~~See Notes to the Condensed Consolidated Financial Statements.~~

The Boeing Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Summary of Business Segment Data

(Unaudited)

(Dollars in millions) Six months ended June 30 Three months ended June 30

2020
2019
2020
2019
Revenues:
Commercial Airplanes
$7,838

$16,544

$1,633

$4,722
Defense, Space & Security 12,630
13,166
6,588

6,579
Global Services 8,116
9,162
3,488

4,543
Boeing Capital 134
141
69

75
Unallocated items, eliminations and other (3 ) (345 ) 29
(168 )
Total revenues
$28,715

$38,668

$11,807

$15,751
Earnings/(loss) from operations:

Commercial Airplanes
($4,830 )
($3,773 )
($2,762 )

($4,946 )
Defense, Space & Security 409
1,827
600

975
Global Services 36
1,340
(672 )
687
Boeing Capital 17
57
(7 )
37
Segment operating loss (4,368 ) (549 ) (2,841 ) (3,247 )
Unallocated items, eliminations and other (651 ) (1,210 ) (478 ) (498 )
FAS/CAS service cost adjustment 702
729
355
365
Loss from operations (4,317 ) (1,030 ) (2,964 )
(3,380 )
Other income, net 206
213
94

107
Interest and debt expense (815 ) (277 ) (553 )
(154 )
Loss before income taxes (4,926 ) (1,094 ) (3,423 )
(3,427 )
Income tax benefit 1,890
301
1,028

485
Net loss (3,036 ) (793 ) (2,395 )
(2,942 )
Less: Net loss attributable to noncontrolling interest (32 )

(19 )

Net loss attributable to Boeing Shareholders
($3,004 )
($793 )
($2,376 )
($2,942 )


(Dollars in millions)	Three months ended March 31
	2021	2020
Revenues:
Commercial Airplanes	$4,269	$6,205
Defense, Space & Security	7,185	6,042
Global Services	3,749	4,628
Boeing Capital	60	65
Unallocated items, eliminations and other	(46)	(32)
Total revenues	$15,217	$16,908
Loss from operations:
Commercial Airplanes	($856)	($2,068)
Defense, Space & Security	405	(191)
Global Services	441	708
Boeing Capital	21	24
Segment operating earnings/(loss)	11	(1,527)
Unallocated items, eliminations and other	(364)	(173)
FAS/CAS service cost adjustment	270	347
Loss from operations	(83)	(1,353)
Other income, net	190	112
Interest and debt expense	(679)	(262)
Loss before income taxes	(572)	(1,503)
Income tax benefit	11	862


Net loss	(561)	(641)
Less: Net loss attributable to noncontrolling interest	(24)	(13)
Net loss attributable to Boeing Shareholders	($537)	($628)

This information is an integral part of the Notes to the Condensed Consolidated Financial Statements. See Note 1918 for further segment results.

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The Boeing Company and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Dollars in millions, except otherwise stated)

(Unaudited)

Note 1 – Basis of Presentation

The condensed consolidated interim financial statements included in this report have been prepared by management of The Boeing Company (herein referred to as “Boeing”, the “Company”, “we”, “us”, or “our”). In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation are reflected in the interim financial statements. The results of operations for the period ended ~~June 30, 2020~~March 31, 2021 are not necessarily indicative of the operating results for the full year. The interim financial statements should be read in conjunction with the audited Consolidated Financial Statements, including the notes thereto, included in our ~~2019~~2020 Annual Report on Form 10-K. ~~Certain amounts in prior periods have been adjusted to conform with the current year presentation.~~

Liquidity Matters

The global outbreak of COVID-19 ~~coupled with~~and residual impacts from the ~~ongoing~~ grounding of the 737 MAX airplane isin 2019 are having a significant adverse impact on our business and isare expected to ~~significantly reduce~~continue to negatively impact revenue, earnings and operating cash flow in future quarters. The ~~aerospace industry is facing~~COVID-19 pandemic has caused an unprecedented shock to demand for air travel, ~~which creates~~creating a tremendous challenge for our customers, our business and the entire aerospace manufacturing and services sector. We ~~currently~~continue to expect ~~it will take approximately three years for~~commercial air travel to return to 2019 levels ~~and~~in 2023 to 2024. We expect it will take a few years beyond that for the industry to return to long-term trend growth. There is significant uncertainty with respect to when commercial air traffic levels will recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels.

During the first ~~half~~three months of ~~2020,~~2021, net cash used by operating activities was ~~$9.6 billion~~$3.4 billion. Our operating cash flows continue to be impacted by lower commercial airplane deliveries and weincreases in commercial airplane inventory. We expect negative operating cash flows ~~in future quarters~~ until commercial deliveries ramp up. In the first quarter of ~~2020, we entered into and fully drew on a $13.8 billion two-year delayed draw term loan credit agreement (delayed draw term loan facility). In the second quarter of 2020,~~2021, we issued ~~$25~~$9.8 billion of fixed rate senior notes that mature between 2023 and ~~2060.~~2026. We used the net proceeds of these note issuances to repay $9.8 billion outstanding under our two-year delayed draw term loan credit agreement. The remaining $4.0 billion of our two-year delayed draw term loan matures in February 2022. As a result, our cash and short-term investment balance ~~has increased to $32.4 billion and our debt balance has increased to $61.4~~was $21.9 billion at ~~June 30, 2020.~~

The major credit rating agencies downgraded our short term and long term credit ratings during the first half of 2020, and there is risk for further downgrades. At June 30, 2020, debt includes $2.4 billion of commercial paperMarch 31, 2021, down from ~~$6.1~~$25.6 billion at December 31, ~~2019. Commercial paper~~2020, while our debt balance was $63.6 billion at ~~June 30, 2020~~March 31, 2021, unchanged from December 31, 2020. Short-term debt and the current portion of long-term debt increased to $6.0 billion at March 31, 2021, up from $1.7 billion at December 31, 2020. The current portion of long term debt includes ~~$0.5 billion and $1.9~~term notes of $1.5 billion maturing in 2021. Our short-term and long-term credit ratings remained unchanged during the ~~third and fourth quarters~~first quarter of ~~2020.~~ 2021.

In the ~~current environment,~~first quarter of 2021, we ~~may have limited future access to the commercial paper market. In addition,~~entered into a $5.3 billion two-year revolving credit agreement, which we have ~~term notes of $350 maturing in the fourth quarter of~~not drawn upon. As a result, our unused borrowing capacity on revolving credit agreements increased to $14.8 billion at March 31, 2021 from $9.5 billion at December 31, 2020. We anticipate that these credit lines will remain undrawn and primarily serve as back-up liquidity to support our general corporate borrowing needs. See Note 11.

At ~~June 30, 2020,~~March 31, 2021, trade payables included ~~$4.4~~$3.8 billion payable to suppliers who have elected to participate in supply chain financing programs. While access to supply chain financing ~~could be curtailed if~~has been reduced due to our credit ratings ~~are downgraded,~~and debt levels, we do not believe that these or future changes in the availability of supply chain financing will have a significant impact on our liquidity.

At June 30, 2020 and December 31, 2019 we had $9.6 billion of unused borrowing capacity on revolving credit agreements. We anticipate that these credit lines will primarily serve as back-up liquidity to support our general corporate borrowing needs. We plan to negotiate extending these facilities in the fourth quarter of 2020 when $3.2 billion of the $9.6 billion comes up for renewal.

In addition to our debt issuances, we have taken a number of actions to improve liquidity. During ~~the first quarter of~~ 2020, our Board of Directors terminated its prior authorization to repurchase shares of the Company’s outstanding common stock and suspended the declaration and/or payment of dividends until further notice. We have also reduced production rates in our commercial business to reflect the impact of COVID-19 on the industry. We ~~have furloughed certain employees and~~ are executing on our plans to reduce our workforce through a combination of voluntary and involuntary layoffs and natural turnover. ~~In the second quarter of 2020, we~~We have recorded severance costs for approximately ~~19,000 emplo~~y~~ees,~~23,000 employees, of which approximately

~~6,000 have left the Company as of June 30, 2020, and the remainder~~ 5,000 are expected to leave in the ~~second half~~remainder of ~~2020.~~

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2021. In the fourth quarter of 2020, we began using our common stock in lieu of cash to fund Company contributions to our 401(k) plans. In December 2020, in lieu of merit pay increases, we awarded most of our employees a one-time stock grant that will vest in three years. We ~~are reducing~~have reduced discretionary spending, ~~as well as~~including reducing or deferring research and development and capital expenditures. We expect these actions will further enable the Company to conserve cash.

We are also working with our customers and supply chain to accelerate receipts and conserve cash. For example, the United States Department of Defense (U.S. DoD) has taken steps to work with its industry partners to increase liquidity in the form of increased progress payment rates and reductions in withholds among other initiatives. We ~~are~~ also ~~deferring~~deferred certain tax payments pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

In July 2020, we announced our business transformation efforts to assess our business across five key pillars: infrastructure, overhead and organization, portfolio and investments, supply chain health and operational excellence. Within the infrastructure pillar we are assessing our overall facility requirements in light of reduced demand in our commercial businesses and remote and virtual work opportunities for large numbers of our workforce. We also anticipate a reduction in office space needs compared to our pre-COVID capacity. However, as we consolidate our footprint, terminate leases and dispose of properties, we may incur near term adverse impacts to earnings. The overhead and organization pillar is focused on our cost structure and how we are organized so we can right size our workforce and simplify and reduce management layers and bureaucracy. The portfolio and investments pillar includes aligning our portfolio and investments to focus on our core business and the changes in market conditions. The supply chain pillar is focused on supply chain health and stability, reducing indirect procurement spend and streamlining our transportation, logistics and warehousing approach. The operational excellence pillar is focused on improving performance, enhancing quality and reducing rework. These activities are not intended to constrain our capacity, but rather to enable the Company to emerge stronger and be more resilient when the market recovers.

Based on our current best estimates of market demand, planned production rates, timing of cash receipts and expenditures, our ability to successfully implement further actions to improve liquidity, as well as our ability to access additional liquidity, if needed, we believe it is probable that we will be able to fund our operations for the foreseeable future.

~~Standards Issued and Implemented~~

~~In the first quarter of 2020, we adopted ASU 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instr~~uments (ASU 2016-13), using a modified retrospective method, which resulted in the recognition of allowances for credit losses on our Condensed Consolidated Statement of Financial Position as of January 1, 2020 and a $162 cumulative-effect adjustment to retained earnings to align our credit loss methodology with the new standard. The standard replaces the incurred loss impairment methodology under Topic 310 with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and certain other financial assets. See Note 5 and 8 for additional disclosures.

~~In the first quarter of 2020, we also adopted ASU 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). See Note 2 for additional disclosures.~~

~~Significant Accounting Policies - Update~~

Our significant accounting policies are described in "Note 1: Summary of Significant Accounting Policies" of our Annual Report on Form 10-K for the year ended December 31, 2019. Our updated significant accounting policies described below reflect the impact of adopting Topic 326.

~~Allowances for losses on certain financial assets~~

We establish allowances for credit losses on accounts receivable, unbilled receivables, customer financing receivables, and certain other financial assets. The adequacy of these allowances are assessed quarterly through consideration of factors including, but not limited to, customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates and collateral exposures. We assign internal credit ratings for all customers and determine the creditworthiness of each customer based upon publicly available information and information obtained directly from our customers. Our rating categories are comparable to those used by major credit rating agencies.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe that the accounting estimates and assumptions are appropriate given the increased uncertainties surrounding the severity and duration of the impacts of the COVID-19 pandemic, however actual results could differ from those estimates.

Changes in estimated revenues, cost of sales and the related effect on operating income are recognized using a cumulative catch-up adjustment which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a long-term contract’s percentage-of-completion. When the

current estimates of total sales and costs for a long-term contract indicate a loss, a provision for the entire reach-forward loss on the long-term contract is recognized.

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Net cumulative catch-up adjustments to prior periods' revenue and earnings, including certain reach-forward losses, across all long-term contracts were as follows:

(In millions - except per share amounts) Six months ended June 30 Three months ended June 30
2020
2019
2020
2019
(Decrease)/increase to Revenue
($290 )
$229

$144

$69
(Decrease)/increase to (Loss)/earnings from operations
($749 )
$175

$90

$28
(Decrease)/increase to Diluted EPS
($0.82 )
$0.22

$0.11

$0.04


(In millions - except per share amounts)	Three months ended March 31
	2021	2020
Increase/(decrease) to Revenue	$7	($434)
Increase to Loss from operations	($176)	($839)
Decrease to Diluted EPS	($0.29)	($0.63)

Note 2 – ~~Goodwill and Acquired Intangibles~~

~~In the first quarter of 2020, we adopted ASU 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. The standard simplifies the quantitative impairment test from a two-step process to a one-step process. The quantitative test is performed by comparing the carrying value of net assets to the estimated fair value of the related operations. If the fair value is determined to be less than carrying value, the shortfall up to the carrying value of the goodwill represents the amount of goodwill impairment. The standard continues to permit a company to test goodwill for impairment by performing a qualitative assessment or using the quantitative test.

We completed our annual assessment of goodwill as of April 1, 2020 and determined that the fair value of each reporting unit exceeded its corresponding carrying value and that there is no impairment of goodwill.

The COVID-19 pandemic continues to impact our Commercial Airplanes and Commercial Services businesses. Therefore, we believe the COVID-19 pandemic is a triggering event in the second quarter of 2020 for testing whether goodwill recorded by our Commercial Airplanes and Commercial Services reporting units is impaired. At June 30, 2020, Commercial Airplanes has $1,315 of goodwill and Commercial Services has $3,056. We performed a qualitative assessment and determined it is not more likely than not that the fair values of our Commercial Airplane and Commercial Services reporting units were less than their carrying values as of June 30, 2020. We will continue to monitor the impacts of the COVID-19 pandemic in future quarters. Changes in our forecasts or further decreases in the value of our common stock could cause book values to exceed fair values which may result in goodwill impairment charges in future periods.

~~Note~~ 3 – Earnings Per Share

Basic and diluted earnings per share are computed using the two-class method, which is an earnings allocation method that determines earnings per share for common shares and participating securities. The undistributed earnings are allocated between common shares and participating securities as if all earnings had been distributed during the period. Participating securities and common shares have equal rights to undistributed earnings.

Basic earnings per share is calculated by taking net earnings, less earnings available to participating securities, divided by the basic weighted average common shares outstanding.

Diluted earnings per share is calculated by taking net earnings, less earnings available to participating securities, divided by the diluted weighted average common shares outstanding.

The elements used in the computation of basic and diluted earnings per share were as follows:


(In millions - except per share amounts)	Three months ended March 31
	2021	2020
Net loss attributable to Boeing Shareholders	($537)	($628)
Less: earnings available to participating securities	0	0
Net loss available to common shareholders	($537)	($628)
Basic
Basic weighted average shares outstanding	585.4	565.9
Less: participating securities	0.4	0.5
Basic weighted average common shares outstanding	585.0	565.4
Diluted
Basic weighted average shares outstanding	585.4	565.9
Dilutive potential common shares(1)	0	0
Diluted weighted average shares outstanding	585.4	565.9
Less: participating securities	0.4	0.5
Diluted weighted average common shares outstanding	585.0	565.4
Net loss per share:
Basic	($0.92)	($1.11)
Diluted	(0.92)	(1.11)

(In millions - except per share amounts) Six months ended June 30 Three months ended June 30

2020

2019

2020

2019
Net loss attributable to Boeing Shareholders
($3,004 )
($793 )
($2,376 )
($2,942 )
Less: earnings available to participating securities

Net loss available to common shareholders
($3,004 )
($793 )
($2,376 )
($2,942 )
Basic
Basic weighted average shares outstanding 566.1
566.6
566.4
565.3
Less: participating securities 0.5
0.6
0.5
0.6
Basic weighted average common shares outstanding 565.6
566.0
565.9
564.7
Diluted
Basic weighted average shares outstanding 566.1
566.6
566.4
565.3
Dilutive potential common shares⁽¹⁾

Diluted weighted average shares outstanding 566.1
566.6
566.4
565.3
Less: participating securities 0.5
0.6
0.5
0.6
Diluted weighted average common shares outstanding 565.6
566.0
565.9
564.7
Net loss per share:
Basic
($5.31 )
($1.40 )
($4.20 )
($5.21 )
Diluted (5.31 ) (1.40 ) (4.20 ) (5.21 )


⁽¹⁾(1)Diluted earnings per share includes any dilutive impact of stock options, restricted stock units, performance-based restricted stock units and performance awards.	~~Diluted earnings per share includes any dilutive impact of stock options, restricted stock units, performance-based restricted stock units and performance awards.~~

As a result of incurring a net loss for the ~~six and~~ three months ended ~~June 30,~~March 31, 2021 and 2020, potential common shares of ~~1.8~~1.7 million and 1.2 million were excluded from diluted loss per share because the effect would have been antidilutive. As a result of incurring a net loss for the six and three months ended June 30, 2019 potential common shares of 4.4 million and 4.02.3 million were excluded from diluted loss per share because the effect would have been antidilutive. In addition, the following table includes the number of shares that may

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be dilutive potential common shares in the future. These shares were not included in the computation of diluted loss per share because the effect was either antidilutive or the performance condition was not met.

(Shares in millions) Six months ended June 30 Three months ended June 30
2020
2019
2020
2019
Performance awards 6.1
2.7
5.5
2.7
Performance-based restricted stock units 1.4
0.6
1.4
0.6


(Shares in millions)	Three months ended March 31
	2021	2020
Performance awards	2.6	6.7
Performance-based restricted stock units	0.7	1.4
Restricted stock units	1.4
Stock options	0.2

Note 43 – Income Taxes

~~Our effective income~~The first quarter of 2021 tax ~~rates~~rate of 1.9% reflects a projected tax benefit from current operations substantially offset with discrete tax expenses impacting the quarter. The 2021 tax benefit reflects pre-tax losses that are generating a tax benefit at the 21% federal tax rate plus research and development tax credits. These tax benefits were ~~38.4% and 30.0% for the six and three months ended June 30, 2020 and 27.5% and 14.2% for the same periods~~offset by discrete tax expenses recorded in the ~~prior year.~~first quarter of 2021 related to adjustments to the valuation allowance and CARES Act tax carryback benefits recorded in 2020. The 2020 tax rate includes tax benefits from the CARES Act enacted on March 27, 2020 ~~due to the Act's five year~~that included a five-year net operating loss ~~carry back~~carryback provision ~~while the 2019 tax rate reflects tax benefits associated with intangible income derived from serving non-U.S. markets. The carry back provisions enable~~which enabled us to benefit ~~from~~ certain 2020 losses and re-measure certain deferred tax assets and liabilities at the former federal tax rate of 35%. The 2020 tax ~~rates in 2020 and 2019~~rate also ~~reflect~~includes research and development tax credits and excess tax benefits related to share-based payments.

