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Boeing (BA)

Participants
Maurita Sutedja Vice President of Investor Relations
David Calhoun President and Chief Executive Officer
Greg Smith Chief Financial Officer and Executive Vice President, Enterprise Performance & Strategy
Peter Arment Baird
Rob Spingarn Credit Suisse
Seth Seifman JPMorgan
Carter Copeland Melius Research
Noah Poponak Goldman Sachs
Doug Harned Bernstein
Ron Epstein Bank of America
Sheila Kahyaoglu Jefferies
Jon Raviv Citigroup
Myles Walton UBS
Call transcript
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Operator

Thank you for standing by. Good day, everyone, and welcome to The Boeing Company's First Quarter 2020 Earnings Conference Call. Today's call is being recorded. The management discussion and slide presentation, plus the analyst question-and-answer session, are being broadcast live over the Internet. [Operator Instructions].

opening to introductions, Ms. for the am time, over call this remarks I and turning At Maurita for The Vice Boeing Sutedja, President Company. of Investor Relations Ms. go please ahead. Sutedja,

Maurita Sutedja

Thank Officer; me today Boeing's David Calhoun, Welcome call. you, and Maurita Smith, are good Chief Boeing's President XXXX Executive I'm with quarter Greg earnings to and Sutedja, Boeing's John, and and first morning. Executive we a others Enterprise After limit one management will call, conduct Officer. on please and to comments, fairness Financial question-and-answer that Chief Operation In yourself Vice question. President session. you ask the we to

provided financial slide earlier and you have we always, release a follow press can in presentation issued through As And reminder, as detailed information our broadcast our website today's today. boeing.com. at

to and statement the projections, need and news discussion this web that Before our risks, presentation. to our in our SEC we goals in the include morning are filings remind estimates forward-looking are this likely release disclaimer of various which at involve I any end you in we detailed begin, and

In our and and for disclosures non-GAAP earnings of to addition, certain refer presentation reconciliation measures. release we you

Now, Dave I the Calhoun. turn will to over call

David Calhoun

and are staying and to this to I I by everyone. good hope customers Boeing doing other, Maurita, colleagues these healthy our my business, global thank during for and want start they you’re support globe to you, Thank crisis. everything morning, I want intensely all safe challenging during saying also the our times. around each

frontline and responders decisions personal to federal, the care are servants I'd risks of protect difficult out Boeing, of professionals and all there behalf us. from first to and authorities they like of state, public the for the making to all recognize and for local On healthcare

Boeing, crisis Let’s no Across This turn safe. personally our our other. home like global pandemic please. a and the for professionally. focused people COVID-XX and we’re on communities us to hits The is keeping slide second

adding every taking scanners, distancing implementation temperature the to suspending the deep medical increase access quarantining virus around clock, work virtual operations to work, our battling and exposed measure indicators more. thermal by cleaning screening no of patterns, to early potentially social possible We’re anyone virus, the touch providing stop visual work to including where with adjusting necessary stations information and areas,

with that We work, of federal customers brings Carolina doubled site ensure sites support will rigorous cannot production back At a where was for leave our remotely for their final we’ve steps worked and week, paid temporarily we’ve restart as safe and teams to beginning aligned have before X. sites result to our of maintain we and objectives suspend we policy we had this work Earlier This announced our ensure at to implemented critical Boeing bringing to suspended. with operations that them. those back our temporarily our operations, state site we’ve May closely when resume suspended guidance move South are who on operations. orderly COVID-XX. And

defense to continue disruption as services of have suspended for we suspension We’re our supply to end decisions. our item to operations operations. also reduced trickle. of to health. some suppliers In this own or supply and business on cases, chain focused number support doing site supply also We’ve shortages A mitigating value commitments to a customers. customers can our their our own the actions watch we space our some in resulting but the where our a other airplanes remains We’ve taken At meeting us. contributed their commercial global for and everything key slows our can, support we chain,

on and will and than supports liquidity industry, we through and The sector of chain, of the In aerospace and the a Given aviation applaud well States, on sectors. the $XXX manufacturing ensuring our company as preserve GDP, generating comprises aerospace the the U.S., announced nation’s some including jobs We more as intensely airline to swift nature the the packages of global United million which economic XX,XXX COVID-XX global critical supporting shared suppliers. CARES pass long-term XX support relies sector, X.X together the crisis. competitiveness entire have working XX this industry worth immediate million we than and welcome jobs our the Act, supply more that for Congress aerospace the severe focused worldwide. the administration billion X.X% to targeting which countries, shock, to are be specifically

the We markets out to credit take to of will is function that to expect place U.S. the Knowing the our liquidity and not to industry’s on impact the again, financial ability putting The air government agreed will package full medium to by in is the the our production critical Even is the coming government vital us through airline step has pillar that allows support recovery. $XX options the toward recovery bridge services long-term pandemic, aviation providing that help of programs and the a economy. the maintaining for a industry years, airlines billion support travel. bill U.S. funding plan and and support months. provide pivotal the U.S. system

but to that through situation believe go we bit a in industry’s will just support our detail liquidity. ensuring to later, government me access say, be liquidity our let Greg more will critical

aggressive U.S. evaluate term the well U.S. and drawing including the spend, as capital loan, taken customers. receipts from defense programs. from continue funding We’ve markets steps, non-critical some accelerating down with the the help share Treasury as various deferring options Federal Reserve a options our We in and or terminating reducing progress government reducing repurchase via payments, authorization, other to payment liquidity dividend suspending operating costs, also on

and Additionally, are business, leadership reshape resize the at with our we structure. starting our top to working

