forty six tankers beyond the current program of record. Turning now to our space portfolio.

[Kelly Ortberg, President & CEO at The Boeing Company]

We recently captured an important win with US Space Force, awarding Boeing a $2,800,000,000 contract for the development and production of two satellites to deliver resilient space based nuclear command and control and communications for The United States. This contract is consistent with our strategy to ensure we enter into the appropriate contract type for the appropriate type of work. Furthermore, this award is a testament to our role as a leader in national security space, and we stand ready to support future programs like the Golden Dome. Looking forward, the recently enacted reconciliation bill also increases national defense spending by a $150,000,000,000 through fiscal year twenty twenty nine, providing funding for Boeing defense programs like the F-15EX, the MQ-twenty five, the E-seven, and proprietary programs, among others. Our portfolio is well positioned to meet the priorities of our customers and the current global threat environment.

[Kelly Ortberg, President & CEO at The Boeing Company]

Next, we'll discuss Boeing Global Services. BGS had another strong quarter, continued to deliver great performance for our company as they support our defense and commercial customers. In the quarter, we delivered the first P-eight with enhanced anti submarine warfare technology to the US Navy, marking a major milestone for our team in Jacksonville, Florida. PGS also secured a contract to provide p eight a aircraft training systems and support to the Republic of Korean Navy. And in commercial services, we opened our third parts distribution center in Germany and our ninth global location dedicated to shipping spares.

[Kelly Ortberg, President & CEO at The Boeing Company]

Our network of distribution centers enables quicker repairs as well as maintenance and overhaul work to keep airplanes in service, all focused at serving a growing aftermarket. Turning now to global trade where the environment has been dynamic. We continue to simultaneously monitor policy developments while mitigating the potential impacts of tariffs as trade negotiations continue. As a reminder, about 80% of our commercial supply chain spending goes to U. S.

[Kelly Ortberg, President & CEO at The Boeing Company]

Suppliers and about 80% of our commercial deliveries are to customers outside The U. S. As a leading US exporter, ongoing free trade is important to our business. Our top priority is promoting continuity of supply, and we're working across the supply chain to ensure suppliers are focused on meeting the strong market demand. You'll recall that we framed the risk of higher input costs in our first quarterly call, and our team is doing well to manage within that framework.

[Kelly Ortberg, President & CEO at The Boeing Company]

We are seeing some of these input tariffs resolved through negotiation agreements like the one announced over the weekend between The US and the EU and the bilateral with The UK. So overall, we're probably feeling better today, but we still need to actively manage through this dynamic environment. We have appreciated the administration and congress for championing US aerospace industry around the world and applaud president Trump and the EU Commission president Ursula von der Leyen for reaching a negotiated agreement that will be good for the aerospace industry in The US and Europe. The administration understands the role of our sector in strengthening The US trade balance. We're optimistic that future agreements will address aircraft and parts as we work through our diverse backlog of more than $600,000,000,000 for our global customers.

[Kelly Ortberg, President & CEO at The Boeing Company]

During the past several quarters, you've heard me talk about four key areas that will enable our recovery. This morning, we've touched on the progress to stabilize our business, improve program execution and build on our future with key wins. I'd like to now spend a few moments going through our progress on our culture change. You may recall earlier this year, employees helped create a new set of values and behaviors that we shared across the company. I'm very excited about how the employees have embraced this.

[Kelly Ortberg, President & CEO at The Boeing Company]

It's simple. It's straightforward, and it's helping people rally around change. This month, we took our next step in rebuilding our culture by introducing our new performance management approach to strengthen accountability, develop careers, and measure what they accomplished and how they achieved their goals through our values and behaviors. These measures will be important because they determine how we work, develop, and promote our people. I'm confident as we continue to change our culture, work to rebuild trust, and strengthen accountability, we'll continue to move going forward.

[Kelly Ortberg, President & CEO at The Boeing Company]

We have an incredible opportunity ahead. Now before I conclude my prepared remarks, I'd like to give special thanks to our employees for their dedicated and hard work throughout the quarter. The energy that they're creating here and the focus on delivering to our customers, meeting commitments, and execution is really paying off. And I also wanna extend my deep appreciation to Brian West for his outstanding work over the last four years to stabilize our business and navigate the recovery, all while continuing to position the company for our future. And I particularly wanna thank him for the support he's given me this past year.