As of March 31, 2021 and December 31, 2020, the Company had recorded valuation allowances of $3,192 and $3,094 primarily for certain federal deferred tax assets, state net operating loss carryforwards, and state tax credits. To measure the valuation allowance, the Company estimated in what year each of its deferred tax assets and liabilities would reverse using systematic and logical methods to estimate the reversal patterns. Based on these methods, deferred tax liabilities were assumed to reverse and generate taxable income over the next 5 to 10 years while deferred tax assets related to pension and other postretirement benefit obligations were assumed to reverse and generate tax deductions over the next 15 to 20 years. The valuation allowance primarily resulted from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of certain deferred tax assets.

As of March 31, 2021, based on the estimated reversal patterns of the Company’s deferred tax assets and liabilities, it is more likely than not that the Company will realize the federal deferred tax assets generated in 2021 as there is sufficient projected income from reversals of deferred tax liabilities in the next five years.

Federal income tax audits have been settled for all years prior to ~~2015.~~2018. The Internal Revenue Service (IRS) began the ~~2015-2017~~2018-2019 federal tax audit in the first quarter of ~~2019.~~2021. We are also subject to examination in major state and international jurisdictions for the ~~2007-2018~~2007-2019 tax years. We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.

~~Audit outcomes and the timing~~

Table of audit settlements are subject to significant uncertainty. It is reasonably possible that within the next 12 months unrecognized tax benefits related to federal matters under audit may decrease by up to $690 based on current estimates.Contents

Note ~~5 -~~4 – Allowances for Losses on Financial Assets

~~Upon adoption of ASU 2016-13, we recorded a $162 cumulative-effect adjustment to retained earnings to increase our allowances for credit losses, resulting in a balance of $337 as of January 1, 2020.~~ The ~~change~~changes in allowances for expected credit losses for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 consisted of the following:

Accounts receivable, net
Unbilled receivables, net
Other Current Assets, net
Customer financing, net
Other Assets, net
Total
Balance at January 1, 2020
($138 )
($81 )
($38 )
($5 )
($75 )
($337 )
Changes in estimates (246 ) (107 ) (10 ) (9 ) (34 ) (406 )
Write-offs 3

3
Balance at June 30, 2020
($381 )
($188 )
($48 )
($14 )
($109 )
($740 )


	Accounts receivable, net	Unbilled receivables, net	Other current assets, net	Customer financing, net	Other assets, net	Total
Balance at January 1, 2020	($138)	($81)	($38)	($5)	($75)	($337)
Changes in estimates	(29)	1	(10)			(38)
Write-offs	1					1


Balance at March 31, 2020	($166)	($80)	($48)	($5)	($75)	($374)

Balance at January 1, 2021	($444)	($129)	($72)	($17)	($140)	($802)
Changes in estimates	10	(1)	(6)		(42)	(39)
Write-offs	1					1


Balance at March 31, 2021	($433)	($130)	($78)	($17)	($182)	($840)

Note 65 – Inventories

Inventories consisted of the following:

June 30
2020
December 31
2019
Long-term contracts in progress
$957

$1,187
Commercial aircraft programs 71,945
66,016
Commercial spare parts, used aircraft, general stock materials and other 10,843
9,419
Total
$83,745

$76,622


	March 31 2021	December 31 2020
Long-term contracts in progress	$913	$823
Commercial aircraft programs	71,008	70,153
Commercial spare parts, used aircraft, general stock materials and other	10,747	10,739
Total	$82,668	$81,715

~~Long-Term Contracts in Progress~~

~~Long-term contracts in progress~~Commercial spare parts, used aircraft, general stock materials and other includes Delta launch program inventory that is being sold at cost to United Launch Alliance (ULA) under an inventory supply agreement that terminates on March 31, 2021. The inventory balance was $176 at June 30, 2020 and December 31, 2019. See indemnifications to ULA in Note 11.

~~Included in inventories are~~ capitalized precontract costs of ~~$794~~$571 at ~~June 30, 2020~~March 31, 2021 and ~~$711~~$733 at December 31, ~~2019~~2020 primarily related to ~~the~~ KC-46A Tanker and Commercial Crew. See Note ~~10.~~9.

Commercial Aircraft Programs

The increase in commercial aircraft programs inventory during 2021 reflects a continued buildup of 787 aircraft caused by 787 production issues and associated rework, which resulted in a significant reduction in 787 deliveries. This was partially offset by a decrease in 737 inventory reflecting the resumption of deliveries. Commercial aircraft programs inventory includes approximately 400 737 MAX aircraft and 100 787 aircraft at March 31, 2021 as compared with 425 737 MAX aircraft and 80 787 aircraft at December 31, 2020.

We are currently remarketing certain aircraft and may have to remarket additional aircraft in future periods. If we are unable to successfully remarket the aircraft, determine further production rate reductions are necessary, and/or contract the program accounting quantities, future earnings may be reduced and/or additional reach-forward losses may have to be recorded.

At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, commercial aircraft programs inventory included ~~$1,209 and $1,313 of~~the following amounts related to the 737 program: deferred production costs of $1,861 and ~~$506~~$2,159 and ~~$521 of~~ unamortized tooling and other non-recurring costs ~~related to the 737 program.~~of $632 and $480. At ~~June 30, 2020, $1,678~~March 31, 2021, $2,391 of 737 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and ~~$37~~$102 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

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At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, commercial aircraft programs inventory included the following amounts related to the 777X program: ~~$6,854 and $5,628 of work in process and $3,141 and $2,914 of~~ unamortized tooling and other non-recurring costs of $3,351 and $3,295. During the fourth quarter of 2020, we determined that estimated costs to complete the 777X program plus costs already included in 777X inventory exceed estimated revenues from the program. The resulting reach-forward loss of $6,493 was recorded as a reduction to deferred production costs.

~~At June 30, 2020~~ As a result, 777X deferred production costs were immaterial at March 31, 2021 and December 31, ~~2019,~~2020. The level of profitability on the 777X program will be subject to a number of factors. These factors include continued market uncertainty, the impacts of COVID-19 on our production system as well as impacts on our supply chain and customers, further production rate adjustments for the 777X or other commercial aircraft programs, contraction of the accounting quantity and potential risks associated with the testing program and the timing of aircraft certification. One or more of these factors could result in additional reach-forward losses on the 777X program in future periods.

At March 31, 2021 and December 31, 2020, commercial aircraft programs inventory included the following amounts related to the 787 program: ~~$27,515 and $24,772 of work in process (including~~ deferred production costs of ~~$16,035~~$14,803 and ~~$18,716), $2,006~~$14,976, $1,795 and ~~$2,202~~$1,865 of supplier advances, and ~~$1,924~~$1,857 and ~~$2,092~~$1,863 of unamortized tooling and other non-recurring costs. At ~~June 30, 2020, $15,496~~March 31, 2021, $11,557 of 787 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and ~~$2,463~~$5,103 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline customers totaling ~~$2,941~~$3,114 and ~~$2,863~~$2,992 at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

Note 76 – Contracts with Customers

Unbilled receivables ~~decreased~~increased from ~~$9,043~~$7,995 at December 31, ~~2019~~2020 to ~~$8,570~~$8,785 at ~~June 30, 2020,~~March 31, 2021, primarily driven by ~~an increase in billings~~revenue recognized at Defense, Space & Security (BDS) and Global Services (BGS)~~, as well as an increase~~ in ~~allowances for expected credit losses at BGS.~~excess of billings.

Advances and progress billings increased from ~~$51,551~~$50,488 at December 31, ~~2019~~2020 to ~~$53,367~~$50,908 at ~~June 30, 2020,~~March 31, 2021, primarily driven by advances on orders received ~~in excess of revenue recognized~~ at Commercial Airplanes (BCA), BDS, and ~~BGS.~~BGS, partially offset by revenue recognized and the return of customer advances at BCA.

Revenues recognized during the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ from amounts recorded as Advances and progress billings at the beginning of each year were ~~$5,255~~$4,718 and ~~$10,116. Revenues recognized during the three months ended June 30, 2020 and 2019 from amounts recorded as Advances and progress billings at the beginning of each year were $1,465 and $4,219.~~$3,790.

Note 87 – Customer Financing

Customer financing primarily relates to the Boeing Capital (~~BCC~~) (BCC) segment and consisted of the following:


	March 31 2021	December 31 2020
Financing receivables:
Investment in sales-type/finance leases	$911	$919
Notes	417	420
Total financing receivables	1,328	1,339
Operating lease equipment, at cost, less accumulated depreciation of $162 and $209	677	715

Gross customer financing	2,005	2,054
Less allowance for losses on receivables	(17)	(17)
Total	$1,988	$2,037

June 30
2020
December 31
2019
Financing receivables:
Investment in sales-type/finance leases
$965

$1,029
Notes 433
443
Total financing receivables 1,398
1,472
Operating lease equipment, at cost, less accumulated depreciation of $248 and $235 785
834
Gross customer financing 2,183
2,306
Less allowance for losses on receivables (14 ) (8 )
Total
$2,169

$2,298

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We acquire aircraft to be leased to customers through trades, lease returns, purchases in the secondary market, and new aircraft transferred from our BCA segment. Leasing arrangements typically range in terms from 1 to 12 years and may include options to extend or terminate the lease. Certain leases include provisions to allow the lessee to purchase the underlying aircraft at a specified price. A minority of leases contain variable lease payments based on actual aircraft usage and are paid in arrears.

We determine a receivable is impaired when, based on current information and events, it is probable that we will be unable to collect amounts due according to the original contractual terms. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we individually evaluated for impairment customer financing receivables of ~~$393~~$380 and

~~$400,~~ $391, of which ~~$381~~$380 and ~~$388~~$380 were determined to be impaired. We recorded no allowance for losses on these impaired receivables as the collateral values exceeded the carrying values of the receivables.

We determine a receivable is past due when cash has not been received upon the due date specified in the contract. There were no past due customer financing receivables as of March 31, 2021. Customer financing receivables past due as of ~~June 30,~~March 31, 2020 ~~is $8.~~was $18.

We evaluate the collectability of customer financing receivables at commencement and on a recurring basis. If a customer financing receivable is deemed ~~uncollectable,~~uncollectible, the customer is categorized as non-accrual status. When a customer is in non-accrual status at commencement, revenue is deferred until substantially all cash has been received or the customer is removed from non-accrual status. If a customer status changes to non-accrual after commencement and sufficient collateral is available, we recognize contractual interest income as payments are received to the extent payments exceed past due principal payments. If there is not sufficient collateral, then revenue is not recognized until payments exceed the principal balance. Receivables in non-accrual status as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were ~~$381 and $388.~~$380. Interest income received for the ~~six and~~ three months ended ~~June 30,~~March 31, 2021 and 2020 was ~~$21~~$6 and ~~$13.~~$8.

The adequacy of the allowance for losses is assessed quarterly. ~~Four~~The four primary factors influencing the level of our allowance for losses on customer financing receivables are customer credit ratings, default rates, expected loss rate and collateral values, each of which may be adversely affected by impacts that COVID-19 has on our customers. We assign internal credit ratings for all customers and determine the creditworthiness of each customer based upon publicly available information and information obtained directly from our customers. Our rating categories are comparable to those used by the major credit rating agencies.

Our financing receivable balances at ~~June 30, 2020~~March 31, 2021 by internal credit rating category and year of origination consisted of the following:

Rating categories Current 2019 2018 2017 2016 Prior Total
BBB

$400

$400
BB
$69

$54

$17

152
292
B

$53

171
224
CCC

38

251

$180
13
482
Total carrying value of financing receivables
$69

$92

$17

$304

$180

$736

$1,398


Rating categories	Current	2020	2019	2018	2017	Prior	Total
BBB						$254	$254
BB	$67	$131	$47	$15		139	399
B					$51	170	221
CCC		7	31		$240	176	454


Total carrying value of financing receivables	$67	$138	$78	$15	$291	$739	$1,328

At ~~June 30, 2020,~~March 31, 2021, our allowance related to receivables with ratings of CCC, B, BB, and BBB. We applied default rates that averaged ~~26%~~25.4%, ~~8.8%~~6.8%, ~~3.1%~~2.9%, and 0.2%, respectively, to the exposure associated with those receivables.

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Customer Financing Exposure

Customer financing is collateralized by security in the related asset. The value of the collateral is closely tied to commercial airline performance and overall market conditions and may be subject to reduced valuation with market decline. Certain collateral values are being adversely impacted by ~~COVID-19.~~the changes in market conditions driven by the COVID-19 pandemic. Declines in collateral values could result in asset impairments, reduced finance lease income, and an increase in the allowance for losses. Our customer financing collateral is concentrated in out-of-production aircraft and 747-8 aircraft. Generally, out-of-production aircraft have experienced greater collateral value declines than in-production aircraft.

The majority of customer financing carrying values are concentrated in the following aircraft models:

June 30
2020
December 31
2019
717 Aircraft ($113 and $124 accounted for as operating leases)
$689

$736
747-8 Aircraft ($124 and $130 accounted for as operating leases) 483
475
737 Aircraft ($231 and $240 accounted for as operating leases) 253
263
777 Aircraft ($230 and $236 accounted for as operating leases) 232
240
MD-80 Aircraft (accounted for as sales-type finance leases) 171
186
757 Aircraft ($14 and $22 accounted for as operating leases) 166
182
747-400 Aircraft ($28 and $31 accounted for as operating leases) 81
90


	March 31 2021	December 31 2020
717 Aircraft ($73 and $98 accounted for as operating leases)	$617	$637
747-8 Aircraft ($120 and $121 accounted for as operating leases)	479	480
737 Aircraft ($209 and $214 accounted for as operating leases)	229	235
777 Aircraft ($216 and $216 accounted for as operating leases)	223	225
MD-80 Aircraft (accounted for as sales-type finance leases)	170	167
757 Aircraft ($0 and $4 accounted for as operating leases)	139	147
747-400 Aircraft ($19 and $19 accounted for as operating leases)	70	71

Lease income recorded in Revenue on the Condensed Consolidated Statements of Operations for the six months ended June 30, 2020 and 2019 included $29 and $32 from sales-type/finance leases, and $62 and $71 from operating leases, of which $4 and $5 related to variable operating lease payments. Lease income recorded in Revenue on the Condensed Consolidated Statements of Operations for the three months ended ~~June 30,~~March 31, 2021 and 2020 included $13 and ~~2019 included $14 and $16~~$15 from sales-type/finance leases, and ~~$31~~$18 and ~~$35~~$31 from operating leases, of which $3$2 and $2$1 related to variable operating lease payments. Profit at the commencement of sales-type leases was recorded in revenue for the three months ended March 31, 2021 and 2020 in the amount of $16 and $4.

Note 98 – Investments

Our investments, which are recorded in Short-term and other investments or Investments, consisted of the following:


	March 31 2021	December 31 2020
Equity method investments (1)	$925	$936
Time deposits	14,187	17,154
Available for sale debt instruments	582	596
Equity and other investments	60	85
Restricted cash & cash equivalents(2)	87	83
Total	$15,841	$18,854

June 30
2020
December 31
2019
Equity method investments ⁽¹⁾

$998

$1,031
Time deposits 11,981
50
Available for sale debt instruments 411
405
Equity and other investments 72
65
Restricted cash & cash equivalents⁽²⁾
42
86
Total
$13,504

$1,637

(1)Dividends received were $5 and $33 during the three months ended March 31, 2021 and 2020.


⁽¹⁾ (2)Reflects amounts restricted in support of our workers’ compensation programs, employee benefit programs, and insurance premiums.	~~Dividends received were $53 and $20 for the six and three months ended June 30, 2020 and $93 and $30 during the same periods in the prior year.~~


⁽²⁾	~~Reflects amounts restricted in support of our workers’ compensation programs, employee benefit programs, and insurance premiums.~~

Allowance for losses on available for sale debt instruments are assessed quarterly. All instruments are considered investment grade and, as such, we have not recognized an allowance for credit losses as of ~~June 30, 2020.~~March 31, 2021.

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Note 109 – Commitments and Contingencies

737 MAX Grounding and COVID-19 Impacts

~~On March 13,~~In 2019, following two fatal 737 MAX accidents, the Federal Aviation Administration (FAA) ~~issued an order to suspend operations of all 737 MAX aircraft in the U.S.~~ and ~~by U.S. aircraft operators following two fatal 737 MAX accidents. Non-U.S.~~non-U.S. civil aviation authorities ~~have~~ issued ~~directives to the same effect.~~orders suspending commercial operations of 737 MAX aircraft. Deliveries of the 737 MAX ~~have been~~were suspended ~~until clearance is granted~~following these orders. Deliveries in the U.S. resumed in late 2020 following rescission by the ~~appropriate regulatory authorities.~~FAA of its grounding order. In addition, ~~multiple~~several other non-U.S. civil aviation authorities, including the Brazilian National Civil Aviation Agency, Transport Canada, and the European Union Aviation Safety Agency (EASA) have subsequently approved return of operations, allowing us to resume deliveries in those jurisdictions. More than 165 countries have approved the resumption of 737 MAX operations. The 737 MAX remains grounded in certain non-U.S. jurisdictions, including China.

Multiple legal actions have been filed against us as a result of the accidents. ~~We also~~In addition, we are fully cooperating with U.S. government investigations related to the accidents and the 737 MAX program, including ~~investigations~~an investigation by ~~the U.S. Department of Justice and~~ the Securities and Exchange Commission, the outcome of which may

be material. WeOther than as described in Note 17 with respect to our entry during the first quarter into a Deferred Prosecution Agreement with the U.S. Department of Justice, we cannot reasonably estimate a range of loss, if any, not covered by available insurance that may result given the current status of the lawsuits, investigations and inquiries related to the 737 MAX.

~~We have developed software and pilot training updates for the 737 MAX. During the week of June 29, 2020,~~In early April 2021, we notified the FAA ~~completed a series of flight tests~~that we recommended to ~~assess whether the~~operators that certain 737 MAX ~~meets certification safety standards. The FAA has stated~~airplanes be temporarily removed from service to address issues that ~~while this is an important milestone, a number~~could affect the operation of ~~key tasks remain including evaluating data gathered during~~ the flight tests. On July 21, 2020 the FAA announced a 45 day public comment period for their notice of proposed rulemaking relative to 737 MAX certification. The impact this will have on timing and conditions of return to service, if any, is uncertain.electrical power system. We ~~continue to work~~are working with the FAA to finalize the required actions to address the issues and ~~non-U.S. civil aviation authorities~~do not expect it to ~~complete remaining steps toward certification and readiness for return to service including addressing their questions~~have a material financial impact on the software updates and how pilots will interact with the airplane controls and displays in different flight scenarios. We have assumed that computer and simulator training will be required and as a result, we have provisioned for certain training costs.737 program.