We and accountabilities. focusing are consolidating roles, simplifying processes,

functions, his well CFO manufacturing, to you additional in leading take As part of roles. enterprise, our know services asked to of strategy chain, Greg this most Smith, addition and and reorganization, I’ve responsibilities who supply

I healthcare selfless have the face broader Before healthcare transport shields of world, dollars of to contributions and to for just steps coronavirus. I people we’re to supplies around missions have the longer-term to employees and on the environment business thousands hundreds flown it, a prepare critical food and been distribution masks, the for for equipment, centers protective to call professionals, fight that’s They’ve contributed partial our taking producing Boeing turn out our gloves the donated in need want aircraft against to other and list. made to

industry and this. forecast The to anything seen Slide projects never like latest on industry Now, our the for I’d X. quite full-year the to IATA like highlighted outlook attention air turn travel The to has governments to the XX% due severely contain global economic of travel to XXXX, traffic virus. activity restricting this down passenger be down the that year COVID-XX slows to spread compared the as

year moment operations traffic to time this XX% a cutting Here in back passenger down the is Airlines dramatically. in U.S., compared ago. are at

As they fleets, they’re that down postponing grounding deferring and or businesses, orders, of their assess orders, stopping making completed slowing result payments. airplane difficult acceptance decisions in

over levels They it to long-term decades to to are two the services. take XXXX years will three that trends. also a few to for past fewer remain the driven intact. believe be this accelerating years growth to travel air aircraft will return it but recover, We doubled beyond will and for return have decades retirements travel industry industry and five air past two the traffic that The and requiring for fundamentals

within outlook insights recession prior the decades behavior industry Our industry a customer potential assumptions by on including in has the of and to is We shocks. assessment. informed prolonged analysis incorporated and consolidation reacted our how to market related

today, it trailed The bring to we picture the airplanes by many to lead as is than airplanes and key dynamic but passenger see in way narrow-body driver fleets airlines will subject the progressively as more significantly likely of both will wide-body networks retirements back be impacted of unknowns, wide-body their the Therefore, in near A narrow-body will fleets. online. older rate segments be fleets term. recovery

as focus our to customers in will expect oldest light to of retire. were uniform be efficient at airlines least with the differently XX-plus in their will We prior of years More X,XXX service service fleet active not planning on dynamics. Replacements strategies to crisis. aircraft the than these and look

airlines Some to announcements already effect. have this made

to this airplanes be than plan we to efficient XX% fuel more that they’re Airplanes deliver replacing. XX% that year will

helped up, the line the and proposition our the have value of balance our and to airplane includes and of unmatched programs. of XXXX largest backlog. shock our supply by and the and airplanes our family reduce efficient of competitiveness, long-term to XXX Our the commercial cargo potential This the family, world’s diversity decided twin-engine position market-leading demand is most XXX family. Dreamliner our versatile of production several COVID-XX To we preserve the given our rates jet and

are low at have we will conditions X. to timing aircraft of the understood. we Slide production as rates MAX In segment, to resume turn better in Let’s return service assumed and XXX that XXXX narrow-body

gradual gradually with our rate pace We is the rate further ramp the expect increase production and affected of of due The production commercial up slower airline the COVID-XX, increases to with the rate of reflects profile that XXXX uncertainty production XX industry correspond market to ramp to stored impact also by delivery demand. during aircraft.

and to required less airplanes replacements our capacity continue for older, growth for see efficient creating providing new airplanes. We MAX

the customers backlog to to make will MAX and closely near planned flexibility protect and XXX the their lower where continue in adapt deliver family. We our more to provide to the than appropriate our of review in to production with work plans MAX airplanes adjustments fleet term, value MAX

month Moving XXX reduce X gradually rate per XXXX plan per to and reduce by production to XX We the wide-body segment. XXXX. then the in to now to month

XXXX will and demand. to supply beyond rate evaluate We to continue balance the

as -- compelling fleet as performance and XXX fuel offering expanding enabling range optimize and Our well profitably profitability a to carriers unparalleled Dreamliner well flexibility, as as has network markets. family proposition, efficiency new value to

and average the We rate the X.X due made the flight three production especially in development in restart impacts the by combined month at operations XXXX. per XXXX expect COVID-XX-related any the And XXXX. COVID-XX, environment delivery We’ve in risks and be to we XXX/XXXX around post-MAX our continue month impacts. in requirements to of XXXX Puget driven certification reduce the manage certification will We progress expect first testing the approximately inherent XXX-X ones the program, per the to of currently resumed deliver have and primarily now the to in market XXX in to of on with Turning to XXXX. Sound. an to plan uncertainties rate of

will a corporation service. we in the number We minimize amount approach ramp to prior into will rate of look aircraft the entry measured to produced the as work to managing by change take XXXX of

as to closely market and On earlier, discussed our cargo the manage I carefully will the monitor XXX, we skyline. continue

dedicated rates the and half These to the to are and of opportunities. programs into These XXX change time. this for environment, on of no make current is we’ll account approximately production Finally, the taking based targeted XXX a our are the market at program. assessment XXX decisions tanker host risks and demand of line rate production cargo the

We affect will wide-body and market. monitor factors the skyline that our including the replacement closely cycle key cargo the

