Brian West
Executive Vice President, Chief Financial Officer at Boeing
Great, thanks Dave, and good morning, everyone. Let's go to the next page and cover the fourth quarter financial results. Revenue in the fourth quarter came in at $20 billion, that's up 35% Year-over-Year, driven by higher commercial volume. Core operating margin was negative 3.3%, and the core loss per share was $1.75. Both the margin and the loss per share were significantly better than prior year and impacted in the quarter by period expenses and abnormal costs.
From a free-cash flow perspective, our primary financial metric was positive $3.1 billion for the quarter, up significantly versus the prior year on higher deliveries and strong order activity and up sequentially versus the prior quarter and a bit better than our original estimate.
I'll take a minute to go through each of the business units. Moving on to the next page with BCA. BCA revenue in the fourth quarter was $9.2 billion, that's up 94% year-over-year, driven by higher 787 and 787 deliveries, partially offset by 787 customer considerations. On the operating margins, they were negative 6.8% in the quarter, significantly better than a year ago, and in the quarter driven by abnormal costs and higher period expenses including higher R&D spending.
I'll take a minute to go through a few highlights on the major programs, starting with the 737. We had 110 deliveries in the fourth quarter and 387 for the full-year, slightly ahead of our estimate. We ended the year with 250 MAX airplanes in inventory, 30 of which were Dash 7 and Dash 10s, and we had 138 for customers in China. We do expect the monthly deliveries from inventory to slow slightly as fewer airplanes will be available combined with some impact from the Dash 7, Dash 10 builds. We still expect most inventoried airplanes will be delivered by the end of 2024.
On the 787, we had 22 deliveries in the fourth quarter and 31 for the full year. We ended the year with 100 airplanes in inventory, most of which will be delivered by the end of 2024. We booked $350 million of abnormal costs in the quarter, taking the total to date to $1.7 billion. We're increasing the abnormal accounting estimate by about $600 million to roughly $2.8 billion in total as we will be under the five per month production rate a bit longer than expected due to a supplier constraint that has temporarily slowed production. We still expect to hit five per month this year. Our total year delivery guidance of 70 to 80 is unchanged, and there is no change to the 2023 cash flows.
77 orders were strong in the quarter, and we've added 100 airplanes to the accounting quantity, which increases our GAAP program margin. On the 777X, the program timeline is holding and efforts are ongoing. Abnormal costs were $112 million in the quarter, and there is no change to the $1.5 billion total estimate.
On the customer settlement front, we continue to make good progress resolving contractual issues on the three big programs. The 737 MAX is near the finish line with the vast majority of customers settled. Of the original $9.3 billion of that we set aside, there's only 3% left. On the 787, a year ago, we included a significant provision in the program, which has been very stable. There are far fewer customers in the MAX, and we've already reached agreement with several, all in line with our estimates. And the 777X, there are even fewer customers and discussions are ongoing. Keep in mind that the revenue and cash impact of these settlements will be over several years, and all contemplated in both the near and long-term financial guidance. Finally, on the orders front for BCA, we booked 376 orders in the quarter and have over 4,500 airplanes in backlog valued at $330 billion.
Moving on to the next page, I'll cover BDS. BDS revenues in the fourth quarter were $6.2 billion, up 5% Year-over-Year. Operating margins were 1.8%, and if you include services, defense margins would be 200 basis-points higher to 4%. There are two things impacting BDS margins in the quarter. First, we felt the operational impact of supply-chain constraints in labor instability. Second, we saw adverse timing of certain cost accrual true-ups, including higher pension cost that flow-through the P&L in the quarter. The big focus for the BDS leadership team to improve execution stability both in the factory and in the supply base. Some additional highlights, as Dave mentioned, we're very proud of ARTEMIS 1 successful mission to the moon last November, and we delivered 45 aircraft in the quarter, including the first P8 to New Zealand, as well as three satellites, including the first two O3b empower units.
We received $7 billion in orders during the quarter, including a contract for two KC-46A Tankers from Japan and an award for 12 Chinook helicopters from the Egyptian Air Force. The BDS backlog is $54 billion.