Prior to the grounding, the 737 production rate was 52 per month, and we had planned to increase the rate to 57 per month during 2019. Beginning in the second quarter of 2019, we reduced the production rate to 42 per month. We continued to produce at a rate of 42 per month through December 2019. We temporarily suspended 737 MAX production beginning in January 2020. DuringIn the first quarter of ~~2020,~~2021, we ~~completed airplanes~~delivered 58 aircraft, and we have assumed that ~~were already~~the remaining non-U.S. regulatory approvals will occur and enable deliveries in process at the end of the fourth quarter of 2019. In March 2020, we announced a temporary suspension of production operations in the Puget Sound area as a result of the COVID-19 pandemic. Production operations in Puget Sound resumedall jurisdictions during the week of April 20, 2020, at which point the 737 team resumed preparations for restarting 737 MAX production. We resumed early stages of 737 MAX production in May 2020 and expect to continue to produce at low rates for the remainder of 2020.2021. We have approximately ~~450~~400 airplanes in inventory as of ~~June 30, 2020.~~

The COVID-19 pandemic has significantly impacted air travel and reduced near-term demand, resulting in lower production and delivery rate assumptions. During the first quarter of 2020, we lowered our production rate assumptions in response to COVID-19 impacts to expected demand. During the second quarter of 2020, we further delayed our production rate ramp assumptions and now expect to gradually increase the production rate toMarch 31, by the beginning of 2022. We expect further gradual production rate increases in subsequent periods based on market demand. We have assumed that the timing of regulatory approvals will enable 737 MAX deliveries to resume during the fourth quarter of 2020.2021. A number of customers have requested to defer deliveries or to cancel orders for 737 MAX aircraft, ~~which may require us to remarket~~and we are remarketing and/or ~~delay~~delaying deliveries of certain aircraft included within inventory. We continue to expect ~~that the majority~~to deliver about half of the ~~approximately 450~~ 737 MAX ~~airplanes~~aircraft in inventory ~~will~~as of December 31, 2020 by the end of 2021. In the event that we are unable to resume aircraft deliveries in certain non-U.S. jurisdictions consistent with our assumptions of regulatory approval timing, our expectation of delivery timing could be ~~delivered during the first year after the resumption of deliveries.~~impacted.

During 2019, the cumulative impacts of changes to assumptions regarding timing of return to service and timing of planned production rates and deliveries increased the estimated costs to produce and deliver the 3,100 undelivered aircraft then included in the accounting quantity by approximately $6.3 billion. During 2020, additional reductions in planned production rates further increased the estimated costs to produce and deliver aircraft included in the accounting quantity, but were partially offset by headcount and other cost reductions. These costs will result in lower 737 margins in future periods after deliveries resume.

During the first quarter of 2020, we reduced the number of aircraft included in the accounting quantity by 400 units as a result of reductions to planned production rates due to COVID-19 driven market uncertainties. The accounting quantity was unchanged during the second quarter. As we continue to produceWe produced at abnormally low production rates in 2020 and ~~2021,~~expect to continue to do so through 2021. As a result, we expect to incur approximately $5 billion of abnormal production costs ~~that~~on a cumulative basis, which are being expensed as incurred. ~~The slowdown in~~We expensed abnormal production costs of $2,567 during 2020 and $568 during the ~~planned~~three months ended March 31, 2021.

In addition to impacts related to the 737 MAX accidents and subsequent grounding, the 737 program continues to be significantly impacted by the COVID-19 pandemic and its effect on aircraft demand. These impacts have contributed to the lower production and delivery rate assumptions described above. We continue to expect to gradually increase the production rate ~~ramp-up increased expected abnormal costs however this increase was offset~~to 31 per month by ~~adjustments to the determination of the normal production level due to COVID-19 impacts on customer demand,~~early 2022, as well as ~~cost reduction activities, including~~implement further gradual production rate increases in subsequent periods based on market demand. The ongoing impacts of COVID-19 on market demand have also created significant ~~reductions~~uncertainty around the timing of deliveries of 737 MAX aircraft in ~~employment levels.~~inventory. We ~~expensed $712 and $1,509 of abnormal production~~may need to recognize additional costs ~~during the three and six months ended June 30, 2020.~~associated with remarketing and/or reconfiguring aircraft in inventory, which may reduce revenue and/or earnings in future periods.

We have also recorded additional expenses of ~~$121 as a result of~~$53 and $61 due to the 737 MAX grounding induring the ~~first half of 2020. These expenses include~~three months ended March 31, 2021 and 2020, including costs related to storage, inventory impairment, pilot training, and software updates.

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The following table summarizes changes in the 737 MAX customer concessions and other considerations liability during the three months ended March 31, 2021 and 2020.



	~~2020~~
~~Beginning balance – January 1~~		~~$7,389~~
~~Reductions for payments made~~	~~(1,211~~		)
~~Reductions for concessions and other in-kind considerations~~	~~(35~~		)
~~Changes in estimates~~	~~521~~
~~Ending balance – June 30~~		~~$6,664~~


	2021	2020
Beginning balance – January 1	$5,537	$7,389

Reductions for payments made	(1,172)	(671)
Reductions for concessions and other in-kind considerations	(25)	(2)
Changes in estimates	30	(30)
Ending balance – March 31	$4,370	$6,686

We are working with our customers to minimize the impact to their operations from grounded and undelivered aircraft. We continue to reassess the liability for estimated potential concessions and other considerations to customers on a quarterly basis. This reassessment includes updating estimates to reflect revisions to return to service, delivery and production rate assumptions driven by timing of regulatory approvals, as well as latest information based on engagements with 737 MAX customers. The liability represents our current best estimate of future concessions and other considerations to customers, and is necessarily based on a series of assumptions. It is subject to change in future quarters as negotiations with customers mature and timing and conditions of return to service are better understood. The liability balance of ~~$6.7~~$4.4 billion at ~~June 30, 2020~~March 31, 2021 includes ~~$1.9~~$1.7 billion expected to be liquidated by lower customer delivery payments, ~~$1.1~~$0.6 billion expected to be paid in cash and ~~$0.1~~$0.2 billion in other concessions. Of the cash payments to customers, we expect to pay ~~$0.4~~$0.3 billion in ~~2020~~2021 and ~~$0.5~~$0.3 billion in ~~2021.~~2022. The type of consideration to be provided for the remaining ~~$3.6~~$1.9 billion will depend on the outcomes of negotiations with customers.

The ~~FAA and other~~737 MAX remains grounded in certain non-U.S. jurisdictions. The civil aviation authorities in those jurisdictions will determine the timing and conditions of return to service. Our assumptions reflect our current best estimate, but actual timing and conditions of return to service and resumption of deliveries could differ from this estimate, the effect of which could be material. We are unable at this time to reasonably estimate potential future additional financial impacts or a range of loss, if any, due to continued uncertainties related to the timing and conditions of return to service in certain jurisdictions. For example, a significant portion of our 737 MAX inventory consists of aircraft scheduled to be delivered to customers based in China. If we are unable to resume deliveries to China consistent with our assumptions, or if further deterioration in trade relations between the U.S. and China results in unanticipated delivery delays, the continued absence in revenue, earnings, and cash flows associated with 737 MAX deliveries would materially and adversely impact our operating results. In addition, uncertainties related to the impacts of COVID-19 on our operations, supply chain and customers, future changes to the production rate, supply chain impacts, and/or the results of negotiations with particular ~~customers. Any such impacts, including~~customers, as well as any changes in our program estimates, could have a material adverse effect on our financial position, results of operations, and/or cash flows. For example, we expect that, in the event that we are unable to resume aircraft deliveries consistent with our assumptions, the continued absence of revenue, earnings, and cash flows associated with 737 MAX deliveries would continue to have a material impact on our operating results. In the event that future production rate increases occur at a slower rate or take longer than we are currently assuming, we expect that the growth in inventory and other cash flow impacts associated with production would decrease. However, while any prolonged production suspension or delays in planned production rate increases could mitigate the impact on our liquidity, it could significantly increase the overall expected costs to produce aircraft included in the accounting quantity, which would reduce 737 program margins and/or increase abnormal production costs in the future.

Commercial air traffic has fallen dramatically due to the COVID-19 pandemic. ~~While this~~This trend has impacted passenger traffic most ~~severely, near-term~~severely. While the pandemic caused a temporary shift in air cargo dynamics, we have seen air cargo traffic ~~has also fallen significantly due~~ to ~~the global~~return to positive growth in 2021 on economic ~~downturn~~recovery and ~~the reduction in cargo capacity on passenger airplanes.~~strengthening trade. Airlines have significantly reduced their capacity, and many could implement further reductions in the near future. ~~Many airlines are also implementing significant reductions in staffing.~~ These capacity changes are causing, and are expected to continue to cause, negative impacts to our customers’ revenue, earnings, and cash flow, and in some cases may threaten the future viability of some of our customers, potentially causing defaults within our customer financing portfolio and/or requiring us to remarket aircraft that have already been produced and/or are currently in backlog. If 737 MAX aircraft remain grounded for an extended period of time in certain non-U.S. jurisdictions, we may

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experience additional reductions to backlog and/or significant order cancellations. Additionally, we may experience fewer new orders and increased cancellations across all of our commercial airplane programs as a result of the COVID-19 pandemic and associated impacts on demand. Our customers may also lack sufficient liquidity to purchase new aircraft due to impacts from the pandemic. We are also observing a significant increase in the number of requests for payment deferrals, contract modifications, lease restructurings and similar actions,

and these trends may lead to additional earnings charges, impairments and other adverse financial impacts in our business over time. In addition, to the extent that customers have valid rights to cancel undelivered aircraft, we may be required to refund pre-delivery payments, putting additional constraints on our liquidity. ~~In addition to the near-term impact, there~~There is risk that the industry implements longer-term strategies involving reduced capacity, shifting route patterns, and mitigation strategies related to impacts from COVID-19 and the risk of future public health crises. In addition, airlines may experience reduced demand due to reluctance by the flying public to travel.

We continue to expect commercial air travel ~~due~~ to ~~travel restrictions and/or social distancing requirements.~~

Asreturn to 2019 levels in 2023 to 2024. We expect it will take a ~~result, there~~few years beyond that for the industry to return to long-term trend growth. There is significant uncertainty with respect to when commercial air traffic levels will begin to recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels. The COVID-19 pandemic also has increased, and its aftermath is also expected to continue to increase, uncertainty with respect to global trade volumes, putting significant negative pressure on cargo traffic. Any of these factors would have a significant impact on the demand for both single-aisle and wide-body commercial aircraft, as well as for the services we provide to commercial airlines. In addition, a lengthy period of reduced industry-wide demand for commercial aircraft would put additional pressure on our suppliers, resulting in increased procurement costs and/or additional supply chain disruption. To the extent that the COVID-19 pandemic or its aftermath further impacts demand for our products and services or impairs the viability of some of our customers and/or suppliers, our financial condition, results of operations, and cash flows could be adversely affected, and those impacts could be material.

Environmental

The following table summarizes environmental remediation activity during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 and ~~2019.~~2020.

2020
2019
Beginning balance – January 1
$570

$555
Reductions for payments made (21 ) (24 )
Changes in estimates 11
17
Ending balance – June 30
$560

$548


	2021	2020
Beginning balance – January 1	$565	$570
Reductions for payments made	(13)	(9)
Changes in estimates	15	7
Ending balance – March 31	$567	$568

The liabilities recorded represent our best estimate or the low end of a range of reasonably possible costs expected to be incurred to remediate sites, including operation and maintenance over periods of up to 30 years. It is reasonably possible that we may incur charges that exceed these recorded amounts because of regulatory agency orders and directives, changes in laws and/or regulations, higher than expected costs and/or the discovery of new or additional contamination. As part of our estimating process, we develop a range of reasonably possible alternate scenarios that includes the high end of a range of reasonably possible cost estimates for all remediation sites for which we have sufficient information based on our experience and existing laws and regulations. There are some potential remediation obligations where the costs of remediation cannot be reasonably estimated. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the high end of the estimated range of reasonably possible remediation costs exceeded our recorded liabilities by ~~$1,088~~$1,059 and ~~$1,077.~~$1,095.

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Product Warranties

The following table summarizes product warranty activity recorded during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 and ~~2019.~~2020.

2020
2019
Beginning balance – January 1
$1,267

$1,127
Additions for current year deliveries 34
83
Reductions for payments made (149 ) (64 )
Changes in estimates 395
(83 )
Ending balance – June 30
$1,547

$1,063

The increase in the product warranty reserve during the six months ended June 30, 2020 is primarily driven by charges related to “pickle forks” on 737NG aircraft. During 2019, we detected cracks in the "pickle forks", a frame fitting component of the structure connecting the wings to the fuselages of 737NG aircraft. We notified the FAA, which issued a directive requiring that certain 737NG airplanes be inspected. We have estimated the number of aircraft that will have to be repaired in the future and provisioned for the estimated costs of completing the repairs. We recognized charges of $135 in 2019 for current and projected future aircraft repairs. During the first quarter of 2020, we recognized additional charges of $336 based on revised engineering and fleet utilization estimates as well as updated repair cost estimates. We cannot estimate a range of reasonably possible losses, if any, in excess of amounts recognized due to the ongoing nature of the inspections and repairs and pending the completion of investigations into the cause of the condition.


	2021	2020
Beginning balance – January 1	$1,527	$1,267
Additions for current year deliveries	17	23
Reductions for payments made	(44)	(82)
Changes in estimates	234	341
Ending balance – March 31	$1,734	$1,549

Commercial Aircraft Commitments

In conjunction with signing definitive agreements for the sale of new aircraft (Sale Aircraft), we have entered into trade-in commitments with certain customers that give them the right to trade in used aircraft at a specified price upon the purchase of Sale Aircraft. The probability that trade-in commitments will be exercised is determined by using both quantitative information from valuation sources and qualitative information from other sources. The probability of exercise is assessed quarterly, or as events trigger a change, and takes into consideration the current economic and airline industry environments. Trade-in commitments, which can be terminated by mutual consent with the customer, may be exercised only during the period specified in the agreement, and require advance notice by the customer.

Trade-in commitment agreements at ~~June 30, 2020~~March 31, 2021 have expiration dates from ~~2020~~2021 through ~~2026.~~2028. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 total contractual trade-in commitments were ~~$1,165~~$623 and ~~$1,407.~~$950. As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we estimated that it was probable we would be obligated to perform on certain of these commitments with net amounts payable to customers totaling ~~$621~~$400 and ~~$711~~$599 and the fair value of the related trade-in aircraft was ~~$602~~$400 and ~~$678.~~$580.

Financing Commitments

Financing commitments related to aircraft on order, including options and those proposed in sales campaigns, and refinancing of delivered aircraft, totaled ~~$12,784~~$13,383 and ~~$13,377~~$11,512 as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020. The estimated earliest potential funding dates for these commitments as of ~~June 30, 2020~~March 31, 2021 are as follows:

Total
July through December 2020
$2,462
2021 2,472
2022 1,368
2023 1,755
2024 1,373
Thereafter 3,354

$12,784


			Total
April through December 2021			$2,166
2022			1,667
2023			3,839
2024			2,328
2025			1,934
Thereafter			1,449
			$13,383

As of ~~June 30, 2020,~~March 31, 2021, all of these financing commitments relate to customers we believe have less than investment-grade credit. We have concluded that no reserve for future potential losses is required for these financing commitments based upon the terms, such as collateralization and interest rates, under which funding would be provided.

Funding Commitments

We have commitments to make additional capital contributions of $243 to joint ventures over the next ~~seven~~six years.

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Standby Letters of Credit and Surety Bonds

We have entered into standby letters of credit and surety bonds with financial institutions primarily relating to the guarantee of our future performance on certain contracts. Contingent liabilities on outstanding letters of credit agreements and surety bonds aggregated approximately ~~$3,761~~$4,037 and ~~$3,769~~$4,238 as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

United States Government Defense Environment Overview

The Bipartisan Budget Act of 2019 raised the Budget Control Act limits on federal discretionary defense and non-defense spending for fiscal years 2020 and 2021 (FY20 and FY21), reducing budget uncertainty and the risk of sequestration. The consolidatedOmnibus appropriations acts for ~~FY20,~~FY21, enacted in December ~~2019,~~2020, provided ~~FY20~~FY21 appropriations for government departments and agencies, including the U.S. DoD, the National Aeronautics and Space Administration (NASA) and the ~~FAA. In February 2020, the U.S. administration submitted its request for $740.5 billion in base national defense spending for FY21, congruent with the amended spending limit.~~Federal Aviation Administration.

The enacted ~~FY20~~FY21 appropriations included funding for Boeing’s major programs, such as the F/A-18 Super Hornet, F-15EX, CH-47 Chinook, AH-64 Apache, V-22 Osprey, KC-46A Tanker, P-8 Poseidon and Space Launch System. ~~However,~~

On April 9, 2021, the Office of Management and Budget released the President’s budget request for fiscal year 2022, which included $715 billion in funding for the Department of Defense and $24.7 billion in funding for NASA. Detailed budget documentation has not yet been released, so there continues to be uncertainty with respect to ~~future program-level appropriations~~requested funding levels for ~~the U.S. DoD and other government agencies, including NASA.~~individual programs. Future budget cuts or investment priority changes, including changes associated with the authorizations and appropriations process, could result in reductions, cancellations and/or delays of existing contracts or programs. Any of these impacts could have a material effect on our results of operations, financial position and/or cash flows.

BDS Fixed-Price Development Contracts

Fixed-price development work is inherently uncertain and subject to significant variability in estimates of the cost and time required to complete the work. BDS fixed-price contracts with significant development work include Commercial Crew, KC-46A Tanker, MQ-25, T-7A Red Hawk, VC-25B, and commercial and military satellites. The operational and technical complexities of these contracts create financial risk, which could trigger termination provisions, order cancellations or other financially significant exposure. Changes to cost and revenue estimates could result in lower margins or material charges for reach-forward losses. For example, we have recorded a reach-forward loss of $978 on KC-46A Tanker in the first half of 2020. The KC-46A Tanker reach-forward loss in the first quarter of 2020 reflects $551 of costs associated with the agreement signed in April 2020 with the U.S. Air Force (USAF) to develop and integrate a new Remote Vision System, and the remaining costs reflect productivity inefficiencies and COVID-19 related factory disruption. Moreover, our fixed-price development programs remain subject to additional reach-forward losses if we experience further production, technical or quality issues, schedule delays, or increased costs.

KC-46A Tanker

In 2011, we were awarded a contract from the U.S. Air Force (USAF) to design, develop, manufacture and deliver four next generation aerial refueling tankers. This Engineering, Manufacturing and Development (~~EMD~~)(EMD) contract is a fixed-price incentive fee contract and involves highly complex designs and systems integration. Since 2016, the USAF has authorized ~~five~~seven low rate initial production (LRIP) lots for a total of 6794 aircraft. The EMD contract and authorized LRIP lots are valued at approximately ~~$15 billion.~~$19 billion as of March 31, 2021.