We will appropriate maintain discipline make future. adjustments a and in management as process rate the

our The unmatched government Slide for will moving space turn X. services, to diversity let’s Now us our of and critical stability defense forward. portfolio programs is provide and

our portfolio In of and revenue in internationally. remains year our XX% our & fact of temporary to customers’ Security, some technologies At various our Defense, programs, work solid our missions. near-term major obviously platforms of the increase aligned will healthy operations XXXX at to market our associated demand production with in well domestically continue and ahead. these we see in programs that a and accounted Space suspension impacts locations, for Despite areas with for both overall

address also new to platforms franchise for with world-class needs, are the well-positioned affordable current innovative We and and future. capable programs proven

funding For key KC-XXA vehicle. example, for XX also undersea year budget and and the unmanned of the It President’s ’XX the in large franchise the future V-XX with aircraft fiscal our Red programs, development F-XXEX Tankers. and profile extra expected Wolf, the MQ-XX, and requests including line supports T-XA Grey programs, the Hawk request Apache, Boeing XX MH-XXXA

We from the have across BDS products portfolio. the programs support for received Pentagon and broad

KC-XXA of our space performance Tanker including improving existing We programs. platforms, are continuously and the our

System, has future challenges, aircraft other ensure month’s Vision and the by and Air While delays will which the with measured. becomes integrate are we develop had this standard program Remote all KC-XX agreement a U.S. Force refueling that tanker to the with new

have XXXX capabilities tanker KC-XX. Given and men in our of design technological The that and Force commitment, the US have other our will the its tanker no of Air women reinforces the update, dedication. investment full

Test. Our CST-XXX NASA’s completed space core teams Flight and the lessons System Space of learned stage Launch Orbital from Starliner’s key the

paving system, the on this of the the fly refly to will test thing quality and to way for for the NASA flights. it. Starliner customer do astronauts who the crude our is We It ultimately demonstrate future right

another quarter. recall, we As you uncrewed may provisioned last our financials mission for in

direct commercial parts On demand logistics a the a side, as seeing in services result business our on we flights impact and are supply for fewer offerings. decreased chain our

modifications Our We maintenance. when commercial such spend result customers period airplanes, which levels, and of accelerated commercial our for previous travel older newer anticipate demand are which the to upgrades resumes offerings. retirement fleet and decreased as of on curtailing required discretionary a focusing will in prolong will services air

it government services commercial support under a of Commercial XXXX including overall with for The on as accounted logistics services for to training, services of services stable. expect multi-year key see services government the provides Similar as revenue, in customers business. The outlook number business. Airplanes, chain international in our remains well for period We offerings demand BGS growth of we government just strength business, a our recovery for the a which and to U.S. programs. areas growth ramp-ups strong foundation supply half

it spending In had our in a reductions The as around rates on and of in adjustment schedules look airlines BCA our going economic and workforce. will outlined the impact industry make has infrastructure, our us production resulting summary, the is require this world. to result I our very different pandemic similar the and to

doubling see at maintain other work have and But sites impacted worked even be over length the pay next COVID-induced workforce could. as of We employees we those back we the out MAX in Charleston shutdown company will our by we safely Sound, sharp reduction years people sites, soon we a for demand to bringing smaller airplanes stability the hard support workforce a time the of as several the the layoffs while. of Puget today. suspension our for of won’t We’ve production, size to through avoiding of the the that

most our involuntary our layoffs At enterprise. our employees necessary. this make by through workforce time, and for the of We’ll this of roughly is in XX% total layoffs, by we of are deeper businesses end services more us time, and the approximately to XX% voluntary services even are have exposed as taking action of that customers, overall airplanes defense, condition corporate cut. across space the same areas the the XX% year, to of the and combination reductions reduce the ongoing of At commercial than as businesses, attrition well as commercial limit of stability our to XXX,XXX This our help our depth related functions. will

continue of to Of market as conditions adjustments will it in factors course, closely and we ongoing will make we unpredictable monitor the light driving appropriate. currently

global employees providing through this of our facing. like as we emergency the work our health fairly over the committed continuously we and what to duration implementing and next to to as for are will our the employees as can reductions news transparently with these possible and much respectfully to the as years. look think and support compete we We shape market I shared will this five I morning business

this update turn over important want you to a I couple other topics. I of to Before on Greg,

the First, to our MAX XXX returning progress on safely service.

flight. on required work on MAX that the our precede and we closely software FAA other will continuing safe global completing service a of regulators. certification the to return We’re working technical validation focused and Right with are now, documentation the the

has documentation to anticipated and also things how work than meetings this coronavirus we do remotely of required Some including with and we has changes regulators. working longer our the taken virtual situation some

quarter. support XXX that progress during to and make said, very resumption currently regulatory be MAX With will time expect deliveries the of obtained the necessary we’ve to we approvals continued third solid in that

lives process timing XX and backlog meantime, useful have be actual aircraft. Of In ultimately remained well X,XXX in narrow-body most we aircraft MAX the market XXX determined the fuel-efficient our and MAX the regulators. by the this with approximately course, are over approximately strong XXX has will years. built stored our at They planes throughout

proactively We been needs. health this the while backlog, of responding working their to customers with maintain have to our

unsatisfied companies, we Turning We MTA our had the to for Master to both but we to two years commercial agreement is have agreement. and establish critical was our joint to for Saturday around Embraer, have could rights under Agreement. not come exercised and but defense strategic in reached deeply a deal transaction, the conditions the where It helpful resolution ultimately we continued the worked between out negotiation Transaction two longer disappointing we announced so a finalize that we point set terminate diligently to covering partnership ventures. the the no the terminated planned