[Kelly Ortberg, President & CEO at The Boeing Company]

As you know, we recently announced Jay Malavi will join Boeing in a couple weeks as our new CFO as Brian transitions into a senior advisory role. I look forward to welcoming Jay to Boeing and Brian's continued counsel in his new role. Thanks, Brian. Now I'll hand it over to you to discuss the operating results before we move to questions.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Thanks, Kelly, and good morning, everyone. Let's start with the total company financial performance for the quarter. Revenue was $22,700,000,000 up 35% primarily driven by higher commercial delivery volume. The core loss per share of $1.24 was a significant improvement compared to last year driven by higher commercial deliveries and improved operational performance across the business. Free cash flow was a usage of $200,000,000 in the quarter, reflecting higher commercial deliveries and working capital that improved compared to both the prior year and the prior quarter.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Our free cash flow was better than expectations shared in April, driven by higher commercial delivery volume and better wide body mix as well as favorable timing of CapEx. Turn to the next page. I'll cover BCA. BCA delivered a 150 airplanes in the quarter. Revenue was $10,900,000,000 and operating margin was minus 5.1%.

[Brian West, EVP of Finance & CFO at The Boeing Company]

BCA booked four fifty five net orders in the quarter, including one hundred and twenty seven eighty seven and thirty triple seven dash nine airplanes for Qatar Airways and thirty two seventy seven dash 10 airplanes for British Airways. Backlog in the quarter ended at $522,000,000,000, which was up more than $60,000,000,000 sequentially. This includes more than 5,900 airplanes that translates over seven years of production, and the seven thirty seven and the seven eighty seven are both sold firm into the next decade. Now we'll give more color on the key programs. The seven three seven program delivered a 104 airplanes in two q, including 42 in June.

[Brian West, EVP of Finance & CFO at The Boeing Company]

On production, the factory steadily increased rate during the quarter with monthly production reaching 38 per month in May, and the team remains intent on stabilizing at that level. Importantly, the operational KPIs continue to progress, and we still expect to be in a position to request approval to go above 38 per month in the coming months. Spirit continues to deliver fuselages with improved quality and flow, which sets us up well for both the production ramp and the reintegration. Closing on this transaction is expected later in the year. More broadly, on the master schedule, we continue to make adjustments as needed to manage supplier by supplier based on inventory levels.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Over the past year, our buffer inventory has grown to promote stability across our production system. As production continues to stabilize and rates increase over time, we plan to deliberately return buffer inventory to more normal levels. The quarter ended with about twenty seven three seven dash eights built prior to 2023, down 15 from one q, which are for customers in China. We now expect to complete the rework on 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.

[Brian West, EVP of Finance & CFO at The Boeing Company]

As Kelly said, we continue to mature the certification path for these programs. The engine anti ice solution has taken us longer and we now expect certification next year. As we said, we will build other MAX models for affected customers and don't expect an impact on our planned production rates with the financial impact of this revised timeline reflected in the program margins this quarter. On the July, we delivered 24 airplanes in the quarter as the program continued to demonstrate improved stability. After stabilizing at five per month and completing a successful capstone review in the quarter, the production rate is now at seven per month, and the program is focused on stabilizing the production system prior to future rate increases.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Two q ended with about 15 airplanes in inventory built prior to 2023, down five from one q. The rework on these remaining airplanes is complete, and we expect to deliver about half of these units this year and the other half in 2026 in line with our customers' fleet planning requirements. Finally, on 777x, flight testing activities with the FAA continue to progress, and we remain focused on the work ahead to deliver the airplane next year. 777X inventory was up about $900,000,000 in the quarter and will continue to grow as we move towards entry in service as we previously shared. Moving on to the next page in BDS.

[Brian West, EVP of Finance & CFO at The Boeing Company]

BDS booked $19,000,000,000 in orders during the quarter, and the backlog grew to 74,000,000,000. Revenue was 6,600,000,000.0, up 10% on improved operational performance, and BDS delivered 34 aircraft and two satellites in the quarter. Operating margin of 1.7% was up significantly compared to last year, also reflecting the better operating performance in 2Q. The business continued to make important progress in this recovery, and the game plan to get BDS back to high single digit margins remains a key focus. Our core business remains solid, representing approximately 60% of our revenue and performing in the mid to high single digit margin range.