At ~~June 30, 2020,~~March 31, 2021, we had approximately ~~$374~~$268 of capitalized precontract costs and ~~$548~~$180 of potential termination liabilities to suppliers.

Recoverable Costs on Government Contracts

Our final incurred costs for each year are subject to audit and review for allowability by the U.S. government, which can result in payment demands related to costs they believe should be disallowed. We work with the U.S. government to assess the merits of claims and where appropriate reserve for amounts disputed. If we are unable to satisfactorily resolve disputed costs, we could be required to record an earnings charge and/or provide refunds to the U.S. government.

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Severance

~~During~~The following table summarizes changes in the ~~second quarter of~~severance liability during 2021:


			2021
Beginning balance – January 1			$283
Reductions for payments made			(48)
Changes in estimates			(75)
Ending balance – March 31			$160

During 2020, the Company recorded severance costs ~~of $652 that are expected to be paid during 2020 to~~for approximately ~~19,000~~26,000 employees expected to leave the Company through a combination of voluntary and involuntary terminations. The severance packages are consistent with the Company’s ongoing compensation and benefits plans. AsDuring the first quarter of ~~June 30, 2020 approximately 6,000~~2021, we reduced the estimated number of employees ~~had left the Company and the remaining 13,000 employees are~~ expected to leave the Company through voluntary and involuntary terminations to approximately 23,000. As of March 31, 2021, our severance liability relates to approximately 5,000 employees expected to leave the Company in the ~~third and fourth quarter~~remainder of 2020. The remaining liability at June 30, 2020 was $405. In July 2020, the Company announced that the prolonged impact of COVID-19, further reductions in production rates and lower demand for commercial services will result in further assessments of the size of the Company’s workforce to align with a smaller market.2021.

Note 1110 – Arrangements with Off-Balance Sheet Risk

We enter into arrangements with off-balance sheet risk in the normal course of business, primarily in the form of guarantees.

The following table provides quantitative data regarding our third party guarantees. The maximum potential payments represent a “worst-case scenario,” and do not necessarily reflect amounts that we expect to pay. Estimated proceeds from collateral and recourse represent the anticipated values of assets we could liquidate or receive from other parties to offset our payments under guarantees. The carrying amount of liabilities represents the amount included in Accrued liabilities.

Maximum
Potential Payments

Estimated Proceeds from
Collateral/Recourse

Carrying Amount of
Liabilities
June 30
2020
December 31
2019
June 30
2020
December 31
2019
June 30
2020
December 31
2019
Contingent repurchase commitments
$1,480

$1,570

$1,480

$1,570

Indemnifications to ULA:
Contributed Delta inventory 30
30

Inventory supply agreement 34
34

Questioned costs

317

$48
Credit guarantees 92
92
35
36

$24
16


	Maximum Potential Payments		Estimated Proceeds from Collateral/Recourse		Carrying Amount of Liabilities
	March 31 2021	December 31 2020	March 31 2021	December 31 2020	March 31 2021	December 31 2020
Contingent repurchase commitments	$1,452	$1,452	$1,452	$1,452	0	0





Credit guarantees	90	90	32	28	$24	$24

Contingent Repurchase Commitments The repurchase price specified in contingent repurchase commitments is generally lower than the expected fair value at the specified repurchase date. Estimated proceeds from collateral/recourse in the table above represent the lower of the contracted repurchase price or the expected fair value of each aircraft at the specified repurchase date.

~~Indemnifications to ULA~~ During the first quarter of 2020, the USAF and ULA reached a settlement regarding previously questioned deferred support and deferred production costs. As part of the settlement the USAF agreed to reimburse ULA for $307 of those costs, which was received by ULA in the second quarter. The settlement substantially retires our indemnification risks to ULA.

Other Indemnifications In conjunction with our sales of Electron Dynamic Devices, Inc. and Rocketdyne Propulsion and Power businesses and our BCA facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma, we agreed to indemnify, for an indefinite period, the buyers for costs relating to pre-closing environmental conditions and certain other items. We are unable to assess the potential number of future claims that may be asserted under these indemnifications, nor the amounts thereof (if any). As a result, we cannot estimate the maximum potential amount of future payments under these indemnities and therefore, no liability has been recorded. To the extent that claims have been made under these indemnities and/or are probable and reasonably estimable, liabilities associated with these indemnities are included in the environmental liability disclosure in Note ~~10.~~9.

Credit Guarantees We have issued credit guarantees where we are obligated to make payments to a guaranteed party in the event that the original lessee or debtor does not make payments or perform certain specified services. Generally, these guarantees have been extended on behalf of guaranteed parties with less than investment-grade credit and are collateralized by certain assets. We record a liability for the fair value of guarantees and the expected contingent loss amount, which is reviewed quarterly. Current outstanding credit guarantees expire through 2036.

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Note 1211 – Debt

In the first quarter of 2020, we entered into a $13,825, two-year delayed draw term loan facility, which includes additional commitments made subsequent to the initial closing date. As of June 30, 2020, we have fully drawn on the $13,825 delayed draw term loan facility, with ~~February 6, 2022~~ as the final maturity date. Borrowings outstanding bear interest at the Eurodollar rate (determined in accordance with the delayed draw term loan facility agreement) plus between 0.75% and 1.25%, depending on our credit rating.

~~In the second quarter of 2020,~~2021, we issued ~~$25,000~~$9,825 of fixed rate senior notes consisting of ~~$3,000~~$1,325 due ~~May 1,~~February 4, 2023 that bear an annual interest rate of ~~4.508%~~1.167%, ~~$3,500~~$3,000 due ~~May 1, 2025~~February 4, 2024 that bear an annual interest rate of ~~4.875%~~1.433%, ~~$2,000~~and $5,500 due ~~May 1, 2027~~February 4, 2026 that bear an annual interest rate of ~~5.04%, $4,500 due~~ ~~May 1, 2030~~ ~~that bear an annual interest rate of 5.15%, $3,000 due~~ ~~May 1, 2040~~ ~~that bear an annual interest rate of 5.705%, $5,500 due~~ ~~May 1, 2050~~ ~~that bear an annual interest rate of 5.805%, and $3,500 due~~ ~~May 1, 2060~~ ~~that bear an annual interest rate of 5.93%~~2.196%. The notes are unsecured senior obligations and rank equally in right of payment with our existing and future unsecured and unsubordinated indebtedness. The net proceeds of the issuance totaled ~~$24,802,~~$9,780, after deducting underwriting discounts, commissions, and offering expenses. We used the net proceeds of these note issuances to repay $9,825 outstanding under our two-year delayed draw term loan credit agreement. The remaining $4,000 of our two-year delayed draw term loan matures in February 2022.

In the first quarter of 2021, we entered into a $5,280 two-year revolving credit agreement. As of March 31, 2021, we have $14,753 currently available under credit line agreements, of which $3,073 expires in October 2021, $3,200 expires in October 2022, $5,280 expires in March 2023, and $3,200 expires in October 2024. The facility scheduled to expire in October 2021 has a one-year term out option that allows us to extend the maturity of any borrowings one additional year. We continue to be in full compliance with all covenants contained in our debt or credit facility agreements.

Note 1312 – Postretirement Plans

The components of net periodic benefit (income)/cost for the three months ended March 31 were as follows:



	Pension		Postretirement
	2021	2020	2021	2020
Service cost	$1		$22	$21
Interest cost	498	$614	23	36
Expected return on plan assets	(966)	(939)	(2)	(2)
Amortization of prior service credits	(20)	(20)	(9)	(9)
Recognized net actuarial loss/(gain)	310	258	(17)	(12)
Settlement loss	1
Net periodic benefit (income)/cost	($176)	($87)	$17	$34

Net periodic benefit cost included in Loss from operations	$1		$22	$21
Net periodic benefit (income)/cost included in Other income, net	(177)	($87)	(5)	13
Net periodic benefit (income)/cost included in Loss before income taxes	($176)	($87)	$17	$34

Six months ended June 30 Three months ended June 30
Pension Plans 2020
2019
2020
2019
Service cost
$1

$2

$1

$1
Interest cost 1,228
1,462
614
731
Expected return on plan assets (1,878 ) (1,930 ) (939 ) (965 )
Amortization of prior service credits (40 ) (40 ) (20 ) (20 )
Recognized net actuarial loss 516
321
258
160
Settlement/curtailment/other losses 3

3

Net periodic benefit income
($170 )
($185 )
($83 )
($93 )

Net periodic benefit cost included in Loss from operations
$1

$158

$1

$80
Net periodic benefit income included in Other income, net (171 ) (187 ) (84 ) (94 )
Net periodic benefit income included in Loss before income taxes
($170 )

($29 )
($83 )
($14 )

Six months ended June 30 Three months ended June 30
Other Postretirement Plans 2020
2019
2020
2019
Service cost
$43

$39

$22

$20
Interest cost 72
98
36
49
Expected return on plan assets (5 ) (4 ) (3 ) (2 )
Amortization of prior service credits (17 ) (18 ) (8 ) (9 )
Recognized net actuarial gain (23 ) (23 ) (11 ) (12 )
Net periodic benefit cost
$70

$92

$36

$46

Net periodic benefit cost included in Loss from operations
$44

$45

$23

$23
Net periodic benefit cost included in Other income, net 27
53
14
26
Net periodic benefit cost included in Loss before income taxes
$71

$98

$37

$49

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Note 1413 – Share-Based Compensation and Other Compensation Arrangements

~~Restricted~~ Stock ~~Units~~Options

On February ~~24, 2020,~~17, 2021, we granted 342,986 premium-priced stock options to our ~~executives 325,108 restricted stock units (RSUs)~~executive officers as part of our long-term incentive program. These stock options have an exercise price equal to 120% of the fair market value of our stock on the date of grant. The stock options are scheduled to vest and become exercisable three years after the grant date and expire ten years after the grant date. If an executive terminates employment because of retirement, layoff, disability, or death, the executive (or beneficiary) may receive some or all of their stock options depending on certain age and service conditions. The fair value of the stock options granted was $74.63 and was estimated using a Monte-Carlo simulation model using the following assumptions: expected life 6.6 years, expected volatility 37.8%, risk free interest rate 1.3% and no expected dividend yield.

Restricted Stock Units

On February 17, 2021, we granted 980,077 restricted stock units (RSU) to our executives as part of our long-term incentive program. The RSUs granted under this program ~~with~~have a grant date fair value of ~~$319.04~~$215.70 per ~~unit. The RSUs granted under this program will~~unit and are generally scheduled to vest and settle in common stock (on a one-for-one basis) ~~on the third anniversary of~~three years after the grant date.

~~Performance-Based Restricted Stock Units~~

~~On February 24, 2020, we granted to our executives 290,202 performance-based restricted~~ If an executive terminates employment because of retirement, layoff, disability, or death, the executive (or beneficiary) may receive some or all of their stock units (PBRSUs) as part of our long-term incentive program with a grant date fair value of $357.38 per unit. Compensation expense for the award is recognized over the three-year performance period based upon the grant date fair value estimated using a Monte-Carlo simulation model. The model used the following assumptions: expected volatility of 27.04% based upon historical stock volatility, a risk-free interest rate of 1.21%,depending on certain age and ~~no expected dividend yield because the units earn dividend equivalents.~~service conditions.

~~Performance Awards~~

On February 28, 2020, we granted to our executives performance awards as part of our long-term incentive program with a payout based on the achievement of financial goals for the three-year period ending ~~December 31, 2022. At June 30, 2020, the minimum payout amount is $0 and the maximum amount we could be required to pay out is $305.~~

Note 1514 – Shareholders' Equity

Accumulated Other Comprehensive Loss

Changes in Accumulated other comprehensive ~~loss~~income/(loss) (AOCI) by component for the ~~six and~~ three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ were as follows:


	Currency Translation Adjustments	Unrealized Gains and Losses on Certain Investments	Unrealized Gains and Losses on Derivative Instruments	Defined Benefit Pension Plans & Other Postretirement Benefits		Total (1)
Balance at January 1, 2020	($128)	$1	($84)	($15,942)		($16,153)
Other comprehensive (loss)/income before reclassifications	(77)		(275)			(352)
Amounts reclassified from AOCI			2	170	(2)	172
Net current period Other comprehensive (loss)/income	(77)		(273)	170		(180)
Balance at March 31, 2020	($205)	$1	($357)	($15,772)		($16,333)

Balance at January 1, 2021	($30)	$1	($43)	($17,061)		($17,133)
Other comprehensive (loss)/income before reclassifications	(36)		11	2		(23)
Amounts reclassified from AOCI			(2)	206	(2)	204
Net current period Other comprehensive (loss)/income	(36)		9	208		181
Balance at March 31, 2021	($66)	$1	($34)	($16,853)		($16,952)

(1) Net of tax.

(2) Primarily relates to amortization of actuarial losses for the three months ended March 31, 2021 and 2020 totaling $228 and $193 (net of tax of ($65) and ($53)). These are included in the net periodic pension cost.

Currency Translation Adjustments
Unrealized Gains and Losses on Certain Investments
Unrealized Gains and Losses on Derivative Instruments
Defined Benefit Pension Plans & Other Postretirement Benefits

Total⁽¹⁾

Balance at January 1, 2019
($101 )

($62 )
($14,920 )
($15,083 )
Other comprehensive (loss)/income before reclassifications (2 ) 1
(17 ) 8
(10 )
Amounts reclassified from AOCI

(3 ) 188
⁽²⁾
185
Net current period Other comprehensive (loss)/income (2 ) 1
(20 ) 196
175
Balance at June 30, 2019
($103 )
$1

($82 )
($14,724 )
($14,908 )

Balance at January 1, 2020
($128 ) $1

($84 )
($15,942 )
($16,153 )
Other comprehensive (loss)/income before reclassifications (33 )

(186 ) (12 ) (231 )
Amounts reclassified from AOCI

12
347
⁽²⁾
359
Net current period Other comprehensive (loss)/income (33 )
(174 ) 335
128
Balance at June 30, 2020
($161 )
$1

($258 )
($15,607 )
($16,025 )

Balance at March 31, 2019
($100 )
$1

($53 )
($14,817 )
($14,969 )
Other comprehensive (loss)/income before reclassifications (3 )
(28 )

(31 )
Amounts reclassified from AOCI

(1 ) 93
⁽²⁾
92
Net current period Other comprehensive (loss)/income (3 )
(29 ) 93
61
Balance at June 30, 2019
($103 )
$1

($82 )
($14,724 )
($14,908 )

Balance at March 31, 2020
($205 )
$1

($357 )
($15,772 )
($16,333 )
Other comprehensive (loss)/income before reclassifications 44

89
(12 ) 121
Amounts reclassified from AOCI

10
177
⁽²⁾
187
Net current period Other comprehensive (loss)/income 44

99
165
308
Balance at June 30, 2020
($161 )
$1

($258 )
($15,607 )
($16,025 )


⁽¹⁾ Table of Contents	~~Net of tax.~~


⁽²⁾	Primarily relates to amortization of actuarial losses for the six and three months ended June 30, 2019 totaling $233 and $115 (net of tax of ($65) and ($33)) and for the six and three months ended June 30, 2020 totaling $390 and $197 (net of tax of ($103) and ($50)). These are included in the net periodic pension cost.

Note 1615 – Derivative Financial Instruments

Cash Flow Hedges

Our cash flow hedges include foreign currency forward contracts, commodity swaps and commodity purchase contracts. We use foreign currency forward contracts to manage currency risk associated with certain transactions, specifically forecasted sales and purchases made in foreign currencies. Our foreign currency contracts hedge forecasted transactions through 2025. We use commodity derivatives, such as fixed-price purchase commitments and swaps to hedge against potentially unfavorable price changes for items used in production. Our commodity contracts hedge forecasted transactions through ~~2023.~~

2029.

We continue to monitor the effects of the COVID-19 pandemic on our ~~commodity~~ cash flow hedges, including reductions in our forecasted purchases of certain commodities. As of ~~June 30, 2020,~~March 31, 2021, the impact of the COVID-19 pandemic on our cash flow hedges was not significant.

Derivative Instruments Not Receiving Hedge Accounting Treatment

We have entered into agreements to purchase and sell aluminum to address long-term strategic sourcing objectives and non-U.S. business requirements. These agreements are derivative instruments for accounting purposes. The quantities of aluminum in these agreements offset and are priced at prevailing market prices. We also hold certain foreign currency forward contracts and commodity swaps which do not qualify for hedge accounting treatment.

Notional Amounts and Fair Values

The notional amounts and fair values of derivative instruments in the Condensed Consolidated Statements of Financial Position were as follows:


	Notional amounts (1)		Other assets		Accrued liabilities
	March 31 2021	December 31 2020	March 31 2021	December 31 2020	March 31 2021	December 31 2020
Derivatives designated as hedging instruments:
Foreign exchange contracts	$2,800	$2,594	$59	$81	($39)	($24)

Commodity contracts	416	404	16	4	(7)	(43)
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	832	769	22	22	(6)	(16)
Commodity contracts	889	904	1		(23)	(17)
Total derivatives	$4,937	$4,671	$98	$107	($75)	($100)
Netting arrangements			(37)	(31)	37	31
Net recorded balance			$61	$76	($38)	($69)

Notional amounts⁽¹⁾
Other assets Accrued liabilities
June 30
2020
December 31
2019
June 30
2020
December 31
2019
June 30
2020
December 31
2019
Derivatives designated as hedging instruments:
Foreign exchange contracts
$3,233

$2,590

$7

$29

($165 )
($60 )
Commodity contracts 366
645
2
4
(119 ) (72 )
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts 399
285
7
1
(6 ) (6 )
Commodity contracts 796
1,644

(25 )
Total derivatives
$4,794

$5,164

$16

$34

($315 )
($138 )
Netting arrangements (14 ) (20 ) 14
20
Net recorded balance
$2

$14

($301 )
($118 )


⁽¹⁾(1)Notional amounts represent the gross contract/notional amount of the derivatives outstanding.	~~Notional amounts represent the gross contract/notional amount of the derivatives outstanding.~~

Gains/(losses) associated with our hedging transactions and forward points recognized in Other comprehensive income are presented in the following table:


	Three months ended March 31
	2021	2020
Recognized in Other comprehensive income, net of taxes:
Foreign exchange contracts	($19)	($197)
Commodity contracts	30	(78)

Six months ended June 30 Three months ended June 30

2020
2019
2020
2019
Recognized in Other comprehensive income, net of taxes:
Foreign exchange contracts
($112 )
$31

$85

$9
Commodity contracts (74 ) (48 ) 4
(37 )

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Gains/(losses) associated with our hedging transactions and forward points reclassified from AOCI to earnings are presented in the following table:


	Three months ended March 31
	2021	2020
Foreign exchange contracts
Revenues		($1)
Costs and expenses		(1)
General and administrative	$3	0
Commodity contracts

Costs and expenses	(3)	(1)
General and administrative expense	2

Six months ended June 30 Three months ended June 30
2020
2019
2020
2019
Foreign exchange contracts
Revenues
($1 )
$6

$1
Costs and expenses (6 ) (12 )
($5 ) (7 )
General and administrative (5 ) 9
(5 ) 8
Commodity contracts
Costs and expenses (3 ) 1
(2 )

General and administrative expense (1 )

(1 ) (1 )

Gains related to undesignated derivatives on foreign exchange and commodity cash flow hedging transactions recognized in Other income, net were ~~$6 and $1~~insignificant for the ~~six and~~ three months ended ~~June 30, 2020~~March 31, 2021 and ~~$2 and $0 for the six and three months ended June 30, 2019.~~2020.