Boeing. on established January. stakeholders. is to I will Looking trust in included XXX across important the priorities that concentrate back most They earning and ahead, service what we with returning MAX to to end, our company To six safely continue

our to across future we We our excellence while delivering and our are invest businesses committed production our and to also restoring values. determined health, are always living in

lose importance such the future, the the XX.With let XXX will on of development financial We to for that, as Greg? an our such of over to are our not critical on -- sight such our and continuing making to investments continued as turn that MAX me XXXX the Greg as progress performance. update it programs

Greg Smith

and Dave, good morning, Great. Thanks, everyone.

please results. X first turn our Slide Let’s for quarter to

share first were experiencing COVID-XX and driven quarter quarter and internal cash the primarily impacts our materially COVID-XX results operating meeting Revenue, MAX first forecast. by to well Prior grounding. the impacts, reduced. were earnings tracking flow Our XXX we per to original

quarter of KC-XXA XXX revenue the due on share the were by Tanker also reflects as MAX well negative COVID-XX. earnings program. in Core last Our deliveries a fewer the quarter and billion, to was per quarter lower earnings first versus deliveries of charge as $XX.X in $X.XX impacted year,

let MAX. performance, segment on the me touch discuss we XXX Before

stored aircraft XXX inventory. Dave have we’re MAX and XXX As built approximately in -- mentioned, currently

and Delivery regular priority aircraft to than to inventory. deliver period more our on their year. completing monitor aircraft flights mentioned, assumptions return takes past continue assisting timing service. maintain one, ramp. due the over with out to will COVID-XX to we’ve impacts, be Also, X,XXX to to deliveries storage continue operating profile from in these from basis, time production it of over and aircraft revised We the as the post rate convert our storage the significant a cash customers of storage these in These will including primarily and

we rate We’ve aircraft better In preparation statements, profile. as that understood. production during at begin quarter and conditions initial for ramp will COVID-XX are second timing timing impacts assumed we XXX and XXXX and financial our deliveries, first quarter of including certain rates made low production assumptions, MAX of to service return the

a We production market approvals XX assumed expect of demand. the quarter that enable will assumed to than a also deliveries, the during expect inventory first increase majority of and although rate again that of slower year delivered with aircraft previously within the the we XXX at the after correspond produced increases of to resumption regulatory grounding deliveries will third XXXX We’ve to XXX gradual included pace assumed. timing XXXX. resume be the MAX and gradually the the during further We’ve during to MAX during

aircraft, due in production deliveries to reduces increases result result the XXX rates number ramp reduced rates cost impacts additional accounting XXX after produce to slower reduction planned by quarter, rate This to of delivery as as the Again, units primarily COVID-XX. the margins production a industry COVID-XX. reflects cost the will The In the resume. further program and of first the in due undelivered aircraft result fixed a production quantity to of absorption. airline reduction commercial we to plan in

production production rates to and of production approximately in we for billion be the abnormally period result abnormal will the as billion. majority expected once around of year. billion from $X increasing low to as will longer be resumes cost, and These In total $X additional $X abnormal extend addition, these production expensed this expect expensed a to incurred, costs

delays. expensed financial these additional to $XXX Any of no estimate recognize abnormal million the potential There our us costs. changes material change to During of quarter, is production assumptions we impacts. require to for could first reduced liability customers cash grounding the $XXX to to considerations related disruption other MAX In million, we approximately the the associated quarter, delivery and first through by balance concessions primarily and payments.

of pandemic. disruption operations assessing address We impact customer-by-customer, continue is COVID-XX light of including the MAX impacts individually having in the the on their to

of more We expect to continue consideration also years. in to to the other or be the be with cash years first concessions over any provided impact front-loaded number few a

now move the Slide Airplanes to Let’s X. Commercial on

lower $X.X to Our the Commercial impacts following: decreased business by Airplane negative XXX billion declined as grounding of MAX the reflecting revenue quarter XX.X% deliveries, COVID-XX. to to margins primarily Operating during well due as the

from due Generation million fork primarily delivery a rate COVID-XX. volume; approximately MAX from saw of costs in million response one suspension as and a Lower related to XXX in margins Next costs $XXX component quarter. program abnormal also XXX to week abnormal cost charge reductions associated the related known temporary earlier; and temporary of COVID-XX; of the lower $XXX to with the costs $XXX repair We the operations of impact the to of production Sound mentioned suspension that; million fitting the the these pickle Puget frame

additional We program the through additional quarter, margin lower contraction Sound to X,XXX abnormal valued Puget in the drove and to quarter May. which related aircraft. over airplanes due disruption remaining and primarily the decreased BCA early due of billion. expect requiring to planned to and Charleston of fewer The XXX cost recognize deferred costs, higher backlog in April the fixed our includes sites our suspension rates, XXX-unit at COVID-XX accounting second quantity to also $XXX us production absorption, over costs balance see

our rates appropriate production our recovery. will COVID-XX the the for aircraft our adjustments environment assessment current factors as position significantly pandemic affect earlier, closely us we’re help in that rate bridge continue and us on which monitor decisions rate these based demand to impacted and we a These and of future. result mentioned demand, skyline future to and the are make actions will realities taking by has these Dave as of new infrastructure, As adjusting