[Brian West, EVP of Finance & CFO at The Boeing Company]

The demand for these products remains very strong, supported by the global threat environment confronting our nation and allies. On the roughly 25% of the portfolio that's primarily comprised of fighter and satellite programs, operations continue to reflect the stabilizing performance trend that began in the first quarter, which drove relatively consistent sequential margins. Lastly, on our fixed price development programs that represent the remaining 15% of revenue, we continue to work to stabilize maturities programs. This quarter's results reflect improved operational performance, and we remain focused on retiring risk and ultimately delivering these important capabilities to our customers. In the quarter, we made progress on the NQ25 program, which started ground testing, as well as the T7A program, which achieved three additional customer milestones.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Overall, the defense portfolio is well positioned for the future and we still expect the business to return to historical performance levels as we continue to stabilize production, execute on development programs and transition to new contracts with tighter underwriting standards. Moving on to the next page in Boeing Global Services. BGS continued to perform well delivering very strong financial results in the quarter. The business received $5,000,000,000 in orders and the backlog ended at $22,000,000,000 Revenue was $5,300,000,000 up 8% year over year primarily reflecting improved commercial and government volume. Operating margin was 19.9% in the quarter, up two ten basis points compared to last year on favorable performance and mix including a one time gain.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Both our commercial and government businesses again delivered double digit margins. In the quarter, BGS completed the sale of its maintenance repair and overhaul facility at Gatwick Airport and secured a contract to provide p eight eight aircraft training systems support to the Republic of Korea Navy. BGS remains a terrific long term franchise that is focused on profitable, long term efficient offerings, and the team continues to execute very well. Turning to page. I'll cover cash and debt.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Cash and marketable securities ended at $23,000,000,000 primarily reflecting the debt repayment and free cash flow usage in the quarter. Debt balance ended at $53,300,000,000 down 300,000,000 in the quarter on the pay down of maturing debt, with $300,000,000 of maturities left in the year. The company maintains access to $10,000,000,000 of revolving credit facilities, all of which remain undrawn. We remain committed to managing the balance sheet in a prudent manner with two main objectives. First, continue to prioritize the investment grade rating and second, allow the factory and supply chain to stabilize.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Let me provide some additional context on the macro backdrop before getting into the free cash flow outlook. We continue to closely monitor ongoing policy developments and work to promote our industry's importance to long term economic and trade objectives of the administration. And we were encouraged by certain bilateral trade deals that were announced in the quarter, including the recent agreement with the EU. Given our position as a top US exporter, free trade policy across commercial aerospace continues to be very important to us. On the input cost side, we continue to work closely with our suppliers to promote continuity of supply and pursue options to mitigate tariff cost pressures.

[Brian West, EVP of Finance & CFO at The Boeing Company]

And as we said, any financial impact is not significant. Regarding free cash flow, we expect third quarter free cash flow to be more or less in line with the second quarter usage before any impact from a potential one time DOJ payment. That sets us up for positive free cash flow in the fourth quarter so long as the global trade environment continues to remain favorable for the industry and our commercial delivery forecast remains intact. Broadly, the markets we serve continue to be significant and our backlog demonstrates the strength of our product 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 for questions.

[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 Our first question comes from the line of Myles Walton from Wolfe Research. Your line is open.

[Myles Walton, Managing Director at Wolfe Research LLC]

Thanks. Good morning. Brian, thanks for all the help over the last four years. You've always been straightforward in assessing these ups and downs. It's good to see we're on the upside.

[Myles Walton, Managing Director at Wolfe Research LLC]

Can you and on that point, can you lay out for us the $2,000,000,000 better performance here on free cash flow in the second quarter? How much of that should we translate to the prior 4,000,000,000 to $5,000,000,000 target? Are we comfortable around $3,000,000,000 or so? And then what might be upside risks for the year?

[Brian West, EVP of Finance & CFO at The Boeing Company]

Well, thank you, Miles. That number you threw out there in terms of 3,000,000,000, that's probably a pretty good assumption. And let me just walk you through some of the pieces. The first half free cash flow usage of 2 and a half billion dollars exceed our expectations, and the second quarter use of 200,000,000 was quite a bit better. And it's primarily driven by better PCA delivery performance as well as some timing items.

[Brian West, EVP of Finance & CFO at The Boeing Company]

And let me highlight one important one on the triple seven program. Usually, we see six to seven triple seven deliveries in a given quarter. We had 13 in the second quarter, which drove an incremental $700,000,000 of positive free cash flow. Now as we think about the third quarter, before we adjust for a potential onetime item, free cash flow, as I mentioned, is gonna look a little bit more like the two q usage more or less. And here are the things that are driving it.