Based on our portfolio of cash flow hedges, we expect to reclassify ~~losses~~gains of ~~$33~~$12 (pre-tax) out of Accumulated other comprehensive loss into earnings during the next 12 months.

We have derivative instruments with credit-risk-related contingent features. For foreign exchange and commodity contracts with original maturities of at least five years, our derivative counterparties could require settlement if we default on our five-year credit facility. For certain commodity contracts, our counterparties could require collateral posted in an amount determined by our credit ratings. The fair value of foreign exchange and commodity contracts that have credit-risk-related contingent features that are in a net liability position at ~~June 30, 2020~~March 31, 2021 was ~~$54~~.$2. At ~~June 30, 2020,~~March 31, 2021, there was no collateral posted related to our derivatives.

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Note 1716 – Fair Value Measurements

The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs. The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.

June 30, 2020 December 31, 2019
Total
Level 1
Level 2
Total
Level 1
Level 2
Assets
Money market funds
$8,877

$8,877

$2,562

$2,562

Available-for-sale debt investments:

Commercial paper 93

$93
108

$108
Corporate notes 321
321
242
242
U.S. government agencies

55
55

Other equity investments 40
40
33
33

Derivatives 2
2
14
14
Total assets
$9,333

$8,917

$416

$3,014

$2,650

$364
Liabilities
Derivatives
($301 )
($301 )
($118 )
($118 )
Total liabilities
($301 )

($301 )
($118 )

($118 )


	March 31, 2021			December 31, 2020
	Total	Level 1	Level 2		Total	Level 1	Level 2
Assets
Money market funds	$2,219	$2,219			$2,230	$2,230
Available-for-sale debt investments:
Commercial paper	234		$234		149		$149
Corporate notes	257		257		333		333
U.S. government agencies	101		101		114		114
Other equity investments	30	30			54	54
Derivatives	61		61		76		76
Total assets	$2,902	$2,249	$653		$2,956	$2,284	$672
Liabilities
Derivatives	($38)		($38)		($69)		($69)
Total liabilities	($38)		($38)		($69)		($69)

Money market funds, available-for-sale debt investments and equity securities are valued using a market approach based on the quoted market prices or broker/dealer quotes of identical or comparable instruments.

Derivatives include foreign currency and commodity contracts. Our foreign currency forward contracts are valued using an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount. Commodity derivatives are valued using an income approach based on the present value of the commodity index prices less the contract rate multiplied by the notional amount.

Certain assets have been measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3). The following table presents the nonrecurring losses recognized for the ~~six~~three months ended ~~June 30~~March 31 due to long-lived asset impairment and the fair value and asset classification of the related assets as of the impairment date:

2020 2019

Fair
Value

Total
Losses

Fair
Value

Total
Losses

Customer financing assets
$71

($17 )
$10

($1 )
Investments 64
(49 ) 72
(51 )
Property, plant and equipment 82
(59 ) 41
(1 )
Other Assets and Acquired intangible assets 201
(155 ) 3
(17 )
Total
$418

($280 )
$126

($70 )


	2021		2020
	Fair Value	Total Losses	Fair Value	Total Losses
Customer financing assets	$18	($9)
Investments	0	(7)	$52	($21)
Property, plant and equipment			36	(5)

Total	$18	($16)	$88	($26)

Investments and Property, plant and equipment ~~Other assets and Acquired intangible assets~~ were primarily valued using an income approach based on the discounted cash flows associated with the underlying assets. The fair value of the impaired customer financing assets is derived by calculating a median collateral value from a consistent group of third party aircraft value publications. The values provided by the third party aircraft publications are derived from their knowledge of market trades and other market factors. Management reviews the publications quarterly to assess the continued appropriateness and consistency with market trends.

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Under certain circumstances, we adjust values based on the attributes and condition of the specific aircraft or equipment, usually when the features or use of the aircraft vary significantly from the more generic aircraft attributes covered by third party publications, or on the expected net sales price for the aircraft.

For Level 3 assets that were measured at fair value on a nonrecurring basis during the year ended ~~June 30, 2020,~~March 31, 2021, the following table presents the fair value of those assets as of the measurement date, valuation techniques and related unobservable inputs of those assets.

Fair

Value

Valuation

Technique(s)

Unobservable Input

Range

Median or Average

Customer financing assets

$18

Market approach

Aircraft value publications

$15 - $24(1)

Median $18

~~Customer financing assets~~

~~$71~~

~~Market approach~~

~~Aircraft value publications~~

~~$57 - $118~~⁽¹⁾

~~Median $79~~

Aircraft condition adjustments

($8)1) - $0$1⁽²⁾

Net ~~($8)~~$0

⁽¹⁾

(1)The range represents the sum of the highest and lowest values for all aircraft subject to fair value measurement, according to the third party aircraft valuation publications that we use in our valuation process.

(2)The negative amount represents the sum, for all aircraft subject to fair value measurement, of all downward adjustments based on consideration of individual aircraft attributes and condition. The positive amount represents the sum of all such upward adjustments.

The range represents the sum of the highest and lowest values for all aircraft subject to fair value measurement, according to the third party aircraft valuation publications that we use in our valuation process.


⁽²⁾	The negative amount represents the sum, for all aircraft subject to fair value measurement, of all downward adjustments based on consideration of individual aircraft attributes and condition. The positive amount represents the sum of all such upward adjustments.

Fair Value Disclosures

The fair values and related carrying values of financial instruments that are not required to be remeasured at fair value on the Condensed Consolidated Statements of Financial Position were as follows:


	March 31, 2021
	Carrying Amount	Total Fair Value	Level 1	Level 2	Level 3
Assets
Notes receivable, net	$417	$481		$481
Liabilities
Debt, excluding finance lease obligations	(63,384)	(69,716)		(69,701)	($15)

June 30, 2020

Carrying
Amount

Total Fair
Value

Level 1 Level 2
Level 3
Assets
Notes receivable, net
$433

$429

$429

Liabilities
Debt, excluding commercial paper and capital lease obligations (58,788 ) (61,367 ) (61,350 )
($17 )

December 31, 2019

Carrying
Amount

Total Fair
Value

Level 1 Level 2
Level 3
Assets
Notes receivable, net
$443

$444

$444

Liabilities
Debt, excluding capital lease obligations and commercial paper (20,964 ) (23,119 ) (23,081 )
($38 )


	December 31, 2020
	Carrying Amount	Total Fair Value	Level 1	Level 2	Level 3
Assets
Notes receivable, net	$420	$488		$488
Liabilities
Debt, excluding finance lease obligations	(63,380)	(72,357)		(72,342)	($15)

The fair values of notes receivable are estimated with discounted cash flow analysis using interest rates currently offered on loans with similar terms to borrowers of similar credit quality. The fair value of our debt that is traded in the secondary market is classified as Level 2 and is based on current market yields. For our debt that is not traded in the secondary market, the fair value is classified as Level 2 and is based on our indicative borrowing cost derived from dealer quotes or discounted cash flows. The fair values of our debt classified as Level 3 are based on discounted cash flow models using the implied yield from similar securities. With regard to other financial instruments with off-balance sheet risk, it is not practicable to estimate the fair value of our indemnifications and financing commitments because the amount and timing of those arrangements are uncertain. Items not included in the above disclosures include cash, restricted cash, time deposits and other deposits, commercial paper, money market funds, Accounts

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receivable, Unbilled receivables, Other current assets, Accounts payable and long-term payables. The carrying values of those items, as reflected in the Condensed Consolidated Statements of Financial Position, approximate their fair value at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020. The fair value of assets and liabilities whose carrying value approximates fair value is determined using Level 2 inputs, with the exception of cash (Level 1).

Note 1817 – Legal Proceedings

Various legal proceedings, claims and investigations related to products, contracts, employment and other matters are pending against us.

In addition, we are subject to various U.S. government inquiries and investigations from which civil, criminal or administrative proceedings could result or have resulted in the past. Such proceedings involve or could involve claims by the government for fines, penalties, compensatory and treble damages, restitution and/or forfeitures. Under government regulations, a company, or one or more of its operating divisions or subdivisions, can also be suspended or debarred from government contracts, or lose its export privileges, based on the results of investigations. Except as described below, we believe, based upon current information, that the outcome of any such legal proceeding, claim, or government dispute and investigation will not have a material effect on our financial position, results of operations, or cash flows. Where it is reasonably possible that we will incur losses in excess of recorded amounts in connection with any of the matters set forth below, we will disclose either the amount or range of reasonably possible losses in excess of such amounts or,

where no such amount or range can be reasonably estimated, the reasons why no such estimate can be made.

Multiple legal actions have been filed against us as a result of the October 29, 2018 accident of Lion Air Flight 610 and the March 10, 2019 accident of Ethiopian Airlines Flight 302. Further, we are subject to, and cooperating with ongoing governmental and regulatory investigations and inquiries relating to the accidents and the 737 MAX, including ~~investigations~~an investigation by ~~the U.S. Department of Justice and~~ the Securities and Exchange Commission, the outcome of which may be material. WeOther than with respect to the agreement described below with the U.S. Department of Justice, we cannot reasonably estimate a range of loss, if any, not covered by available insurance that may result given the current status of the pending lawsuits, investigations, and inquiries related to the 737 MAX.

On January 6, 2021, we entered into a Deferred Prosecution Agreement with the U.S. Department of Justice that resolves the Department of Justice’s previously disclosed investigation into us regarding the evaluation of the 737 MAX airplane by the Federal Aviation Administration. Under the terms of the Deferred Prosecution Agreement, we agreed to the filing of a criminal information charging the Company with one count of conspiracy to defraud the United States, based on the conduct of two former 737 MAX program technical pilots; the criminal information will be dismissed after three years, provided that we comply with our obligations under the agreement. The Deferred Prosecution Agreement requires that we make payments totaling $2.51 billion, which consist of (a) a $243.6 million criminal monetary penalty; (b) $500 million in additional compensation to the heirs and/or beneficiaries of those who died in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents; and (c) $1.77 billion to the Company’s airline customers for harm incurred as a result of the grounding of the 737 MAX, offset in part by payments already made and the remainder satisfied through payments to be made prior to the termination of the Deferred Prosecution Agreement. The agreement also requires that we review our compliance program and undertake continuous improvement efforts with respect to it, and implement enhanced compliance reporting and internal controls mechanisms. We expensed $743.6 million in the fourth quarter of 2020 related to this agreement. During the first quarter, consistent with the terms of the Deferred Prosecution Agreement, the monetary penalty was paid, and the $500 million compensation amount was transferred to a fund established to benefit the heirs and/or beneficiaries of the victims of the 737 MAX accidents. In addition, the $1.77 billion amount related to the Company’s airline customers was included in amounts reserved in prior quarters for 737 MAX customer considerations.

During 2019, we entered into ~~definitive transaction documents with respect to a strategic partnership~~agreements with Embraer S.A. (Embraer)~~. The partnership contemplated the establishment of~~ to establish joint ventures that included the commercial aircraft and services operations of Embraer, of which we were expected to

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acquire an 80 percent ownership stake for $4,200, as well as a joint venture to promote and develop new markets for the C-390 Millennium.

~~The transaction documents permitted either party~~ In 2020, we exercised our contractual right to terminate ~~the proposed partnership beginning on April 24, 2020, provided that certain closing conditions were not met. Based~~these agreements based on Embraer’s failure to ~~satisfy~~meet certain required closing ~~conditions, we exercised our contractual termination right during the second quarter of 2020, which~~conditions. Embraer has ~~disputed. We would have been required~~disputed our right to ~~pay a termination fee of $100 had~~terminate the ~~transaction been terminated due to a failure to obtain antitrust approvals. Because~~agreements, and the ~~transaction was terminated due to a failure by Embraer to meet other closing conditions, we do not expect to be required to pay a termination fee~~dispute is currently in ~~connection with the termination of the transaction. Boeing and Embraer are arbitrating their dispute over Boeing’s termination of the agreement.~~arbitration. We cannot reasonably estimate a range of loss, if any, that may result from the arbitration.

Note 1918 – Segment and Revenue Information

Effective at the beginning of 2020, certain programs were realigned between our BDS segment and Unallocated items, eliminations and other. Business segment data for 2019 has been adjusted to reflect the realignment.

Our primary profitability measurements to review a segment’s operating results are ~~Earnings~~Earnings/(loss) from operations and operating margins. We operate in 4 reportable segments: BCA, BDS, BGS, and BCC. All other activities fall within Unallocated items, eliminations and other. See page 76 for the Summary of Business Segment Data, which is an integral part of this note.

BCA develops, produces and markets commercial jet aircraft principally to the commercial airline industry worldwide. Revenue on commercial aircraft contracts is recognized at the point in time when an aircraft is completed and accepted by the customer.

BDS engages in the research, development, production and modification of the following products and related services: manned and unmanned military aircraft and weapons systems, surveillance and engagement, strategic defense and intelligence systems, satellite systems and space exploration. BDS revenue is generally recognized over the contract term (over time) as costs are incurred.

BGS provides parts, maintenance, modifications, logistics support, training, data analytics and information-based services to commercial and government customers worldwide. BGS segment revenue and costs include certain services provided to other segments. Revenue on commercial spare parts contracts is recognized at the point in time when a spare part is delivered to the customer. Revenue on other contracts is generally recognized over the contract term (over time) as costs are incurred.

BCC facilitates, arranges, structures and provides selective financing solutions for our ~~Boeing~~ customers.

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The following tables present BCA, BDS and BGS revenues from contracts with customers disaggregated in a number of ways, such as geographic location, contract type and the method of revenue recognition. We believe these best depict how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors.

BCA revenues by customer location consist of the following:

(Dollars in millions) Six months ended June 30 Three months ended June 30
2020 2019 2020 2019
Revenue from contracts with customers:
Europe
$2,302

$2,684

$332

$1,023
Asia 1,464
7,534
305
4,360
Middle East 556
1,805
7
695
Other 453
2,367
142
829
Total non-U.S. revenues 4,775
14,390
786
6,907
United States 3,557
7,587
1,383
3,417
Estimated potential concessions and other considerations to 737 MAX customers, net (521 ) (5,610 ) (551 ) (5,610 )
Total revenues from contracts with customers 7,811
16,367
1,618
4,714
Intersegment revenues eliminated on consolidation 27
177
15
8
Total segment revenues
$7,838

$16,544

$1,633

$4,722

Revenue recognized on fixed-price contracts 100 % 100 % 100 % 100 %

Revenue recognized at a point in time 99 % 99 % 99 % 99 %


(Dollars in millions)	Three months ended March 31
	2021		2020
Revenue from contracts with customers:
Europe	$873		$1,970


Asia	363		1,159
Middle East	129		549
Other	576		311
Total non-U.S. revenues	1,941		3,989
United States	2,353		2,174
Estimated potential concessions and other considerations to 737 MAX customers, net	(30)		30
Total revenues from contracts with customers	4,264		6,193
Intersegment revenues eliminated on consolidation	5		12
Total segment revenues	$4,269		$6,205

Revenue recognized on fixed-price contracts	100	%	100	%

Revenue recognized at a point in time	100	%	100	%

BDS revenues on contracts with customers, based on the customer's location, consist of the following:


(Dollars in millions)	Three months ended March 31
	2021		2020
Revenue from contracts with customers:
U.S. customers	$5,520		$4,316
Non U.S. customers(1)	1,665		1,726
Total segment revenue from contracts with customers	$7,185		$6,042

Revenue recognized over time	99	%	99	%

Revenue recognized on fixed-price contracts	70	%	67	%

Revenue from the U.S. government(1)	90	%	89	%

(1)Includes revenues earned from foreign military sales through the U.S. government.

(Dollars in millions) Six months ended June 30 Three months ended June 30
2020 2019 2020 2019
Revenue from contracts with customers:
U.S. customers
$9,153

$9,719

$4,837

$4,836
Non U.S. customers⁽¹⁾
3,477
3,447
1,751
1,743
Total segment revenue from contracts with customers
$12,630

$13,166

$6,588

$6,579

Revenue recognized over time 99 % 99 % 99 % 99 %

Revenue recognized on fixed-price contracts 68 % 69 % 69 % 69 %

Revenue from the U.S. government⁽¹⁾
89 % 88 % 89 % 89 %


⁽¹⁾ Table of Contents	~~Includes revenues earned from foreign military sales through the U.S. government.~~

BGS revenues consist of the following:


(Dollars in millions)	Three months ended March 31
	2021		2020
Revenue from contracts with customers:
Commercial	$1,625		$2,523
Government	2,070		2,033
Total revenues from contracts with customers	3,695		4,556
Intersegment revenues eliminated on consolidation	54		72
Total segment revenues	$3,749		$4,628

Revenue recognized at a point in time	43	%	55	%

Revenue recognized on fixed-price contracts	87	%	89	%

Revenue from the U.S. government(1)	43	%	35	%

(Dollars in millions) Six months ended June 30 Three months ended June 30
2020 2019 2020 2019
Revenue from contracts with customers:
Commercial
$3,894

$5,111

$1,371

$2,526
Government 4,099
3,974
2,066
1,977
Total revenues from contracts with customers 7,993
9,085
3,437
4,503
Intersegment revenues eliminated on consolidation 123
77
51
40
Total segment revenues
$8,116

$9,162

$3,488

$4,543

Revenue recognized at a point in time 49 % 57 % 41 % 57 %

Revenue recognized on fixed-price contracts 88 % 89 % 86 % 90 %

Revenue from the U.S. government⁽¹⁾
40 % 32 % 46 % 32 %


⁽¹⁾(1)Includes revenues earned from foreign military sales through the U.S. government.	~~Includes revenues earned from foreign military sales through the U.S. government.~~

Backlog

Our total backlog represents the estimated transaction prices on performance obligations to our customers for which work remains to be performed. Backlog is converted into revenue in future periods as work is performed, primarily based on the cost incurred or at delivery and acceptance of products, depending on the applicable accounting method.