Security move Defense, Slide Space on X. & now to Let’s

was Remote the due and for decreased cost $X and of KC-XXA charge billion, the with revenue to driven Tanker, which quarter by factory inefficiencies on million charge while Tanker, Vision pre-tax primarily of margins negative KC-XXA primarily reflect of productivity First related operating the $XXX develop Force to disruption. BDS X.X%, to our $XXX with agreement System, driven U.S. COVID-XX in by the the integrate costs the signed the associated April Air new remaining million

other of further of VC-XXB, quarter. also margin costs including number the in an related provisions COVID-XX Act them. There to in A programs, the time, of provide continue Care opportunity are were these by to the impacted reducing to our COVID-XX some contracts and over that may we’ll recover evaluate

During from the $X XX% the now billion our States. at won billion worth stands quarter, BDS $XX United with backlog key and outside contracts

turn favorable XX.X% Global was due $X.X government quarter, to largely Boeing the results operating flat increased first COVID-XX. lower revenue to Global to volume, Services Slide to reflecting higher offset on Let’s In primarily BGS X. service at by service government services margin volume Services the billion, due performance. commercial

worth COVID-XX future contract to $X the commercial impact now we and key demand billion, the significantly $XX for saw We business to which billion. of expect COVID-XX beginning won During the quarter, the the of first quarter have services BGS on periods. larger backlog only awards approximately in impact approximately its on BGS our brings

market these that right-size positioned realities, our as we tailor proactive dynamic, challenging to employment to better actions ensure changing industry are include serve ultimately these number new of taking position a right-size steps our and to through recover. this respond to steps we’re customers market our inventory and business our portfolio taking and time proactively as this well for when to the both begins to To

XX. cash on now turn flow Let’s Slide to

is use more the in earnings this made global for paid And driven shift disruption year flow $X.X cash receipts. and Operating of of has on advanced delivery payments it first that economy COVID-XX debt the negative has significant billion quarter, $X.X on COVID-XX billion added volume, Also our airplane flow billion cash and pressure severe the the impact and December, be XXXX. commercial our caused and expenditures, receipts During expected in the as timing the declared XXXX. has were maturity. was last on quarter. our flow lower quarter to airlines in capital paid in The had greater in $X.X situation by call, $XXX last production million dividends the and challenging also of we shared Clearly, cash COVID-XX, than delivery cash of expenditures. spent and which we discussed, impact even

pandemic COVID-XX and challenges unprecedented clearly presenting our industry for our company.

taking repurchase a taking to employees, and stock. and workforce conserve suspended until its of actions our necessary. as of involuntary actions combination in through a voluntary prior attrition notice. accelerate of our Dave XXXX, will cash. April further payment suspended previously Since and common authorization XXXX, of March we’ve have We’re Directors discussed, and production as And certain we taken company’s layoffs, to business, mentioned, terminated number shares layoffs be dividend to our we March the In program, in actions furloughed share reduce rates our commercial and as XXXX, repurchase have we Board of

and We spending continue discretionary success. our to development, and continue capital to will in technologies be reduce we that reducing research have deferring expenditures, and Also into spending. priorities or will and but future critical key our will customers’ we

taken with also working Defense certain the near-term of pandemic. We’re work increased government to of of appreciate we’re payments. among our customers CARES other We the industry partners with initiatives. COVID-XX withholds the In its and to assess that with mitigate the has steps impacts associated to Department any Act, reductions liquidity deferring improve payment progress tax in forms pursuit and rates in

our stability manage shock the same of manage US but the time We to manage doing liquidity, partners and to with demand at we supply can through are chain this protect to everything as industry. the chain, do health long-term working supply carefully our aerospace health we the of

best to The of X ways source our and supply our suppliers Tier the and through keep with the most OEM suppliers. chain for liquidity on good business this to period. our credit focused are is We flowing important of liquidity

forecast. full-year negative tracking as COVID-XX, quarter As is flow Also I cash we to XXXX COVID-XX operating were we cash pressure to be and clearly more mentioned, XXXX. additional our expect putting prior and internal first on mentioned, in

a delivery also in and commercial We rates. XXX government recovery Airplanes, the MAX cash the side profile revised cash going to flow flow services, business. the solid expect line with earnings generation of be expect on Outside and in forward we slower due Commercial wide-body our to new production

now Let’s liquidity XX planning. finance we’ll discuss and position move Slide and to

Also increase, we As of the quarter, as previously term shore-up $XX.X position the help paid billion total billion debt drew we down $XX.X Again of this We quarter COVID-XX, discussed, and balance. balance to now the to $X.X continued billion. an early we delayed resulting ended debt liquidity use marketable cash cash draw to reduce our in securities. $XX.X current has work the $XX.X the of billion challenges. daily down maturity, our in with billion loan to through bringing due

not have to $X.X to continue to upon. drawn access billion credit revolving our has facility, been We date which