[Brian West, EVP of Finance & CFO at The Boeing Company]

The benefit of lower interest payments will be offset by this triple seven two q reversal that I just outlined. On volume, seven three seven could be a bit better, and I think the seven eight seven is gonna be pretty steady. And there's a few $100,000,000 of unfavorable timing shift from two q to three q, mainly CapEx spend. On top of this in the third quarter, there's a potential for a $700,000,000 onetime payment related to the DOJ non prosecution case. So that's the third quarter, which then sets us up, for the fourth quarter, to be positive.

[Brian West, EVP of Finance & CFO at The Boeing Company]

And as long as the global trade environment remains favorable and we make progress on the rate increases, we expect the fourth quarter, to turn free free cash flow positive and, you know, set us up to exit the year with a very nice positive momentum heading into 2026. So when I put all that together, I think your number there of $3,000,000,000 is pretty reasonable for the full year.

[Myles Walton, Managing Director at Wolfe Research LLC]

Thanks, Brian.

[Operator]

Your next question comes from the line of Sheila Kahyaoglu from Jefferies. Your line is open.

[Sheila Kahyaoglu, Aerospace, Defense & Airlines Equity Research at Jefferies]

Good morning, Kelly, Brian. And Brian, congratulations on ending on a high note, and thank you. Kelly, maybe one for you on tariffs. We've seen a number of trade agreements announced since April with lower tariffs with the tariff agreements benefiting Boeing orders potentially year to date. How do you think about the zero for zero with EU?

[Sheila Kahyaoglu, Aerospace, Defense & Airlines Equity Research at Jefferies]

How do you think that the order momentum builds from here? And given the seven year backlog, how does that factor into pricing and deal negotiations and any potential impact on supply chain?

[Kelly Ortberg, President & CEO at The Boeing Company]

Yes, Sheila. Well, there's obviously been some of these deals have been a good boost for us here in the last quarter. Let me start a little bit with input tariffs because I think that's still important. As you recall, we outlined a less than $500,000,000 impact on the input tariffs. One of the key areas for us is the equipment we import from Japan.

[Kelly Ortberg, President & CEO at The Boeing Company]

So getting this Japan agreement in place, and we understand that to include a zero for zero, no no input tariffs will be will be helpful for us going forward. So that was one of the big ones. We still need to see what happens with Italy. As you know, we import some fuselage components from from Alinea and Italy. So hopefully, that will also result in zero for zero.

[Kelly Ortberg, President & CEO at The Boeing Company]

My understanding is that is the kind of the baseline negotiation strategy as they go through these bilaterals that we will end up in a zero for zero, but, still yet work yet to do. In terms of the demand side, yeah, I mean, everybody's looking at their, trade imbalance and saying, how do I how do I address that? And and no better way than to make a big aircraft order. So the order environment is is going to be very good. In terms of pricing, you know, irrespective of the the tariff driven demand, this has been a constrained environment.

[Kelly Ortberg, President & CEO at The Boeing Company]

And so, you know, we've been managing our pricing to also, you know, reflect that environment going forward. So I think that will also give us an opportunity particularly to offset some of the cost growth, inflationary cost growth that that we are going to see going forward. So, you know, the landscape's pretty good right now. Couple areas I just think we gotta keep watching. One is making sure that that, we don't end up back in retaliatory tariffs with China.

[Kelly Ortberg, President & CEO at The Boeing Company]

So, we are making deliveries as you know right now, and and hopefully that, comes to a resolution. And then the USMCA program agreement is still very important because of the amount we import from Mexico and and Canada. So as they revisit that USMCA, you know, hopefully, that that stays in the same trade trade situation that we're in today. So we don't see additional tariffs that are going forward. But, you know, look, if I if we continue to see this zero for zero, I think we'll, you know, be able to beat that $500,000,000 bogey that we've we've established here.

[Sheila Kahyaoglu, Aerospace, Defense & Airlines Equity Research at Jefferies]

Great. Thank you.

[Operator]

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

[Peter Arment, Senior Research Analyst at Robert W. Baird & Co]

Yes, thanks. Good morning, Kelly and Brian. And thanks again, Brian, for all your support over the last four years. Really appreciate it. Hey, Kelly, maybe we could talk a little bit about maybe the longer term framework, how you're thinking on rates when you think about the progress you're seeing on the July MAX and the July.

[Peter Arment, Senior Research Analyst at Robert W. Baird & Co]

And I guess, specifically on the July, it seems like the demand continues to be really strong with obviously the orders that you're seeing and there's a wide body replacement cycle seems to be heating up. How are you thinking about where the long term rates could go there? Thanks.

