What Boeing (BA) Said on Its Q3 Earnings Call

Key Points

• Boeing’s third-quarter revenue rose 4% to $24.2 billion, with positive free cash flow of $464 million and core EPS improving to a loss of $0.34. The company narrowed its 2026 free-cash-flow target to approximately $2 billion and projects growth to $10 billion by 2029.
• Commercial-aircraft progress continued, including FAA certification of the 737-7 and 737-10 and 161 deliveries through the third quarter—the highest since 2018. However, Boeing expects 737 production stabilization at 47 aircraft per month to extend into next year, with a target of 52 per month in the second half of 2027.
• Defense and services provided important support: Defense revenue increased 15% to $7.9 billion, while the defense backlog reached a record $101 billion. Boeing also secured major contracts, including the U.S. Navy’s F/A-XX sixth-generation fighter award, and Global Services revenue rose 4%.

Boeing NYSE: BA reported third-quarter revenue of $24.2 billion, up 4% from a year earlier, as higher defense and services volume offset a less favorable commercial-aircraft delivery mix. The company posted an operating margin of 1.5%, while core earnings per share improved to a loss of $0.34. Free cash flow was positive $464 million during the quarter.

Chief Executive Officer Kelly Ortberg said the company had completed several milestones in its 2026 plan, including FAA certification of the 737-7 in July and the 737-10 in October. Through the third quarter, Boeing delivered 161 commercial aircraft, its highest level since 2018, according to Ortberg.

The company also reached a four-year labor agreement with its Pacific Northwest engineering and technical workforce, won major defense contracts, and was selected by the U.S. Navy to design, build and deliver the F/A-XX sixth-generation fighter. Ortberg said the selection makes Boeing the exclusive sixth-generation fighter company for both the U.S. Air Force and Navy.

Commercial production and certification progress

Boeing Commercial Airplanes generated $10.7 billion in third-quarter revenue, down 3% year over year, and reported an operating margin of negative 6.5%. The segment delivered 124 737 aircraft and 22 787 aircraft during the quarter. Its backlog rose to a record $612 billion, representing more than 6,300 airplanes.

Ortberg said the company is working to stabilize 737 production at 47 aircraft per month but expects that process to extend into next year. Final-assembly rework has improved 40% since the start of last year, he said, though performance improvements in the wing production system have taken longer than expected.

“It’s more important that we do this ramp right than what particular month we achieve a rate break,” Ortberg said.

Boeing now plans to target a 737 production rate of 52 aircraft per month in the second half of 2027. Achieving that goal will require certification and output from the north production line, stable wing and back-shop operations, and higher-rate fuselage production in Wichita, Ortberg said.

The 787 program is stable at eight aircraft per month, although monthly deliveries have varied because of previously discussed seat-certification issues. Boeing still expects to begin transitioning to a production rate of 10 aircraft per month before the end of the year, with engine delivery performance remaining the pacing item. The company expects annual 787 deliveries of 90 to 100 aircraft, closer to the lower end of that range.

On the 777X, Boeing continues to target first delivery in 2027. Ortberg said the company still needs regulatory approval to begin the remaining flight-test work, including ETOPS testing. Chief Financial Officer Jay Malave said Boeing is producing the aircraft at roughly one per month and expects that rate to continue for most of 2027.

Defense, services and program developments

Boeing Defense, Space & Security revenue increased 15% to $7.9 billion, driven by higher volume in classified programs, missiles and weapons. The segment delivered 30 aircraft and three satellites. Its operating margin was 6.2%, including a $252 million gain from the sale of HRL Laboratories.

BDS booked $23 billion in orders and ended the quarter with a record $101 billion backlog. The F/A-XX award was not included in third-quarter backlog pending completion of the source-selection and evaluation process.

Ortberg also cited a seven-year PAC-3 Seeker contract intended to accelerate and eventually triple production, along with an award to manufacture 22 additional F-15EX aircraft for the U.S. Air Force. That contract brings the total number of F-15EX aircraft under contract to 120, he said.

Ortberg said Boeing and NASA established a path forward for Starliner that is intended to support future flights while reducing program risk. The arrangement includes $359 million of additional NASA funding.

Global Services revenue rose 4% to $5.6 billion. Excluding the prior-year divestiture of Digital Aviation Solutions, revenue increased 11%, primarily due to government and commercial modifications activity. The segment’s operating margin was 18.3%, and both its commercial and government businesses produced double-digit margins, Malave said.

Cash flow targets and balance sheet

Boeing ended the quarter with $20.7 billion in cash and marketable securities and $45.9 billion in debt. The company also has $10 billion of undrawn revolving credit facilities.

Malave said third-quarter cash flow benefited from improved working capital but was partly offset by approximately $700 million in Department of Justice settlement payments and capital expenditures for capacity expansion in Charleston and St. Louis.

The company narrowed its 2026 free-cash-flow outlook to approximately $2 billion and outlined targets of about $3 billion in 2027, $6 billion in 2028 and $10 billion in 2029. The 2027 target assumes 777X certification by midyear and includes approximately $5 billion in capital expenditures, up about $1 billion from 2024. Boeing expects capital spending to be about $4 billion in both 2028 and 2029.

• 2026 free cash flow target: approximately $2 billion
• 2027 free cash flow target: approximately $3 billion
• 2028 free cash flow target: approximately $6 billion
• 2029 free cash flow target: approximately $10 billion

Malave said the outlook is supported by higher commercial deliveries, improving cash margins on the 737 and 787 programs, continued improvement in defense, steady services growth and declining legacy cash drags. The company expects 777X to be a significant use of cash in 2027, improve in 2028 and turn positive in 2029.

Ortberg said Boeing’s record $745 billion total backlog, improved pricing, a more stable production system and improved visibility into certification and development-program risks gave management greater confidence in setting multi-year targets. He said the company sees “significant growth potential” beyond the 2029 free-cash-flow goal, while emphasizing that safety, quality and production stability remain priorities.

About Boeing (NYSE:BA)

The Boeing Company NYSE: BA is a global aerospace company that designs, manufactures and supports commercial airplanes, military aircraft, satellites, space systems and related products and services. Its offerings serve airlines, government agencies, defense organizations and other customers worldwide.

Boeing operates through three principal business areas: Commercial Airplanes, which develops and produces passenger and cargo aircraft; Defense, Space & Security, which provides military aircraft, weapons systems, satellites and space-related platforms; and Global Services, which offers parts, maintenance, training, engineering and other lifecycle support.

Founded in 1916 by William Boeing, the company has grown into one of the world's major aerospace manufacturers.

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