Our backlog at ~~June 30, 2020~~March 31, 2021 was ~~$408,650.~~$363,853. We expect approximately ~~27%~~34% to be converted to revenue through ~~2021~~2022 and approximately ~~70%~~81% through ~~2024,~~2025, with the remainder thereafter. ~~The future periods when backlog~~There is ~~expected to convert to revenue could be impacted if~~significant uncertainty regarding the timing of ~~aircraft deliveries is adjusted~~when backlog will convert into revenue due to the 737 MAX grounding in non-U.S. jurisdictions, entry into service of the 777X, 737 MAX 7 and/or 737 MAX 10, and COVID-19 impacts.

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Unallocated Items, Eliminations and other

Unallocated items, eliminations and other include common internal services that support Boeing’s global business operations, intercompany guarantees provided to BCC and eliminations of certain sales between segments. Such sales include airplanes accounted for as operating leases and considered transferred to the BCC segment. We generally allocate costs to business segments based on the U.S. federal cost accounting standards. Components of Unallocated items, eliminations and other are shown in the following table.

Six months ended June 30 Three months ended June 30

2020
2019
2020
2019
Share-based plans
($43 )
($36 )
($25 )
($22 )
Deferred compensation 73
(129 ) (120 ) (27 )
Amortization of previously capitalized interest (50 ) (45 ) (27 ) (21 )
Research and development expense, net (116 ) (183 ) (62 ) (105 )
Customer financing impairment

(250 )

Litigation

(109 )

(109 )
Eliminations and other unallocated items (515 ) (458 ) (244 ) (214 )
Unallocated items, eliminations and other
($651 )
($1,210 )
($478 )
($498 )

Pension FAS/CAS service cost adjustment
$513

$549

$258

$275
Postretirement FAS/CAS service cost adjustment 189
180
97
90
FAS/CAS service cost adjustment
$702

$729

$355

$365


	Three months ended March 31
	2021	2020
Share-based plans	($128)	($18)
Deferred compensation	(52)	193
Amortization of previously capitalized interest	(22)	(23)
Research and development expense, net	(42)	(54)


Eliminations and other unallocated items	(120)	(271)
Unallocated items, eliminations and other	($364)	($173)

Pension FAS/CAS service cost adjustment	$193	$255
Postretirement FAS/CAS service cost adjustment	77	92
FAS/CAS service cost adjustment	$270	$347

Pension and Other Postretirement Benefit Expense

Pension costs, comprising GAAP service and prior service costs, are allocated to BCA and the commercial operations at BGS. Pension costs are allocated to BDS and BGS businesses supporting government customers using U.S. Government Cost Accounting Standards (~~CAS~~) (CAS), which employ different actuarial assumptions and accounting conventions than ~~GAAP~~.GAAP. These costs are allocable to government contracts. Other postretirement benefit costs are allocated to business segments based on CAS,, which is generally based on benefits paid. FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. These expenses are included in Other income, ~~net~~.

net.

Assets

Segment assets are summarized in the table below:

June 30
2020
December 31
2019
Commercial Airplanes
$80,160

$73,995
Defense, Space & Security 15,407
15,757
Global Services 18,438
18,605
Boeing Capital 2,116
2,269
Unallocated items, eliminations and other 46,751
22,999
Total
$162,872

$133,625


	March 31 2021	December 31 2020
Commercial Airplanes	$78,960	$77,973
Defense, Space & Security	15,315	14,256
Global Services	17,239	17,399
Boeing Capital	1,939	1,978
Unallocated items, eliminations and other	36,582	40,530
Total	$150,035	$152,136

Assets included in Unallocated items, eliminations and other primarily consist of Cash and cash equivalents, Short-term and other investments, ~~Deferred~~ tax assets, capitalized interest and assets managed centrally on behalf of the 4 principal business segments and intercompany eliminations. ~~From December~~

31 2019 to June 30, 2020, assets in BCA increased primarily due to higher inventory balances and assets in Unallocated items, eliminations, and other increased due to higher cash and short-term investment balances from debt issued during the first half

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

The Boeing Company

Chicago, Illinois

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated statement of financial position of The Boeing Company and subsidiaries (the “Company”) as of ~~June 30, 2020,~~March 31, 2021, the related condensed consolidated statements of operations, comprehensive income, ~~and~~ equity, ~~for the three-month~~ and ~~six-month periods ended June 30, 2020 and 2019, and of~~ cash flows for the ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ and the related notes (collectively referred to as the "condensed consolidated interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ~~(PCAOB)~~(the "PCAOB"), the consolidated statement of financial position of the Company as of December 31, ~~2019,~~2020, and the related consolidated statements of operations, comprehensive income, equity, and cash flows for the year then ended (not presented herein); and in our report dated ~~January 31, 2020,~~February 1, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, ~~2019,~~2020, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.

Basis for Review Results

This condensed consolidated interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Deloitte & Touche LLP

Chicago, Illinois

~~July 29, 2020~~

April 28, 2021

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FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates” and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact.

Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to:

(1)			the COVID-19 pandemic and related ~~government actions,~~industry impacts, including with respect to our operations and access to suppliers, our liquidity, the health of our customers and suppliers, and future demand for our products and services;

(2)			the 737 MAX, including the timing and conditions of remaining 737 MAX regulatory approvals, lower than planned production rates and/or delivery rates, and increased considerations to customers and suppliers;

(3)			general conditions in the economy and our industry, including those due to regulatory changes;

(4)			our reliance on our commercial airline customers;

(5)			the overall health of our aircraft production system, planned commercial aircraft production rate changes, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards;

(6)			changing budget and appropriation levels and acquisition priorities of the U.S. government;

(7)			our dependence on U.S. government contracts;

(8)			our reliance on fixed-price contracts;

(9)			our reliance on cost-type contracts;

(10)			uncertainties concerning contracts that include in-orbit incentive payments;

(11)			our dependence on our subcontractors and suppliers as well as the availability of raw materials;

(12)			changes in accounting estimates;

(13)			changes in the competitive landscape in our markets;

(14)			our non-U.S. operations, including sales to non-U.S. customers;

(15)			threats to the security of our or our customers' information;

(16)			potential adverse developments in new or pending litigation and/or government investigations;

(17)			customer and aircraft concentration in our customer financing portfolio;

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(18)			changes in our ability to obtain debt financing on commercially reasonable terms and at competitive rates;



(19)			realizing the anticipated benefits of mergers, acquisitions, joint ventures, strategic alliances or divestitures;

(20)			the adequacy of our insurance coverage to cover significant risk exposures;

(21)			potential business disruptions, including those related to physical security threats, information technology or cyber attacks, epidemics, sanctions or natural disasters;

(22)			work stoppages or other labor disruptions;

(23)			substantial pension and other postretirement benefit obligations; and

(24)			potential environmental liabilities.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking information speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Consolidated Results of Operations and Financial Condition

Overview

The global outbreak of COVID-19 ~~coupled with~~and the ~~ongoing grounding~~residual impacts of the 737 MAX ~~airplane is having a~~grounding in 2019 continue to have significant adverse ~~impact~~impacts on our business and isare expected to ~~significantly reduce~~continue to negatively impact revenue, earnings and operating cash flow in future quarters. ~~It is~~They are also having a significant impact on our liquidity - see Liquidity Matters in Note 1 to our Condensed Consolidated Financial ~~Statements.~~Statements for a further discussion of liquidity and additional actions we are taking in response to these challenges.

The ~~aerospace industry is facing~~COVID-19 pandemic has caused an unprecedented shock to demand for commercial air travel, ~~which creates~~creating a tremendous challenge for our customers, our business and the entire commercial aerospace manufacturing and services ~~sector.~~sectors. The latest ~~IATA~~International Air Transport Association (IATA) forecast projects ~~full-year~~recovery of passenger traffic in 2021 to ~~be down 55% this year compared to~~approximately 43% of 2019 levels, as international markets see continued reopening challenges. However, global economic activity ~~slows down~~remains slow due to COVID-19, and governments continue to severely restrict travel to contain the spread of the virus. While recovery is gaining traction, we continue to expect that that it will remain slow and uneven as travel restrictions and varying regional travel protocols continue to impact air travel.

Generally, we expect domestic travel to recover faster than international travel. As a result, we expect the narrow-body market to recover faster than the wide-body market. Also, the pace of the commercial market recovery will be heavily dependent on COVID-19 infection rates, progress on vaccine distribution, and government travel and other restrictions on trade and commercial activity. Demand for dedicated freighters continues to be strong, underpinned by a strong recovery in global trade and overall air cargo growth. Overall cargo capacity remains challenged given the large impact that COVID-19 has had on international passenger operations, which also carry cargo.

Airline financial performance, which also plays a role in the demand for new capacity, has been adversely impacted by the COVID-19 pandemic. According to IATA, net losses for the airline industry are expected to be approximately $126 billion in 2020 and approximately $48 billion in 2021. Our customers are taking actions to ~~adjust to these new~~combat the effects of the COVID-19 pandemic on the market ~~realities and preserve~~by preserving liquidity. This comes in many forms such as deferrals of ~~advance~~advances and other payments to suppliers, deferrals of deliveries, reduced spending on services, and, in some cases, ~~cancellations.~~cancellation of orders. We face a challenging environment in the near to medium term as airlines adjust to reduced traffic which in turn will lower demand for commercial aerospace products and services. ~~It could~~The current environment is also ~~affect~~affecting the financial viability of some airlines.

We ~~currently~~continue to expect ~~it will take approximately three years for~~commercial air travel to return to 2019 levels ~~and~~in 2023 to 2024. We expect it will take a few years beyond that for the industry to return to long-term trend growth. To balance the supply and demand given the COVID-19 shock and to preserve our long-term potential and competitiveness, we ~~are reducing~~have reduced the production rates of several of our Commercial Airplanes (BCA) programs. These rate decisions are based on our ongoing assessments of the demand ~~environment.~~environment and availability of aircraft financing. There is significant uncertainty with respect to when commercial air traffic levels will recover, and whether, and at what point, capacity will return to and/or exceed pre-COVID-19 levels. During the fourth quarter of 2020, we made adjustments to our estimates regarding timing of 777X entry into service. We now anticipate that the first 777X delivery will occur in late 2023. We will closely monitor the key factors that affect backlog and future demand for each of our commercial aircraft programs, including customers’ evolving fleet plans, the wide-body replacement cycle and the cargo market. We will maintain a disciplined rate management process, and make adjustments as appropriate in the future. Notwithstanding the changes we have made to production rates, risk remains that further reductions will be required. Additionally, if we are unable to make timely deliveries of the large number of aircraft in inventory as of March 31, 2021, future revenues, earnings and cash flows will be adversely impacted.

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The long-term outlook for the industry remains positive due to the fundamental drivers of air travel demand: economic growth, increasing propensity to travel due to increased trade, globalization, and improved airline services driven by liberalization of air traffic rights between countries. The shock from COVID-19 has reduced the near to medium term demand, but our Commercial Market Outlook forecast projects a 4% growth rate for passenger and cargo traffic over a 20 year period. Based on long-term global economic growth projections of 2.5% average annual GDP growth, we project demand for approximately 43,000 new airplanes over the next 20 years. The industry remains vulnerable to exogenous developments including fuel price spikes, credit market shocks, acts of terrorism, natural disasters, conflicts, epidemics, pandemics and increased global environmental regulations.

Deliveries of the 737 MAX resumed in the fourth quarter of 2020, when the Federal Aviation Administration (FAA) rescinded the order that grounded 737 MAX aircraft in the U.S. In addition, several other non-U.S. civil aviation authorities, including the Brazilian National Civil Aviation Agency, Transport Canada, and the European Union Aviation Safety Agency (EASA) have subsequently approved return of operations, allowing us to resume deliveries in those jurisdictions. More than 165 countries have approved the resumption of 737 MAX operations. Orders to suspend operations of 737 MAX aircraft from certain non-U.S. civil aviation authorities, including the Civil Aviation Administration of China, are still in effect. The grounding has had a significant adverse impact on our operations and creates significant uncertainty. We are focused on safely returning the 737 MAX to service for all of our customers.

At Global Services (~~BGS~~)(BGS), we are seeing a direct impact on our commercial supply chain business as fewer flights and more aircraft retirements result in a decreased demand for our parts and logistics offerings. Additionally, our commercial customers are curtailing discretionary spending, such as modifications and upgrades and focusing on required maintenance. Similar to BCA, we expect a multi-year recovery period for the commercial services business. The demand outlook for our government services business, which in 2019 accounted for just under half of BGS revenue, remains stable.

At Defense, Space & Security (BDS), we continue to see a healthy market with solid demand for our major platforms and programs both domestically and internationally. ~~Despite some~~However, we continue to experience near-term production ~~impacts associated with our temporary suspension of operations at various locations, we believe that our portfolio of programs~~disruptions and ~~technologies remains well aligned~~inefficiencies due to ~~our customers’ missions and well positioned to address their current needs.~~COVID-19 impacts.

In March and April of 2020, we temporarily suspended operations at multiple locations including the Puget Sound area, South Carolina and Philadelphia. Operations in Puget Sound and Philadelphia resumed during the week of April 20, while operations in South Carolina resumed beginning on May 3. We have implemented procedures to promote employee safety in our facilities, including more frequent and enhanced cleaning and adjusted schedules and work flows to support physical distancing. These actions have resulted, and will continue to result, in increased operating costs. In addition, a number of our suppliers have suspended or otherwise reduced their operations, and we are experiencing some supply chain shortages. Our suppliers are also experiencing liquidity pressures and disruptions to their operations as a result of COVID-19. We also continue to have large numbers of employees working from home. These measures and disruptions have reduced overall productivity and adversely impacted our financial position, results of operations, and cash ~~flows in the first half of 2020.~~flows. We expect further adverse impacts in future quarters.

In July 2020, we announced business transformation efforts to assess our business across five key pillars: infrastructure, overhead and organization, portfolio and investments, supply chain health and operational excellence. We continue to make progress across all five key pillars as we utilize a lower production rate environment to transform and improve our business processes. Within the infrastructure pillar we are assessing our overall facility requirements in light of reduced demand in our commercial businesses and remote and virtual work opportunities for large numbers of our workforce. The consolidation of the 787 production in South Carolina during the first quarter of 2021 is an example of this. We also anticipate a reduction of approximately 30% in office space needs compared to our pre-COVID capacity. During 2020 and 2021, we have made certain reductions to our footprint and are planning to implement further reductions in 2021 and over the next few years. However, as we consolidate our footprint, terminate leases and dispose of properties, we may incur near term adverse impacts to earnings. The overhead and organization pillar is focused on our cost structure and how we are organized so we can right size our workforce and simplify and reduce management layers and bureaucracy. We have recorded severance costs for approximately 23,000 employees, of which approximately 5,000 are expected to leave the Company in the remainder of 2021. The portfolio and investments pillar includes

~~Loss From Operations~~Table of Contents

aligning our portfolio and ~~Core Operating Loss (Non-GAAP)~~investments to focus on our core business and the changes in market conditions. Through our portfolio and investment prioritization, we are reducing research and development and capital expenditures. The supply chain pillar is focused on supply chain health and stability, reducing indirect procurement spend and streamlining our transportation, logistics and warehousing approach. We are reducing indirect spend, by reducing expenditures in areas such as freight and logistics, purchased services and others. The operational excellence pillar is focused on improving performance, enhancing quality and reducing rework. For example, our information technology teams are evaluating opportunities to form or expand strategic partnerships with vendors that allow us to simplify and optimize our operations, and reduce overall costs. These activities are not intended to constrain our capacity, but rather to enable the Company to emerge stronger and be more resilient when the market recovers. We expect that successful execution of these measures will improve near term liquidity and long term cost competitiveness.

Consolidated Results of Operations

The following table summarizes key indicators of consolidated results of operations:


(Dollars in millions, except per share data)	Three months ended March 31
	2021		2020
Revenues	$15,217		$16,908

GAAP
Loss from operations	($83)		($1,353)
Operating margins	(0.5)	%	(8.0)	%
Effective income tax rate	1.9	%	57.4	%


Net loss attributable to Boeing Shareholders	($537)		($628)
Diluted loss per share	($0.92)		($1.11)

Non-GAAP (1)
Core operating loss	($353)		($1,700)
Core operating margins	(2.3)	%	(10.1)	%
Core loss per share	($1.53)		($1.70)

(Dollars in millions, except per share data) Six months ended June 30 Three months ended June 30

2020
2019
2020
2019
Revenues
$28,715

$38,668

$11,807

$15,751

GAAP
Loss from operations
($4,317 )
($1,030 )
($2,964 )
($3,380 )
Operating margins (15.0 )% (2.7 )% (25.1 )% (21.5 )%
Effective income tax rate 38.4 % 27.5 % 30.0 % 14.2 %
Net loss attributable to Boeing Shareholders
($3,004 )

($793 )
($2,376 )
($2,942 )
Diluted loss per share
($5.31 )
($1.40 )
($4.20 )
($5.21 )

Non-GAAP ⁽¹⁾

Core operating loss
($5,019 )
($1,759 )
($3,319 )
($3,745 )
Core operating margins (17.5 %) (4.5 %) (28.1 %) (23.8 %)
Core loss per share
($6.49 )
($2.60 )
($4.79 )
($5.82 )


⁽¹⁾(1)These measures exclude certain components of pension and other postretirement benefit expense. See pages 52-53 for important information about these non-GAAP measures and reconciliations to the most comparable GAAP measures.	These measures exclude certain components of pension and other postretirement benefit expense. See page 53 for important information about these non-GAAP measures and reconciliations to the most comparable GAAP measures.