[Kelly Ortberg, President & CEO at The Boeing Company]

Well, first of all, Peter, one step at a time. You know, we just moved from five to seven month very successfully. And as I said in the prepared remarks, our KPIs are green after we've done that that rate increase. So we'll stabilize at that rate and then we'll consider moving to the next rate. We have a series of rate increases in our plan.

[Kelly Ortberg, President & CEO at The Boeing Company]

And as you know, we're investing in expansion in Charleston as well so that we can continue to grow beyond the current capacity of our facilities there. So the market demand is strong, for '87 and, you know, increasing rates is part of our plan to address that market. On the MAX, we're at the 38 a month rate. And like we said, we're stabilizing right now. I expect to to be going to the FAA soon, to start the negotiation or discussions on the the rate increases.

[Kelly Ortberg, President & CEO at The Boeing Company]

We do still have one KPI that that is below threshold that we're still working. Not surprising. We know it's it's the amount of rework hours we have on the airplane, so we're working that down. And once we get that that KPI where we need it, then we'll be having those discussions with the FAA. You know, we said rate increases beyond that will go in increments of five.

[Kelly Ortberg, President & CEO at The Boeing Company]

No earlier than than six months. So that doesn't mean it's on six months. It's no earlier than six months. You know, we'll we'll continue to do what we're doing right now is as we go to the new rate, ensure we're stable and can prove that that the production system has the right metrics before we go request an increase in rate. And if they aren't, then we'll stay at that rate until we get the the stability to where we want it.

[Kelly Ortberg, President & CEO at The Boeing Company]

But, we've kind of said no earlier than six month increments, and they'll be in five per month steps.

[Peter Arment, Senior Research Analyst at Robert W. Baird & Co]

Appreciate the color. Thanks, Kelly.

[Operator]

Your next question comes from the line of David Strauss from Barclays. Your line is open.

[David Strauss, MD, Equity Research - Aerospace & Defense at Barclays]

Thanks. Good morning, Brian. Thanks for the help and best of luck. Following up there, I wanted to ask about MAX delivery guidance for this year and July as well. I think previously, Brian, you talked about 400 deliveries.

[David Strauss, MD, Equity Research - Aerospace & Defense at Barclays]

It looks like you're on the MAX, looks like you're tracking ahead of that maybe in the 04/25 plus range. And is July still looking around 80? And then if you could just also, Brian, quickly touch on the movement in inventory in the quarter, given that you absorbed a pretty big hit on the 777X, but the inventory balance came down. Thanks.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Yeah. On the the inventory one, yeah, we did have an up as expected in the triple seven x, but we also liquidated a lot of wide bodies as I mentioned. So all that kind of was in the right net net trajectory for inventory. And that triple seven x, you know, we still expect that as we move towards EIS. That is gonna go up as we expected.

[Brian West, EVP of Finance & CFO at The Boeing Company]

So don't get too concerned about that movement as we move into the back half of the year. In terms of deliveries, so on '77, we've delivered 37 airplanes in the first half, and we're focused on stabilizing at seven, per month. And we had always thought the range was 70 to 80 for the year, so we're at the high end of that range. And on the $7.37, as you mentioned, we target circled around 400. We've delivered two zero nine airplanes in the first half, including 37 out of inventory.

[Brian West, EVP of Finance & CFO at The Boeing Company]

And as we continue to have good performance, we're poised to do a little better than the 400 for the full year as you mentioned. So we feel like we're in pretty good shape heading into the second half.

[David Strauss, MD, Equity Research - Aerospace & Defense at Barclays]

Thank you.

[Operator]

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

[Ronald Epstein, Senior Equity Analyst at Bank of America]

Hey, good morning guys. Maybe, Kelly, if you could dig down a little bit more on the engine anti icing issue with the -seven and -ten. What's going on there? You mentioned in some earlier remarks and on CNBC before that it's taking longer. What about it is taking longer? And how should we think about that?

[Kelly Ortberg, President & CEO at The Boeing Company]

Yes. So we've got several different design paths that we've been going down for solutions on the to to correct the problem. The latest delay is driven by we just haven't closed the design. We went through some testing, and, know, this is a very delicate area that we're dealing with around the inlet of the engines and can it cause any perturbation to the airflow, into the engines? And we we found some issues with the design implementation we had, so we're gonna have to back up and make some additional design changes to get through that that deicing requirement.

[Kelly Ortberg, President & CEO at The Boeing Company]

So, you know, it's basically, the engineering design did not designs have not yielded in the time frame that we were anticipating, and so we still have work to do.

[Ronald Epstein, Senior Equity Analyst at Bank of America]

Got it. Thank you.