Moving on to the next page, Global Services. BGS had another strong quarter, primarily driven by our parts and distribution business. BGS revenue was $4.6 billion, up 6% year-over-year and operating margin was 13.9%. Commercial volume was very strong, partially offset by some softness in the government space. We received $5 billion in orders during the quarter, including an F-15 depot support order for the US Air Force, and we opened up the Germany distribution center. The BGS backlog is $19 billion.
Moving on to the full-year, on the next page, full-year financial results revenue came in at $66.6 billion, that's 5% up year-over-year, driven by higher commercial volume, offset by lower defense revenue. Core operating margin was negative 7%, and the core loss per share was over $11, both a bit worse, reflecting the impact of defense charges taken earlier in the year. And free-cash flow, we generated $2.3 billion positive free-cash flow in the year, up significantly from the prior year, driven by higher deliveries in order activity.
Moving on to the next page, I just want to put that $2.3 billion of free-cash flow in perspective. As you can see from the chart on the left, we've made a lot of progress over the last three years. 2020 was the usage of $20 billion of cash, 2021 improved but was still a usage of $4 billion of cash. In 2022, $2.3 billion positive. As Dave mentioned, a lot of work that's been done and more work to do, the team is pretty proud to get back to positive territory. It's been the 737 return to service and the deliveries that are ramping. It's been the 787 that has been restarted. It's been the commercial market recovery that's been a benefit along the way with a very strong order book, reflecting our customers' confidence in our product lineup. And of course, our service business has held up incredibly well. It was a good exit to 2022 and we expect momentum to continue for 2023.
Moving on to the next page. Cash and debt. On the cash and marketable securities front, we ended the year with $17.2 billion, up $3 billion versus the third quarter, and we had $12 billion of revolving credit facilities, all of which remain undrawn. On the debt side, we finished the year with $57 billion in debt, and as a reminder, our investment-grade credit rating continues to be a top priority. Our liquidity position is strong, and we're very comfortable satisfying near-term maturities, and the overall plan continues to be deliver airplanes, generate cash, pay down debt.
Moving on to the next page -- 2023. Our financial outlook for 2023 is unchanged from what we shared in November. Operating cash-flow in total will be between $4.5 billion and $6.5 billion. We'll reinvest about $1.5 billion in capex, for a net free-cash flow of $3 billion to $5 billion in 2023. As we start the year, overall demand remains strong. Global passenger traffic increased almost 70% in 2022, and we're at 75% of pre pandemic levels globally. If you take out China, that number grows to over 90%. So, demand is pretty robust and reflective of our order book.
Our priority continues to be execution stability, and while we still see some disruptions in the factory and the supply chain, we're hard at work with our partners to address these issues, and ultimately focused on meeting our customer commitments.
On the segment operating cash-flow, same numbers as November. BDS, we expect to be a usage of between $0.5 billion and $1 billion of cash. BGS will generate between $2.5 billion and $3 billion, and BCA will generate between $2.5 billion and $3.5 billion.
On the commercial delivery front, 737 deliveries are unchanged and between 400 and 450 airplanes, 787 deliveries are unchanged between 70 and 80 airplanes, and we've added a couple of items on the expense front, we expect R&D for 2023 to come in at about $3.2 billion versus $2.9 billion in 2022, the vast majority of this increase will be in BCA.
We also have unallocated eliminations and other, which will be relatively in-line with 2022, at $1.6 billion.
One important thing to note is on the quarterly phasing, it will look very similar to last year as both deliveries and the financials will improve throughout the course of the year. On the first quarter specifically, EPS will be an improvement over 4Q 2022 but remain in a loss position. And cash will still be a usage in the first-quarter, although an improvement from the first quarter of 2022. Overall, we're squarely focused on free-cash flow, and it's so far so good as we enter 2023.
Moving on to the last page, 2025 and 2026 long-term guidance. Same page we showed you in November. $10 billion of free-cash flow is still our objective. And it's important to know that margins and EPS are important, but they will be uneven over the next two years, as we unwind the BCA inventory, we put the BCA abnormal costs behind us and we get the BDS margins back on track to its normal trajectory. We're still confident that this plan is underpinned by things we largely control. One, productivity. Two, the commercial rate ramp. Three, services growth. And four, the transition of key defense programs from development to production.
Overall, we're as confident today as we're back in November, and we feel good about the way 2023 is starting.
With that, I'll turn it over to Dave for any final comments.