Revenues

The following table summarizes Revenues:


(Dollars in millions)	Three months ended March 31
	2021	2020
Commercial Airplanes	$4,269	$6,205
Defense, Space & Security	7,185	6,042
Global Services	3,749	4,628
Boeing Capital	60	65
Unallocated items, eliminations and other	(46)	(32)
Total	$15,217	$16,908

(Dollars in millions) Six months ended June 30 Three months ended June 30

2020
2019
2020
2019
Commercial Airplanes
$7,838

$16,544

$1,633

$4,722
Defense, Space & Security 12,630
13,166
6,588
6,579
Global Services 8,116
9,162
3,488
4,543
Boeing Capital 134
141
69
75
Unallocated items, eliminations and other (3 ) (345 ) 29
(168 )
Total
$28,715

$38,668

$11,807

$15,751

Revenues for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 decreased by ~~$9,953~~$1,691 million compared with the same period in ~~2019 due to~~2020 driven by lower revenues ~~across all four~~at BCA and BGS, partially offset by higher revenues at

Table of ~~our segments. Revenues for each of our segments have been adversely impacted by COVID-19.~~ Contents

BDS. BCA revenues decreased by ~~$8,706~~$1,936 million due to lower 787 deliveries, ~~driven~~partially offset by ~~the impacts of the COVID-19 pandemic and the~~higher 737 MAX ~~grounding, offset~~deliveries due to recertification and return to service in most jurisdictions. BDS revenues increased by ~~lower charges related to estimated potential concessions and other considerations to 737 MAX customers.~~ ~~BDS~~ ~~revenues decreased by $536~~$1,143 million primarily ~~due to the unfavorable impact of cumulative contract catch-up adjustments for~~from higher revenue on the KC-46A Tanker program. BGS revenues decreased by ~~$1,046~~$879 million primarily due to lower commercial services revenue driven by impacts of the COVID-19 pandemic. The changes in Unallocated items, eliminations and other primarily reflect the timing of eliminations for intercompany aircraft deliveries, as well as reserves related to cost accounting litigation recorded in 2019. We expect the impacts of the COVID-19 pandemic toRevenues will continue to be significantly ~~impact revenues in future quarters~~impacted until deliveries ramp up and the commercial airline industry ~~recovers.~~

~~Revenues for~~recovers from the ~~three months ended June 30, 2020 decreased by $3,944 million compared with the same period in 2019. BCA revenues decreased by $3,089 million due to lower wide-body and narrow-body~~

deliveries. Revenues in both periods were adversely impacted by the 737 MAX grounding. This decrease was partially offset by lower charges related to estimated potential concessions and other considerations to 737 MAX customers. BGS revenues decreased by $1,055 million due to lower commercial services revenue driven by impacts of ~~the COVID-19 pandemic. The changes in Unallocated items, eliminations and other primarily reflect reserves related to cost accounting litigation recorded in 2019.~~COVID-19.

~~Loss/Earnings~~Loss From Operations

The following table summarizes ~~(Loss)/earnings~~Loss from operations:


(Dollars in millions)	Three months ended March 31
	2021	2020
Commercial Airplanes	($856)	($2,068)
Defense, Space & Security	405	(191)
Global Services	441	708
Boeing Capital	21	24
Segment operating earnings/(loss)	11	(1,527)
Pension FAS/CAS service cost adjustment	193	255
Postretirement FAS/CAS service cost adjustment	77	92
Unallocated items, eliminations and other	(364)	(173)
Loss from operations (GAAP)	($83)	($1,353)
FAS/CAS service cost adjustment *	(270)	(347)
Core operating loss (Non-GAAP) **	($353)	($1,700)

(Dollars in millions) Six months ended June 30 Three months ended June 30

2020
2019
2020
2019
Commercial Airplanes
($4,830 )
($3,773 )
($2,762 )
($4,946 )
Defense, Space & Security 409
1,827
600
975
Global Services 36
1,340
(672 ) 687
Boeing Capital 17
57
(7 ) 37
Segment operating loss (4,368 ) (549 ) (2,841 ) (3,247 )
Pension FAS/CAS service cost adjustment 513
549
258
275
Postretirement FAS/CAS service cost adjustment 189
180
97
90
Unallocated items, eliminations and other (651 ) (1,210 ) (478 ) (498 )
Loss from operations (GAAP)
($4,317 )
($1,030 )
($2,964 )
($3,380 )
FAS/CAS service cost adjustment * (702 ) (729 ) (355 ) (365 )
Core operating loss (Non-GAAP) **
($5,019 )
($1,759 )
($3,319 )
($3,745 )


*	* The FAS/CAS service cost adjustment represents ~~the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments.~~


**	~~Core operating loss is a Non-GAAP measure that excludes the FAS/CAS service cost adjustment. See page 53.~~

~~Loss from operations for~~ the ~~six months ended June 30, 2020 increased by $3,287 million compared with~~difference between the ~~same period in 2019 primarily driven by our BCA, BDS~~FAS pension and ~~BGS~~postretirement service costs calculated under GAAP and costs allocated to the business segments. ~~Earnings/~~

** Core operating loss ~~from operations for each of our segments were adversely impacted by COVID-19. BCA loss from operations of $4,830 million for~~is a Non-GAAP measure that excludes the six months ended June 30, 2020 primarily reflects the continued absence of MAX deliveries, lower wide-body margins and deliveries resulting from COVID-19, abnormal production costs, severance costs and 737NG frame fitting component repair costs. BCA loss from operations of $3,773 million for the six months ended June 30, 2019 primarily reflects the absence of 737 MAX deliveries and charges of $5,610 million for estimated 737 MAX customer considerations. BDS earnings decreased by $1,418 million, primarily due to charges of $978 million on KC-46A Tanker, a $168 million charge in the first quarter of 2020 on VC-25B, as well as gains on property sales in 2019. For discussion regarding BDS Fixed-Price Development Contracts see Note 10 to our Condensed Consolidated Financial Statements. BGS earnings from operations decreased by $1,304 million primarily due to lower commercial services revenue, and $923 million of charges related to asset impairments and severance costs as a result of the COVID-19 market environment. We expect the impacts of the COVID-19 pandemic to continue to reduce earnings in future quarters until the commercial airline industry recovers.FAS/CAS service cost adjustment. See pages 52-53.

Loss from operations for the three months ended ~~June 30, 2020~~March 31, 2021 decreased by ~~$416~~$1,270 million compared with the same period in ~~2019 primarily due to lower losses at BCA, partially offset by decreases in earnings from operations at BDS and BGS.~~2020. BCA loss from operations decreased ~~$2,184~~by $1,212 million ~~primarily~~ due to ~~lower charges related to estimated potential concessions and other considerations to~~higher 737 ~~MAX customers, partially offset by the continued absence of 737 MAX deliveries, lower wide-body margins and~~ deliveries resulting from ~~COVID-19, abnormal production costs,~~the 737 MAX recertification and ~~severance costs.~~lower period expenses. BDS earnings ~~decreased $375~~from operations were $405 million compared with a loss from operations of $191 million during the same period in 2020, primarily due to a ~~gain~~$318 million charge on ~~property sale~~the VC-25B program in ~~2019 and a charge~~2021 as compared with charges in 2020 of $827 million on the KC-46A Tanker program ~~in 2020.~~and $168 million on the VC-25B program. BGS

earnings from operations decreased ~~$1,359~~by $267 million primarily due to lower commercial services ~~revenue,~~revenue. Lower commercial airplane deliveries and ~~$923 million of charges related to asset impairments and severance costs as a result of~~ the COVID-19 ~~market environment.~~pandemic will continue to have a significant adverse impact on future earnings and margins until deliveries ramp up and return to historical levels.

Core operating loss for the ~~six and~~ three months ended ~~June 30, 2020 increased by $3,260 million and~~March 31, 2021 decreased by ~~$426~~$1,347 million compared with the same ~~periods~~period in ~~2019~~2020 primarily due to ~~losses and earnings from operations at BCA, BDS and BGS as~~the changes described above.

Table of Contents

Unallocated Items, Eliminations and Other

The most significant items included in Unallocated items, eliminations and other are shown in the following table:


(Dollars in millions)	Three months ended March 31
	2021	2020
Share-based plans	($128)	($18)
Deferred compensation	(52)	193
Amortization of previously capitalized interest	(22)	(23)
Research and development expense, net	(42)	(54)


Eliminations and other unallocated items	(120)	(271)
Unallocated items, eliminations and other	($364)	($173)

(Dollars in millions) Six months ended June 30 Three months ended June 30

2020
2019
2020
2019
Share-based plans
($43 )
($36 )
($25 )
($22 )
Deferred compensation 73
(129 ) (120 ) (27 )
Amortization of previously capitalized interest (50 ) (45 ) (27 ) (21 )
Research and development expense, net (116 ) (183 ) (62 ) (105 )
Customer financing impairment

(250 )

Litigation

(109 )

(109 )
Eliminations and other unallocated items (515 ) (458 ) (244 ) (214 )
Unallocated items, eliminations and other
($651 )
($1,210 )
($478 )
($498 )
Share-based plans expense for the three months ended March 31, 2021 increased by $110 million compared with the same period in 2020 primarily due to a one-time stock grant of Restricted Stock Units to most employees in December 2020 that will vest in three years. This grant was in lieu of a 2021 salary merit increase.

Deferred compensation expense ~~decreased by $202 million and increased by $93 million~~ for the ~~six and~~ three months ended ~~June 30,~~March 31, 2021 increased by $245 million compared with income in the same period in 2020 primarily driven by broad market conditions and changes in our stock price.

Unallocated research and development expense for the three months ended March 31, 2021 decreased by $12 million compared with the same ~~periods~~period in ~~2019 primarily driven by changes in our stock price and broad market conditions.~~

~~Research and development expense decreased by $67 million and $43 million for the six and three months ended June 30,~~ 2020 ~~compared with the same periods in 2019~~ primarily due to decreased spending by Boeing NeXt on product development.

~~During the first quarter of 2019, we recorded a $250 million charge related to the impairment of lease incentives with one customer that experienced liquidity issues.~~

~~During the second quarter of 2019, we recorded a charge of $109 million related to ongoing litigation associated with recoverable costs on U.S. government contracts.~~

A portion of service cost is recognized in Earnings from operations in the period incurred and the remainder is included in inventory at the end of the reporting period and recorded in Earnings from operations in subsequent periods.

Net periodic pension benefit costs included in Loss from operations were as follows:


(Dollars in millions)	Six months ended June 30						Three months ended June 30						(Dollars in millions)	Three months ended March 31
Pension Plans	2020			2019			2020			2019			Pension Plans	2021	2020
Allocated to business segments		($514	)		($707	)		($259	)		($355	)	Allocated to business segments	($194)	($255)
Pension FAS/CAS service cost adjustment	513			549			258			275			Pension FAS/CAS service cost adjustment	193	255
Net periodic benefit cost included in Loss from operations		($1	)		($158	)		($1	)		($80	)	Net periodic benefit cost included in Loss from operations	($1)	$0

The pension FAS/CAS service cost adjustment recognized in ~~earnings/loss in 2020 is largely consistent~~Loss from operations during the three months ended March 31, 2021 decreased by $62 million compared with the same ~~periods~~period in the prior year, primarily due to reductions in allocated pension cost year over year. The ~~decrease in~~ net periodic benefit ~~costs~~cost included in Loss from operations

in during the three months ended March 31, 2021 and 2020 ~~was primarily due~~reflects the fact that nonunion and the majority of union employees have transitioned to ~~lower service costs reflecting the transition of employees to~~company funded defined contribution retirement savings ~~plans.~~plans and do not generate ongoing Financial Accounting Standards (FAS) service costs.

For discussion related to Postretirement Plans, see Note 1312 to our Condensed Consolidated Financial Statements.

Table of Contents

Other Earnings Items


(Dollars in millions)	Three months ended March 31
	2021	2020
Loss from operations	($83)	($1,353)
Other income, net	190	112
Interest and debt expense	(679)	(262)
Loss before income taxes	(572)	(1,503)
Income tax benefit	11	862
Net loss from continuing operations	(561)	(641)
Less: Net loss attributable to noncontrolling interest	(24)	(13)
Net loss attributable to Boeing Shareholders	($537)	($628)

(Dollars in millions) Six months ended June 30 Three months ended June 30

2020
2019
2020
2019
Loss from operations
($4,317 )
($1,030 )
($2,964 )
($3,380 )
Other income, net 206
213
94
107
Interest and debt expense (815 ) (277 ) (553 ) (154 )
Loss before income taxes (4,926 ) (1,094 ) (3,423 ) (3,427 )
Income tax benefit 1,890
301
1,028
485
Net loss from continuing operations (3,036 ) (793 ) (2,395 ) (2,942 )
Less: Net loss attributable to noncontrolling interest (32 )

(19 )
Net loss attributable to Boeing Shareholders
($3,004 )
($793 )
($2,376 )
($2,942 )

Other income, net ~~decreased~~ increased by ~~$7 million and $13~~$78 million during the ~~six and~~ three months ended ~~June 30,~~March 31, 2021, primarily due to higher non-operating pension income. Non-operating pension income was $177 million during the three months ended March 31, 2021 compared with $87 million during the same period in 2020, primarily due to higher ~~foreign exchange losses~~expected return on plan assets and lower ~~non-operating pension income,~~interest cost, partially offset by ~~lower non-operating postretirement expense.~~higher amortization of actuarial losses. Non-operating postretirement ~~expense~~income was ~~$27 million and $14~~$5 million during the ~~six and~~ three months ended ~~June 30, 2020~~March 31, 2021 compared with ~~$53~~$13 million ~~and $26 million~~of expense during the same ~~periods~~period in ~~2019.~~2020.

Higher Interest and debt expense for the ~~six and~~ three months ended ~~June 30, 2020~~March 31, 2021 is primarily a result of higher debt balances.

For discussion related to Income Taxes, see Note 43 to our Condensed Consolidated Financial Statements.

Total Costs and Expenses (“Cost of Sales”)

Cost of sales, for both products and services, consists primarily of raw materials, parts, sub-assemblies, labor, overhead and subcontracting costs. Our BCA segment predominantly uses program accounting to account for cost of sales. Under program accounting, cost of sales for each commercial airplane program equals the product of (i) revenue recognized in connection with customer deliveries and (ii) the estimated cost of sales percentage applicable to the total remaining program. For long-term contracts, the amount reported as cost of sales is recognized as incurred. Substantially all contracts at our BDS segment and certain contracts at our BGS segment are long-term contracts with the U.S. government and other customers that generally extend over several years. Costs on these contracts are recorded as incurred. Cost of sales for commercial spare parts is recorded at average cost.

The following table summarizes cost of sales:


(Dollars in millions)	Six months ended June 30									Three months ended June 30									(Dollars in millions)	Three months ended March 31
	2020			2019			Change			2020			2019			Change				2021		2020		Change
Cost of sales		$29,746			$36,455			($6,709	)		$12,978			$17,810			($4,832	)	Cost of sales	$13,808		$16,768		($2,960)
Cost of sales as a % of Revenues	103.6		%	94.3		%	9.3		%	109.9		%	113.1		%	(3.2		)%	Cost of sales as a % of Revenues	90.7	%	99.2	%	(8.5	%)

Cost of sales for the ~~six and~~ three months ended ~~June 30, 2020~~March 31, 2021 decreased by ~~$6,709~~$2,960 million, or 18% and by $4,832 million, or 27% compared with the same periods in 2019, primarily due to lower revenue, partially offset by COVID-19 related charges at BCA, BDS, and BGS and abnormal production costs related to 737

~~MAX in 2020. Cost of sales as a percentage of Revenues increased during the six months ended June 30, 2020~~ compared with the same period in ~~2019~~2020, primarily due to ~~the impacts of the 737 MAX grounding~~lower revenue at BCA and ~~COVID-19.~~BGS, lower period expense at BCA and KC-46A Tanker charges recorded at BDS in 2020. Cost of sales as a percentage of Revenues decreased during the three months ended ~~June 30, 2020~~March 31, 2021 compared with the same period in ~~2019~~2020 primarily due to ~~the second quarter 2019 charge for the 737 MAX grounding, partially offset by the second quarter 2020 impacts~~lower period expense at BCA and KC-46A Tanker charges recorded at BDS in 2020.

Table of ~~the 737 MAX grounding and COVID-19.~~Contents

Research and Development

The following table summarizes our Research and development expense:


(Dollars in millions)	Six months ended June 30				Three months ended June 30				(Dollars in millions)	Three months ended March 31
	2020		2019		2020		2019			2021	2020
Commercial Airplanes		$786		$1,062		$361		$498	Commercial Airplanes	$269	$425
Defense, Space & Security	330		374		167		190		Defense, Space & Security	163	163
Global Services	65		73		35		33		Global Services	25	30
Other	116		183		62		105		Other	42	54
Total		$1,297		$1,692		$625		$826	Total	$499	$672


Part I. Financial Information (Unaudited)					Page

~~Part I. Financial Information (Unaudited)~~			~~Page~~

Item 1.	Financial Statements			1
			Condensed Consolidated Statements of Operations		1
			Condensed Consolidated Statements of Comprehensive Income		2
			Condensed Consolidated Statements of Financial Position		3
			Condensed Consolidated Statements of Cash Flows		4
			Condensed Consolidated Statements of Equity		5
			Summary of Business Segment Data		76
			Note 1 - Basis of Presentation		87
			Note 2 ~~- Goodwill and Acquired Intangibles~~		10
	~~Note 3~~ - Earnings Per Share	109
			Note 43 - Income Taxes		1110
			Note 54 - Allowance for Losses on Financial Assets		1211
			Note 65 - Inventories		1211
			Note 76 - Contracts with Customers		1312
			Note 7 - Customer Financing		12
			Note 8 - ~~Customer Financing~~Investments		1314
			Note 9 ~~- Investments~~		15
	~~Note 10~~ - Commitments & Contingencies	15
			Note 1110 - Arrangements with Off-Balance Sheet Risk		2120
			Note 11 - Debt		21
			Note 12 - ~~Debt~~Postretirement Plans		2221
			Note 13 ~~- Postretirement Plans~~		22
	~~Note 14~~ - Share-Based Compensation and Other Comprehensive Arrangements	2322
			Note 1514 - Shareholders' Equity		2422
			Note 1615 - Derivative Financial Instruments		2423
			Note 1716 - Fair Value Measurements		2625
			Note 1817 - Legal Proceedings		2827
			Note 1918 - Segment and Revenue Information		2928
			Report of Independent Registered Public Accounting Firm		3432

Forward-Looking Statements					3533

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		3735
			Consolidated Results of Operations and Financial Condition		3735
			Commercial Airplanes		43
			Defense, Space & Security		4746
			Global Services		4948
			Boeing Capital		5049
			Liquidity and Capital Resources		5150
			Off-Balance Sheet Arrangements		5251
			Contingent Obligations		5251
			Non-GAAP Measures		5352
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		5453

Item 4.			Controls and Procedures		5554

Part II. Other Information

Item 1.			Legal Proceedings		5655

Item 1A.			Risk Factors		5655

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		5855

Item 3.			Defaults Upon Senior Securities		5855

Item 4.			Mine Safety Disclosures		5855

Item 5.			Other Information		5855

Item 6.			Exhibits		5956

Signature					6057


(Dollars in millions)	Three months ended March 31
	2021	2020
Net loss	($561)	($641)
Other comprehensive income/(loss), net of tax:
Currency translation adjustments	(36)	(77)

Unrealized gain/(loss) on derivative instruments:
Unrealized gain/(loss) arising during period, net of tax of ($3), $77	11	(275)
Reclassification adjustment for (gains)/losses included in net loss, net of tax of $0, ($1)	(2)	2
Total unrealized gain/(loss) on derivative instruments, net of tax	9	(273)
Defined benefit pension plans and other postretirement benefits:

Amortization of prior service credits included in net periodic pension cost, net of tax of $6, $6	(23)	(23)