[Operator]

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

[Douglas Harned, Managing Director at AB Bernstein]

Good morning. Thank you. And Brian, thank you for all the help over the years and good luck. On the rate increases that you were talking about before, you know, you've had this goal, in the future rate increases to 47 to 52 on the max of of six month intervals. And I and I appreciate that, you know, you'll see how that goes and and make a call if it needs to be longer.

[Douglas Harned, Managing Director at AB Bernstein]

But that seems like a very ambitious target given, you know, Boeing hasn't really done that in the past. It's been more nine to twelve month type intervals. What what is giving you the confidence that you can move to those levels potentially? And where do you see the biggest bottlenecks, in getting there? And I'd say including the supply chain.

[Douglas Harned, Managing Director at AB Bernstein]

And I'll just throw in how are you thinking of using the, the fourth line in Everett in conjunction with this?

[Kelly Ortberg, President & CEO at The Boeing Company]

Yeah. So let me let me start with the fourth line in Everett. So predominantly, that will be, focused at the dash 10 variant. The dash 10 variant is has the most change from all the other variants, so it will naturally flow through the factory at a slower pace. So by isolating or providing that fourth line in Everett, it'll allow us to let the three lines in in Renton flow faster.

[Kelly Ortberg, President & CEO at The Boeing Company]

So that's a that is a big change from what we've done in the past, having that many lines flowing. So that's one of the areas that gives us additional confidence. We've, you know, we've invested in the in the capacity. Another thing from a supply chain, remember, we've got, as Brian outlined, we've got a tremendous amount of inventory in place. So I think in the near term, as we ramp the MAX up, supply chain is not going to be a challenge for us because of the inventory levels.

[Kelly Ortberg, President & CEO at The Boeing Company]

As we get to those higher rates that you talk about, yes, we'll be balancing getting more to a balanced inventory level and ensuring that the supply chain can achieve those rates is work yet for us to do with the supply chain. Now keep in mind, we generally have them at a higher rate than we are at. And and so we'll be able to see where those supply chain constraints are in advance. And, you know, we go work them and beat them down. You know, this is one of these processes where the constraints tomorrow get resolved and then there's new constraints.

[Kelly Ortberg, President & CEO at The Boeing Company]

And you just constantly are working each one of those down because we're in a perpetual rate increase kind of environment. So we've got a huge market demand, and we need to satisfy that demand. And the only way we're gonna do that is through these methodical rate increases. But I will say we're gonna do the same thing we've done here as we've gotten to 38 a month. The priority is to is to keep it stable, build high quality airplanes.

[Kelly Ortberg, President & CEO at The Boeing Company]

And if we start to wobble, then we're gonna we're gonna stay at that rate until we till we get the the the production process stable.

[Douglas Harned, Managing Director at AB Bernstein]

Okay. Thank you.

[Operator]

Your next question comes from the line of Seth Seifman from JPMorgan. Your line is open.

[Seth Seifman, Executive Director at JP Morgan]

Hey, thanks very much. Good morning, everyone. And Brian, thanks for everything, but best of luck. Maybe since it's your last call, we could do an accounting question. And if you could talk little bit about the progression in BCA margins from here, both as the different programs ramp up?

[Seth Seifman, Executive Director at JP Morgan]

And also, I think you mentioned maybe some margin consequences of the change in certification timing for the seven and ten.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Yeah. Let me hit that last one. So any kind of adjustments are really modest given the size of the program. So you're not really gonna see, and I wouldn't have you worry about that. I would say, overall, BCA margins are expected to be negative for the year as we've said before, although less so as we go quarter by quarter.

[Brian West, EVP of Finance & CFO at The Boeing Company]

So if you remember, first quarter was negative 6.6. Second quarter, we just posted negative 5.1, and we expect to get better as we move into the second half for each quarter, but still negative. And if you step back, BC margins will be better in 2026, but it's way too early to characterize that any further. And then as, Kelly and I have both said consistently that long term, there's nothing that we see that would suggest that we can't get back to historical margin levels performance. So we just gotta keep working their recovery plan, get back to these rates, get the productivity, and then this should be something that, is in much better shape as we move forward.

[Seth Seifman, Executive Director at JP Morgan]

Great. Thank you very much.

[Operator]

Your next question comes from the line of Ken Herbert from RBC Capital Markets. Your line is open.

[Ken Herbert, Managing Director at RBC Capital Markets]

Yes. Hi. Good morning, Kelly and Brian. I wanted to maybe pivot over to BDS if we could. You've got some good momentum in that business, good budget backdrop, some leadership now on a permanent basis there.