Federal government capital and liquidity as we markets to government Given the be liquidity. to from critical our as significant to the options Reserve We U.S. options and operating Treasury well cash access are evaluate will additional continue the U.S. working industry’s impact and of believe via various managing our in COVID-XX to funding support position proactively on ensuring programs. our we access the cash,

be our actions cash access will able We available the additional continue believe operations. to We review our will we our sufficient options best access liquidity, through a combination all obtain and to to select fund to company. of ability and our for

people, making generation We top liquidity normal as new our change, plan sight lose responsibilities sheet as tools to to prepare roles will more streamline that This levels. balance technology debt our processes once we includes post-pandemic returns this navigate cash environment. Dave and the of business, are not priorities we and and organizational are our and leverage future. now critical recent our our levels to immediately reduce in necessary for footprint. mentioned, our industry and simplify Again, Managing investments flow better to and challenging

industry as the and and excellence closely COVID-XX operational excited to on we recover I’m take from teams to business the chain rebuild stronger. units that, aerospace health with drive restore of part across and As and pandemic and production role new a work broader supply our

and is challenging environment obviously dynamic. current The extremely very

industry, the we near and recovery. longer-term action XX,XXX staying supporting engaged And side take right-minded other as future But can opportunities and discussed, healthy aerospace to continue the suppliers continually this about the taking company U.S. to we all we well-positioned we’re bridge of our will with remain demand. and and the emerge on appropriate assessing fully to We’re it, changing the ensure have be the crisis. environment to customers, our to capture when and

turn I’ll to back Dave some comments. closing it over that, for With

David Calhoun

Thanks, Greg.

industry and the am and We’re unprecedented an Boeing. talented and world, period of the to lead humbled in I the privileged people for

and a We and action are be will and our taking position stability continuity chain supply the navigate market. pandemic, support for this to maintain right workforce, through changing

mission. We critical customers their in continue national defense to security support our

of are our We into toward service keeping safe the do and MAX of top our are to we through health their day. excellence operational of that it driving progressing the are return and the employees, communities and we mind. all safety, all, we XXX families quality And every

believe We travel fundamentals strong and industry recover. long-term will air remain the

confident will rises is our and has Boeing Our is we’re and that leader challenges. portfolio crisis and this from company products emerge again thrive a a we proven of to of History these well-positioned as industry. technology

Greg you. that, to your and take be happy I With questions. will Thank

Operator

[Operator Instructions].

go comes Our with Arment from first ahead. question Peter Baird. Please

Peter Arment

now. get of a Thanks. your Greg, get know XX of going fleet to be over deliver kind seems it you a just for arriving certification the just given I in know right warming kind squaring a back whether don't target aircraft, that? of and how period, kind this looking or Dave Dave, guess then that's just just stored question Thanks us for trying over you air line backdrop thanks. to production the seeing Maybe for in against to majority to of morning at time. XX-month that and up QX is deliveries like maybe through we're the Dave, lot walk of you're of the the that but Greg, of I could the of you're to I once deliveries. Good over pace travel what

David Calhoun

Yes, a part our widely, of with the been one, for conversations, know been on having as thank intense you. we probably and MAX has better delivery month away, you to while. would with ones about them customers them I call and right reported variation have -- a quite it's what for, And them. ask it take some wide to of they want defer when some want a to for Number respect

of anything in down. in some airlines, reflected many is light assessment And that the month we of that. yes, accurately But there's a all still in provided Our that which interactions. these think ago of have has settled sort now reflects numbers of on be resources based doubt, of were that, government to those been And more to it if the had.

if gets and/or inventory the on So, now have. priorities, one worse, production be rather to sooner that will robust as what the we sort rate later. that we happens increase more the is goods And will priority we'll it with change marketplace. based in do result, will the any any finished Marketplace reason, than defers gets for And opposite. of that rate respect we to our a deliver

So is and the variable our rate, to we've and a know to in to conversations a all now rate chosen slow about we with of XX MAX number, everything reflects this customers. the production pace XX get is the going be

Operator

Rob Credit question next is with ahead. the And Please Suisse. from go Spingarn

Rob Spingarn

you, Greg. This one is for

flow Let's would XXXs month kind in in per and new now? talking BDS free I profile assuming What BGS? XXX of the XXXs stable am XXXX the and at is have cash three XXXX, say that seven XX reasonable recovery that and with a MAXs I guess you -- about normal.

Greg Smith

currently but the thinking To will Peter's only biggest priority production rates the being least Well, that step, not biggest there. in MAX. that kind yes. from Yes, out driver. timeframe, single we've of And single laid is say today then be off increased I rate but is driver at your -- that the we're ramp that question, that the first delivering production how about to would Rob, of point, clearly one

the to period. discussions that is us profile numerous that And that biggest but the how to with the the XXXX. will inform outside within And be -- established right we've XXX we've say then, can we based today going had market’s that so, the I'd obviously if customer, of driver on single we have the

this you As XXXx’s know, will peak use year year. cash of this

of We positive next cash in expect but then it cash to use year, year. flow it's the be following a

take we're get be drivers be us will So key real XXXX place I’ll what that operational transition, be those there. that that will this key will Obviously, to to experiencing better allow will we year much but say and to the XXXX expect next, cash flow. than

Robert Spingarn

the is a like any quantify at do Greg, what looks How mature XXX about flow with looks half, the cash what over of that targeted what that way we little But half there to been, peak be? rate X flow what environment? and cash with just XXX has like month, a would rate think in

Greg Smith

XXXX we those it'll Yes, specifics into today, obviously drivers. get big drivers. rates even production but or and in cash rates obviously obviously like further really as Rob, away advances we're depending be negatively going timeframe, will XXXX here period navigating, it but there, want don't could rates way positively on rates to key from is, be feels depend on flow impact where what positive go long a I those that because the that as on would and considering sit from It not delivery positive? How it'll -- but be out, that much

this our said, accordingly we've established, to more ‘XX. size in what experienced But experience to year change, it like than XXXX normal starts feel in going do we're best I ‘XX rates with And what And certainly and production at time. to we've that that's could these that. will like a now assessment