Amortization of actuarial losses included in net periodic pension cost, net of tax of ($65), ($53)	228	193
Settlements and curtailments included in net loss, net of tax of $0, $0	1
Pension and postretirement cost related to our equity method investments, net of tax of ($1), $0	2
Total defined benefit pension plans and other postretirement benefits, net of tax	208	170
Other comprehensive income/(loss), net of tax	181	(180)

Comprehensive loss, net of tax	(380)	(821)
Less: Comprehensive loss related to noncontrolling interest	(24)	(13)
Comprehensive loss attributable to Boeing Shareholders, net of tax	($356)	($808)


(Dollars in millions, except per share data)	June 30 2020			December 31 2019			(Dollars in millions, except per share data)	March 31 2021	December 31 2020
Assets							Assets
Cash and cash equivalents		$19,992			$9,485		Cash and cash equivalents	$7,059	$7,752
Short-term and other investments	12,438			545			Short-term and other investments	14,861	17,838
Accounts receivable, net	2,793			3,266			Accounts receivable, net	2,356	1,955
Unbilled receivables, net	8,570			9,043			Unbilled receivables, net	8,785	7,995
Current portion of customer financing, net	115			162			Current portion of customer financing, net	93	101
Inventories	83,745			76,622			Inventories	82,668	81,715
Other current assets, net	2,624			3,106			Other current assets, net	4,123	4,286
Total current assets	130,277			102,229			Total current assets	119,945	121,642
Customer financing, net	2,054			2,136			Customer financing, net	1,895	1,936
Property, plant and equipment, net of accumulated depreciation of $19,863 and $19,342	12,182			12,502
Property, plant and equipment, net of accumulated depreciation of $20,792 and $20,507							Property, plant and equipment, net of accumulated depreciation of $20,792 and $20,507	11,643	11,820
Goodwill	8,064			8,060			Goodwill	8,074	8,081
Acquired intangible assets, net	3,019			3,338			Acquired intangible assets, net	2,773	2,843
Deferred income taxes	729			683			Deferred income taxes	79	86
Investments	1,066			1,092			Investments	980	1,016
Other assets, net of accumulated amortization of $617 and $580	5,481			3,585
Other assets, net of accumulated amortization of $917 and $729							Other assets, net of accumulated amortization of $917 and $729	4,646	4,712
Total assets		$162,872			$133,625		Total assets	$150,035	$152,136
Liabilities and equity							Liabilities and equity
Accounts payable		$13,700			$15,553		Accounts payable	$12,410	$12,928
Accrued liabilities	22,493			22,868			Accrued liabilities	20,553	22,171
Advances and progress billings	53,367			51,551			Advances and progress billings	50,908	50,488
Short-term debt and current portion of long-term debt	2,922			7,340			Short-term debt and current portion of long-term debt	6,021	1,693
Total current liabilities	92,482			97,312			Total current liabilities	89,892	87,280
Deferred income taxes	404			413			Deferred income taxes	908	1,010
Accrued retiree health care	4,427			4,540			Accrued retiree health care	4,077	4,137
Accrued pension plan liability, net	15,663			16,276			Accrued pension plan liability, net	13,968	14,408
Other long-term liabilities	2,821			3,422			Other long-term liabilities	1,477	1,486
Long-term debt	58,457			19,962			Long-term debt	57,554	61,890
Total liabilities	174,254			141,925			Total liabilities	167,876	170,211
Shareholders’ equity:							Shareholders’ equity:
Common stock, par value $5.00 – 1,200,000,000 shares authorized; 1,012,261,159 shares issued	5,061			5,061
Common stock, par value $5.00 — 1,200,000,000 shares authorized; 1,012,261,159 shares issued							Common stock, par value $5.00 — 1,200,000,000 shares authorized; 1,012,261,159 shares issued	5,061	5,061
Additional paid-in capital	6,648			6,745			Additional paid-in capital	8,155	7,787
Treasury stock, at cost - 447,840,938 and 449,352,405 shares	(54,829		)	(54,914		)
Treasury stock, at cost - 427,806,081 and 429,941,021 shares							Treasury stock, at cost - 427,806,081 and 429,941,021 shares	(52,395)	(52,641)
Retained earnings	47,478			50,644			Retained earnings	38,073	38,610
Accumulated other comprehensive loss	(16,025		)	(16,153		)	Accumulated other comprehensive loss	(16,952)	(17,133)
Total shareholders’ equity	(11,667		)	(8,617		)
Total shareholders’ deficit							Total shareholders’ deficit	(18,058)	(18,316)
Noncontrolling interests	285			317			Noncontrolling interests	217	241
Total equity	(11,382		)	(8,300		)	Total equity	(17,841)	(18,075)
Total liabilities and equity		$162,872			$133,625		Total liabilities and equity	$150,035	$152,136


(Dollars in millions)	Six months ended June 30						(Dollars in millions)	Three months ended March 31
	2020			2019				2021	2020
Cash flows – operating activities:							Cash flows – operating activities:
Net loss		($3,036	)		($793	)	Net loss	($561)	($641)
Adjustments to reconcile net loss to net cash (used)/provided by operating activities:							Adjustments to reconcile net loss to net cash (used)/provided by operating activities:
Non-cash items –							Non-cash items –
Share-based plans expense	115			104			Share-based plans expense	321	55
Treasury shares issued for 401(k) contribution							Treasury shares issued for 401(k) contribution	306
Depreciation and amortization	1,103			1,067			Depreciation and amortization	536	556
Investment/asset impairment charges, net	280			70			Investment/asset impairment charges, net	16	26
Customer financing valuation adjustments	9			249

Gain on dispositions, net	(92		)	(300		)	Gain on dispositions, net	(2)	(54)
Other charges and credits, net	815			145			Other charges and credits, net	35	97

Changes in assets and liabilities –							Changes in assets and liabilities –
Accounts receivable	143			588			Accounts receivable	(394)	(54)
Unbilled receivables	285			(222		)	Unbilled receivables	(790)	(402)
Advances and progress billings	1,822			1,842			Advances and progress billings	421	1,337
Inventories	(6,741		)	(5,233		)	Inventories	(680)	(2,973)
Other current assets	433			(887		)	Other current assets	153	328
Accounts payable	(3,181		)	2,002			Accounts payable	(819)	(1,030)
Accrued liabilities	514			4,959			Accrued liabilities	(1,615)	(583)
Income taxes receivable, payable and deferred	(1,894		)	(921		)	Income taxes receivable, payable and deferred	(34)	(892)
Other long-term liabilities	(109		)	(509		)	Other long-term liabilities	(84)	(69)
Pension and other postretirement plans	(357		)	(390		)	Pension and other postretirement plans	(265)	(179)
Customer financing, net	62			347			Customer financing, net	46	23
Other	247			80			Other	23	153
Net cash (used)/provided by operating activities	(9,582		)	2,198
Net cash used by operating activities							Net cash used by operating activities	(3,387)	(4,302)
Cash flows – investing activities:							Cash flows – investing activities:
Property, plant and equipment additions	(776		)	(922		)	Property, plant and equipment additions	(291)	(428)
Property, plant and equipment reductions	96			331			Property, plant and equipment reductions	2	58
Acquisitions, net of cash acquired				(492		)

Contributions to investments	(12,557		)	(496		)	Contributions to investments	(9,688)	(244)
Proceeds from investments	543			758			Proceeds from investments	12,738	227
Purchase of distribution rights				(20		)

Other	8			(12		)	Other	3	8
Net cash used by investing activities	(12,686		)	(853		)
Net cash provided/(used) by investing activities							Net cash provided/(used) by investing activities	2,764	(379)
Cash flows – financing activities:							Cash flows – financing activities:
New borrowings	42,302			11,670			New borrowings	9,814	17,433
Debt repayments	(8,265		)	(6,422		)	Debt repayments	(9,847)	(5,854)
Contributions from noncontrolling interests				7

Stock options exercised	27			47			Stock options exercised	23	21

Employee taxes on certain share-based payment arrangements	(164		)	(238		)	Employee taxes on certain share-based payment arrangements	(38)	(162)
Common shares repurchased				(2,651		)

Dividends paid	(1,158		)	(2,317		)	Dividends paid		(1,158)
Net cash provided by financing activities	32,742			96

Net cash (used)/provided by financing activities							Net cash (used)/provided by financing activities	(48)	10,280
Effect of exchange rate changes on cash and cash equivalents, including restricted	(11		)	(2		)	Effect of exchange rate changes on cash and cash equivalents, including restricted	(18)	(47)
Net increase in cash & cash equivalents, including restricted	10,463			1,439
Net (decrease)/increase in cash & cash equivalents, including restricted							Net (decrease)/increase in cash & cash equivalents, including restricted	(689)	5,552
Cash & cash equivalents, including restricted, at beginning of year	9,571			7,813			Cash & cash equivalents, including restricted, at beginning of year	7,835	9,571
Cash & cash equivalents, including restricted, at end of period	20,034			9,252			Cash & cash equivalents, including restricted, at end of period	7,146	15,123
Less restricted cash & cash equivalents, included in Investments	42			85			Less restricted cash & cash equivalents, included in Investments	87	84
Cash and cash equivalents at end of period		$19,992			$9,167		Cash and cash equivalents at end of period	$7,059	$15,039



	Boeing shareholders
(Dollars in millions, except per share data)	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Non- controlling Interests			Total
Balance at January 1, 2019		$5,061		$6,768			($52,348	)		$55,941			($15,083	)		$71			$410
Net loss									(793		)				(7		)	(800		)
Other comprehensive income, net of tax of ($48)												175						175
Share-based compensation and related dividend equivalents			120						(16		)							104
Treasury shares issued for stock options exercised, net			(39		)	82												43
Treasury shares issued for other share-based plans, net			(211		)	(15		)										(226		)
Common shares repurchased						(2,651		)										(2,651		)
Cash dividends declared ($4.11 per share)									(2,313		)							(2,313		)
Changes in noncontrolling interests															315			315
Balance at June 30, 2019		$5,061		$6,638			($54,932	)		$52,819			($14,908	)		$379			($4,943	)

Balance at December 31, 2019		$5,061		$6,745			($54,914	)		$50,644			($16,153	)		$317			($8,300	)
Impact of ASU 2016-13									(162		)							(162		)
Balance at January 1, 2020		$5,061		$6,745			($54,914	)		$50,482			($16,153	)		$317			($8,462	)
Net loss									(3,004		)				(32		)	(3,036		)
Other comprehensive income, net of tax of ($39)												128						128
Share-based compensation and related dividend equivalents			115															115
Treasury shares issued for stock options exercised, net			(20		)	47												27
Treasury shares issued for other share-based plans, net			(192		)	38												(154		)
Balance at June 30, 2020		$5,061		$6,648			($54,829	)		$47,478			($16,025	)		$285			($11,382	)



☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	June 30 2020		December 31 2019
717 Aircraft ($113 and $124 accounted for as operating leases)		$689		$736
747-8 Aircraft ($124 and $130 accounted for as operating leases)	483		475
737 Aircraft ($231 and $240 accounted for as operating leases)	253		263
777 Aircraft ($230 and $236 accounted for as operating leases)	232		240
MD-80 Aircraft (accounted for as sales-type finance leases)	171		186
757 Aircraft ($14 and $22 accounted for as operating leases)	166		182
747-400 Aircraft ($28 and $31 accounted for as operating leases)	81		90



	June 30 2020		December 31 2019
Equity method investments ⁽¹⁾		$998		$1,031
Time deposits	11,981		50
Available for sale debt instruments	411		405
Equity and other investments	72		65
Restricted cash & cash equivalents⁽²⁾	42		86
Total		$13,504		$1,637



	Total
July through December 2020		$2,462
2021	2,472
2022	1,368
2023	1,755
2024	1,373
Thereafter	3,354
		$12,784



	Six months ended June 30						Three months ended June 30
Other Postretirement Plans	2020			2019			2020			2019
Service cost		$43			$39			$22			$20
Interest cost	72			98			36			49
Expected return on plan assets	(5		)	(4		)	(3		)	(2		)
Amortization of prior service credits	(17		)	(18		)	(8		)	(9		)
Recognized net actuarial gain	(23		)	(23		)	(11		)	(12		)
Net periodic benefit cost		$70			$92			$36			$46

Net periodic benefit cost included in Loss from operations		$44			$45			$23			$23
Net periodic benefit cost included in Other income, net	27			53			14			26
Net periodic benefit cost included in Loss before income taxes		$71			$98			$37			$49



	Notional amounts⁽¹⁾				Other assets						Accrued liabilities
	June 30 2020		December 31 2019		June 30 2020			December 31 2019			June 30 2020			December 31 2019
Derivatives designated as hedging instruments:
Foreign exchange contracts		$3,233		$2,590		$7			$29			($165	)		($60	)
Commodity contracts	366		645		2			4			(119		)	(72		)
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	399		285		7			1			(6		)	(6		)
Commodity contracts	796		1,644								(25		)
Total derivatives		$4,794		$5,164		$16			$34			($315	)		($138	)
Netting arrangements					(14		)	(20		)	14			20
Net recorded balance						$2			$14			($301	)		($118	)



	June 30, 2020								December 31, 2019
	Total			Level 1		Level 2			Total			Level 1		Level 2
Assets
Money market funds		$8,877			$8,877					$2,562			$2,562
Available-for-sale debt investments:
Commercial paper	93						$93		108						$108
Corporate notes	321					321			242					242
U.S. government agencies									55			55
Other equity investments	40			40					33			33
Derivatives	2					2			14					14
Total assets		$9,333			$8,917		$416			$3,014			$2,650		$364
Liabilities
Derivatives		($301	)				($301	)		($118	)				($118	)
Total liabilities		($301	)				($301	)		($118	)				($118	)



	737	*	747	767	*	777	†	787	Total
Deliveries during the first six months of 2020	9	(7)	1	14	(6)	10		36	70
Deliveries during the first six months of 2019	113	(10)	4	22	(14)	22	(1)	78	239
Deliveries during the second quarter of 2020	4	(4)	1	4	(1)	4		7	20
Deliveries during the second quarter of 2019	24	(6)	2	10	(6)	12		42	90
Cumulative deliveries as of 6/30/2020	7,448		1,556	1,190		1,637		975
Cumulative deliveries as of 12/31/2019	7,439		1,555	1,176		1,627		939


	737	*	747	767	*	777	787	Total
Deliveries during the first three months of 2021	63	(5)	1	5	(1)	6	2	77
Deliveries during the first three months of 2020	5	(3)		10	(5)	6	29	50
Cumulative deliveries as of 3/31/2021	7,545		1,561	1,211		1,659	994
Cumulative deliveries as of 12/31/2020	7,482		1,560	1,206		1,653	992



			THE BOEING COMPANY



			(312)			544-2000


	Program
As of 3/31/2021	737	747	767	777	777X	787	†
Program accounting quantities	10,200	1,574	1,207	1,700	350	1,500
Undelivered units under firm orders	3,240	12	97	35	228	442	(22)
Cumulative firm orders	10,785	1,573	1,308	1,694	228	1,436

As of 12/31/2020	737	747	767	777	777X	787	†
Program accounting quantities	10,000	1,574	1,207	1,700	350	1,500
Undelivered units under firm orders	3,282	8	75	41	191	458	(22)
Cumulative firm orders	10,764	1,568	1,281	1,694	191	1,450



	Program
As of 6/30/2020	737	747*	767	777	777X	787	†
Program accounting quantities	10,000	1,574	1,207	1,690	**	1,500
Undelivered units under firm orders	3,595	12	89	46	309	501	(27)
Cumulative firm orders	11,043	1,568	1,279	1,683	309	1,476

As of 12/31/2019	737	747	767	777	777X	787	†
Program accounting quantities	10,400	1,574	1,195	1,690	**	1,600
Undelivered units under firm orders	4,398	17	94	68	309	520	(29)
Cumulative firm orders	11,837	1,572	1,270	1,695	309	1,459


†	~~Aircraft ordered by BCC are identified in parentheses.~~


*	~~At June 30, 2020, the 747 accounting quantity includes one already completed aircraft that has not been sold and is being remarketed.~~


**	~~The accounting quantity for the 777X will be determined in the year of first airplane delivery.~~


⁽¹⁾ FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. This adjustment is excluded from Core operating loss (non-GAAP).	FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. This adjustment is excluded from Core operating loss (non-GAAP).


⁽²⁾	Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. These expenses are included in Other income, net and are excluded from Core loss per share (non-GAAP).



	(a)	(b)	(c)	(d)
	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (2)
1/1/2021 thru 1/31/2021	83,222	$205.60
2/1/2021 thru 2/28/2021	73,567	213.57
3/1/2021 thru 3/31/2021	24,129	223.57
Total	180,918	$211.24



(Dollars in millions, except per share data)
	(a)	(b)		(c)	(d)
	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs⁽²⁾
4/1/2020 thru 4/30/2020	5,381		$138.98
5/1/2020 thru 5/31/2020	4,201	140.49
6/1/2020 thru 6/30/2020	1,761	165.29
Total	11,343		$143.62


⁽¹⁾	A total of 9,175 shares were transferred to us from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock units during the period. We did not purchase any shares of our common stock in the open market pursuant to our repurchase program. We purchased 2,168 shares in swap transactions.


⁽²⁾	On March 21, 2020, the Board of Directors terminated its prior authorization to repurchase shares of the Company's outstanding common stock. Share repurchases under this plan had been suspended since April 2019.


3.2			By-Laws of The Boeing Company, as amended and restated effective April 20, 2021 (Exhibit 3.2 to the Company's Current Report on Form 8-K dated April 20, 2021)

10.1*			~~Employment Agreement between Boeing Canada Operations LTD and Susan Doniz~~Form of U.S. Notice of Terms of Non-Qualified Stock Option

10.2*			Form of International Notice of Terms of ~~Supplemental~~Non-Qualified Stock Option

10.3*			Form of U.S. Notice of Terms of Non-Qualified Stock Option for CEO

10.4*			Form of U.S. Notice of Terms of Restricted Stock Units

1510.5*			Form of International Notice of Terms of Restricted Stock Units

10.6*			Form of U.S. Notice of Terms of Restricted Stock Units for CEO

15			Letter from Independent Registered Public Accounting Firm regarding unaudited interim financial information

31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1			Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2			Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			Inline XBRL Taxonomy Extension Schema Document

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104			The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2020,~~March 31, 2021, has been formatted in Inline XBRL.


		THE BOEING COMPANY
		(Registrant)


		~~THE BOEING COMPANY~~
		~~(Registrant)~~
April 28, 2021		/s/ Carol J. Hibbard
(Date)		Carol J. Hibbard


~~July 29, 2020~~	~~/s/ Robert E. Verbeck~~
~~(Date)~~	~~Robert E. Verbeck~~
	Senior Vice President and Controller