[Ken Herbert, Managing Director at RBC Capital Markets]

You're obviously facing some work stoppage issue or strike risk, but how do we think about that with the opportunity and the pace of margin improvement in BDS as you seem to be have turned the corner from a risk standpoint, but when do we think about that business getting back to the mid to high single digits, and what's the pace in the second half of the year?

[Kelly Ortberg, President & CEO at The Boeing Company]

Yeah. Let me let me address the strike question first. So, you know, just to put in context, it's about 3,200 employees. They build the the fighters mechanics. They build the fighters and our munitions business in Saint Louis and Saint Charles.

[Kelly Ortberg, President & CEO at The Boeing Company]

So, you know, the order of magnitude of this is much, much less than what we saw last fall. The the you know, that that that was roughly 30,000 machinists. So we'll manage through this. I wouldn't worry too much about the implications of the strike. We'll manage our way through that.

[Kelly Ortberg, President & CEO at The Boeing Company]

Look. We've said that that and Brian said it in his prepared remarks, we wanna get our BDS business back to high single digit margin. See, nothing that's gonna keep us from doing that. Couple points is we are as we're entering into these new contracts, we're following our process to make sure that we only enter into the appropriate contracting type. So this these recent big wins we have, the development parts of those programs have all been cost plus.

[Kelly Ortberg, President & CEO at The Boeing Company]

So we're not making the errors of the past in signing up for for fixed price development high risk programs. So, you know, we do have this this, pig in the python that we've just gotta push through, relative to these big development programs. But Parker's doing a great job in working with his customers to derisk those programs and help us get those through, through the development phase. So we're just gonna have to keep doing that. You know, this active management that we've started with the t seven, is a is a a great example of how we can go change the outcome of this that's beneficial to both us and the customer.

[Kelly Ortberg, President & CEO at The Boeing Company]

And, you know, we're playing that playbook in other areas as well.

[Ken Herbert, Managing Director at RBC Capital Markets]

Great. Thank you.

[Operator]

Your next question comes from the line of Noah Poponak from Goldman Sachs. Your line is open.

[Noah Poponak, Research Analyst at Goldman Sachs]

Hey, good morning, everyone. And let me add my thanks, Brian, for the work with us over the recent years.

[Brian West, EVP of Finance & CFO at The Boeing Company]

Thank you.

[Noah Poponak, Research Analyst at Goldman Sachs]

Clarification on the free cash discussion for this year. If 3Q looks like 2Q and then I put the $700,000,000 on top of that, 4Q would have to be kind of barely positive to be minus three for the year. And given the historical seasonality there, I'd I'd think that would maybe be a little better if if I'm missing something there. And then beyond '25, the consensus is around the $10,000,000,000 framework you used to have in 2027 and 2028. And I just wanted to ask, without putting a year on it, is with the demand you have and the profitability and working capital picture you see, is the 10 still the right framework and and it's just a matter of time, or is that kind of number very far in the future?

[Brian West, EVP of Finance & CFO at The Boeing Company]

Let me let me have, Kelly respond to the last part. Let me take the first part, in terms of your question, this year. So, you know, we have a global trade environment that's stabilizing and getting more favorable. Each day that goes by, we've got some nice rate increases, that we're anxious to get to stable as we head into the second half. So, you know, fourth quarter, Italy positive.

[Brian West, EVP of Finance & CFO at The Boeing Company]

How positive is gonna be a function of, you know, how our delivery performance or rate performance goes? And a lot of that is uncertain because we've gotta do things like get above the 38. So I would just, you know, be a little just, give us a little bit of time. It'll be positive. I think the 3,000,000,000 net is the right, reasonable assumption right now.

[Brian West, EVP of Finance & CFO at The Boeing Company]

And as we move through, the rest of the year, we'll have plenty of time to update you on progress. And, Kelly, maybe take the other part.

[Kelly Ortberg, President & CEO at The Boeing Company]

Yeah. No. Look, I see nothing structural that that says we can't get back get get to that $10,000,000,000. So, I think you you framed it perfectly. It's not if, but when.

[Kelly Ortberg, President & CEO at The Boeing Company]

And I'm not ready yet to say when. We got a lot of work to do here as we've talked through all the the production rates and see how we're doing in these rate increases. How long does it take us between rate increases? How's the supply chain doing? But but I think that's certainly a target out there that still looks reasonable to me.