Operator

from Our of Seth next JPMorgan. the ahead. go is question with Seifman line Please

Seth Seifman

the several can you billion the put in but kind how needs timeline? you cash short-term weeks be cash. ago debt XX capital of billion was X $XX-billion-plus number about to I investment industry mean about and talk company? now? sheet, it on and liquidity burning questions A that Can couple structure. whether balance about you guys for you think an of Boeing maybe you about and of grade the that talk and out also rated there And what about about talk you’ve of Can the got about

Greg Smith

and Dave let I'll follow Maybe, address industry then the Yes. up. I'll

David Calhoun

or respect early The frankly, some role $XX and billion put rates. and weak orders trying chain. assess provides knows our in that our of Boeing's everybody that the course in they in supply mostly as to were spots number I chain chain, in going be, fact and and in against to the markets were place real as this the the could the we good and do response fragility the process, then are that make for with we to tight think leverage that liquidity of soft to supply they together the of is when us we of adjustments credit that supply supply is we sound was But need have ultimately our credit make all they're here to production health chains,

important. and the XX,XXX So of liquidity supply that. is suppliers need, to to But support the of the tier suppliers, our all whole, do we Xs provide the ultimately itself, in and might chain, and the and tier represent of most that can't whatever the sort meant speak that I our we number to was Xs

an again, number, was industry fact $XX number. so, Boeing in And a number specific billion not

Greg Smith

just would investment seen doing your then of as possible heard second And anything. being look, we're investment market's I Seth, being impact that question to Yes. like and than that And grade, we more to maintain do part your grade. But you've probably that. on going everything around the to certainly think

the I that prepare with manage navigate we're taking day to allowed outlined, Dave and Fortunately liquidity side. started that's right day steps position it. out us strength all we balance for as on a our we to -- other sheet, of and in And and the as now recovery

investment to certainly the try the of end be prefer And maintain going investment taking But be actions what to we'd I -- think going again, right to all on the all doing at grade. that. to it's we're the to grade. day, But the it’s stay

Operator

And from our is go with Research. next ahead. Copeland Please Melius Carter question

Carter Copeland

to -- block you I Just Greg, just make sure right on quickly reduction. the XX, want just I on heard the

level. if then wondered what I or on some respect you just And unsold reduce to visibility to a XXX in would with a quarter. give missing pretty just imply it that, the mean billion kind why that math thin said to That units. I lack you program I think a that the that there? of production, that $X around color the down could deferred I shaved there's in looks razor margin did number Am to of something like you've pricing?

Greg Smith

mean I cost right. it got in by you the think the driven I was contraction time. No, base

we period year So, on within the five staying that have it's cost basis.

a as when contraction, So, the us cost fundamentals by even expect. with margin said, basis, pretty even the at to well. would model forward, even on XXX, that unit it I would look you look rates, that but the as volume, of that real at look with think mix, on you like backlog program on with the we're But some impacted kind our the net-net down costs. the lower say you a back the production caused the said, as contract going impacted, with to at going be result I producing up the XXX step lower impacted base fixed I when by like forward is a holds profile, the key own it much come and units. not supplier to drivers, of units you And that fewer productivity, going even and I

key those So sight on -- the to don't there's a because driver of still lose those ask, we margin would fundamentals I think cash program.

David Calhoun

comment the the pretty demand is other strong. backdrop respect XXX, with to one on market the Maybe for XX the

utilization But is its much marketplace back and as is XX for come issue ones. structures And are performance, the Our to now international in airplane's than the the going a the that. right in that we suffers otherwise is, our amazing. result, domestic think right we're the assumptions slower pretty route

the is is. it what the made, So we've we feel this based assumptions on it good about pushover, but airplane,

Operator

with will we go to next And Noah ahead. go Sachs. Poponak Please Goldman

Noah Poponak

try one if the the challenging out precise are all single skyline? I'm delivery having feels, suggest in a are Because their it's would on month it not it of imagine your more clearly gross I revise deferring happening. possible a but on the many looks maintaining attempting to traffic for just you or XX like and customers with your canceling, feels -- literally or pretty just that's there, you way by which but precise year, could of position to you wanted how at conversation to the surprised customers about every get and the that. numbers XX

of MAX us them, You're want something airplane, telling your they amount to -- conversations for the still somewhere originally with your a customers wanted decent suggest, where close they them.

expect know your backlog term of the there's customers you be take your what ability to the just customers’ of are turmoil your just kind I of percentage for of to percentage airplanes? to don't quantify, I'm sticking in immediate degree customers are way any So they percentage of what asking had previously, canceled. or if to to just what trying with what to sense get move some

David Calhoun

swing a at take me let that. So

can, where swap all of respected have do going to heard these respect First we if from our of with can assume of all everything to our when cetera. constructive will, And I'm retained. And do. we would we haven't we to power lot customers, of a our et are we remember, we course what now, customers in them with discussions that all, of defer like PDPs are literally and by they to invested

we quite that actually accurately then exactly outcomes requests and for to as it where we're our side. risk demand can, of we bunch requests we're in not or rates can And production each is production So glasses, in there to their colored suggest these opposite, reflected remaining which we not, in have the that And a are rates. initial of everything on believe negotiate new of been the sit. constructive But and we where And about these rose forward have as isn't doing the is know meet it's looking and not many them. quite whole that productive. the discussions, we reflect view

base. surprised extent fleet a which accelerate it's this surprising. me the that's So will probably thing But rationalization one to the customer anyway, in bit is the

even fleet, do this robust the to they now polar growth of You know portion retire couldn’t if wasn’t scenario, had they their because to was, as it gone from simply where market environment, went a it they've plans and opposite. robust the we a

business. rationalization to is this cases, fleet of get trying moment put they in And it ordered, that new maybe some not, that believe simply so even rationalize And or they're it out efforts the where big. airplanes requires that to

again, know. are swing So think this a dynamics. set full of we efforts everything interesting in we've The And fleet reflected is everybody. I very for planning