[Kelly Ortberg, President & CEO at The Boeing Company]

I don't see anything that knocks us off of that. We'll just have to look real long and hard at when are we going to get to that level.

[Noah Poponak, Research Analyst at Goldman Sachs]

Thank you.

[Operator]

Your next question comes from the line of Scott Duschel from Deutsche Bank. Your line is open.

[Scott Deuschle, Director - Aerospace & Defense Equity Research at Deutsche Bank]

Hey, good morning. Kelly, it seems that Airbus will be making some architecture decisions on its next generation single aisle within the next few years, I think potentially selecting the the engine architecture by around 2027. So so in that context, do you have a sense for when BCA will need to begin making these types of design decisions in order to have a competitive entry into service date for its own next generation single aisle?

[Kelly Ortberg, President & CEO at The Boeing Company]

Yeah. We're working through that. I'm not in a position where I wanna announce any any decision dates at this particular time. You know, I I've said this in the past. We've got three work streams here that we've gotta we've gotta mature.

[Kelly Ortberg, President & CEO at The Boeing Company]

One is the readiness of the market for the new airplane and, you know, that that that needs more work. I don't think the market is ready yet for a new airplane. When are we ready? And then this whole discussion around, you know, turning the company around and generating cash flow is really important to when we're ready to launch it, as well as when is the technology ready. And engine technology is a part of it, but it's beyond just engine technology.

[Kelly Ortberg, President & CEO at The Boeing Company]

So we're maturing all of those, you know, and we'll do that when those three work streams all kinda converge. That's not today and probably not tomorrow.

[Eric Hill, VP - IR at The Boeing Company]

Hey, Rob. We have time for one more question.

[Operator]

Certainly. Your final question comes from the line of Christine Liwag from Morgan Stanley. Your line is open.

[Kristine Liwag, Executive Director at Morgan Stanley]

Great. Thanks, everyone. Brian, echoing everyone's thanks. Thank you for all your help. Kelly, congrats on your first full year at Boeing.

[Kristine Liwag, Executive Director at Morgan Stanley]

It's great to see stability in aircraft production. I guess looking back, what surprised you most in your year one at Boeing? And where do your priorities lie for 2026?

[Kelly Ortberg, President & CEO at The Boeing Company]

Well, thanks, Christine. First of all, it's not a year yet. It's August 8 when it's here, so I still have some work to do. But, you know, I'm pretty pleased with where we are through the first half and through my first year. Clearly, the surprises have been, you know, just a lot of the macro dynamics that we've been through.

[Kelly Ortberg, President & CEO at The Boeing Company]

I mean, we've been through quite a bit. I'm not surprised with the performance of the company and the recovery. We we've got great people in the company. We've got great market positions. My role here is just to help everybody get organized and headed in the right right direction.

[Kelly Ortberg, President & CEO at The Boeing Company]

You know, it's it's turning a big ship around. I think that that we're turning it. I don't think it's turned. We still have a lot of work to do. But, you know, I haven't been overly surprised with what I learned.

[Kelly Ortberg, President & CEO at The Boeing Company]

As you know, I spent a lot of my career working very closely with Boeing. So not a lot of surprises with what we've what we're dealing with. It's, you know, it's just one day at a time, improve our performance, address the issues that we have, build restore trust and and build confidence with our our customer base and and our end users of our products. And I think you're seeing that. So like I said, I feel pretty good with the first half, but, we got a lot of lot of work yet to do in the second half.

[Kristine Liwag, Executive Director at Morgan Stanley]

Great. Thank you.

[Operator]

And that completes The Boeing Company's second quarter twenty twenty May conference call. Thank you for joining.

Participants

Executives

• Eric Hill, VP - IR
• Kelly Ortberg, President & CEO
• Brian West, EVP of Finance & CFO

Analysts

• Myles Walton, Managing Director at Wolfe Research LLC
• Sheila Kahyaoglu, Aerospace, Defense & Airlines Equity Research at Jefferies
• Peter Arment, Senior Research Analyst at Robert W. Baird & Co
• David Strauss, MD, Equity Research - Aerospace & Defense at Barclays
• Ronald Epstein, Senior Equity Analyst at Bank of America
• Douglas Harned, Managing Director at AB Bernstein
• Seth Seifman, Executive Director at JP Morgan
• Ken Herbert, Managing Director at RBC Capital Markets
• Noah Poponak, Research Analyst at Goldman Sachs
• Scott Deuschle, Director - Aerospace & Defense Equity Research at Deutsche Bank
• Kristine Liwag, Executive Director at Morgan Stanley