Noah Poponak

much reminded recently. the surprised that -- when up look is A publicly companies I Dave, large went large I market myself capital sale was I lot the is. to of myself to of how leaseback, raised have remind leasing traded how

just can have you financial hold have that growing position state-owned they’re customers that, that until hold again in have assume and into coming -- a I to things this. reasonable are and Is it customers, You XXXX challenging through set described just XXXX? it that of together things can good customers as as normalized are,

David Calhoun

with is hold up at holds markets you it out In GECAS again. my financial discussions had that X/XX life as experience It And back And turns world. and I’ve lessors, we believe that imagine. in will a through in fact the would the and exactly lot what up. it been in post of lived we’ve my

had this in financial is assumptions reflect assumption your process our with think of sources. I discussions part and So we’ve correct the

it can’t I but it’s So clearly you the answer, guess, an on is for our numbers. put in absolute yes, reflected I number

Operator

Harned question ahead. Our Please Doug next from with go Bernstein. is

Doug Harned

that supply for lot $XX a look on with biggest of management overlaps. with cash the focus facing it the a crosses needs before. cash the responsibility the chain, it around the at with you're it suppliers, also when billion But have Airbus you the you're Boeing, of discussion lot This you On morning, appears the risk described health. that describing chain’s today, same the is And liquidity. of Airbus that supply liquidity issues the crosses

You've got the suppliers support potentially from governments and themselves. then

to Can looks the you to sense like related be here a about you year? chain. what can the you of wide next it different give as this? outcomes range the So could how be could of the what the work here and over supply with to us you Boeing try there And scenarios for cash a for range address as are talk outcome potential constituencies look

David Calhoun

us, pre-COVID The take them so from at me get to they they this post-COVID and to room into before let markets business right and can be we and we to to that with the the there for and to be credit us puts have believe tools eyes. there of moment able open get that the to from moment there are crack look accordance one have order on warm at to right term the allows stability and make the marketplace balance Well, and long-term sheet is the Boeing, demand begin some we medium the that. And in We now us in a when is demand with adjustments it process. recovery available first to that enough to in and get first. here spare. there out a that is going of itself believe That airlines get our

adjustments chain new As then then into and a on supply the Boeing. good both whole extends their Airbus chain of we reflect do bunch and own that, to has make credit our the the requirements supply production to at

the finance always again always our them new from and demand, spots CARES tools that to meet supply on do access the our where credit then work chain’s Act might term advantage. to to chain moment, that that the here then soft to direct administration restructure on real that that airlines, Boeing-Airbus, to the with relying credit ability moment and we the on but medium ability overall their get in and to chain. that So the relying a put and now that's trying in place And themselves those be supply and bridging to closely factories open, being to tools understand supply has

it not, And it's robust Believe it's that's think unfolding I process that’s before and eyes. working. the or our

serious moment this supply big time least And some or ways. in I'm in issues anticipating so any repercussions at at from chain not

stability the tools, was two three prior. up or cetera, have as stepped last there little et weeks in than governments been more there's with just their a Just

Doug Harned

you're this outcomes So that you Greg range you the you off were you're about billion. possible is can it suppliers, look to worst able to $XX that and the there here, at when with say scenarios respect now, feeling case perhaps fairly mentioned some when of in talking fair to say, as confident take back

solid So year. current confident that even shape you're in fairly under case the of for worst sort here, you're this

David Calhoun

with imagine, we more start what We know we but we strongly that And also us many, when believe are. have of we're through it to the do who And going lot that going we're would debt, this we we tests do more And paying a than I in are putting that difficult it. we many ultimately we're we have do. folks do take on get to down. stress much case believe and forward ways help you

we good rate in what our but production money get that believe we at question, rates, to be the form lenders. at of I stability pay and of when shape it to Now these we'll process begin returning to real some is down

Operator

America. Bank ahead. Ron go from next with of Our Please question is Epstein

Ron Epstein

Maybe a say, I being where the but and end strategy, market deal bit competitors. focus product the out both then who at the do a table, can your that sandwiched you off on product end a aircraft like by think of is it’s competing against of Airbus at not it’s of lower has to the Embraer how NMA the the changing playing market about product ends little -- and with it's higher how MAX -- are it optimized narrow-body the market seems the fine, between the

an particularly spend development your where environment So, in on and R&D constrained spend? your you're

David Calhoun

more the confidence in than its have the the place implies. MAX respect to lot with question MAX, Well, I market and a maybe in

it loads actually set is in a actually us. of them still smaller want as flying on to have maybe result years, prop several some of the good. In get ways, value pretty if smaller We a that next to airplane might a passengers play

product backlog have in We it. robust definitely and a we not are the development business. of it We're with out

at invested will believe differentiated with that in and we're the it. manufacturing offer applied be whatever capabilities very we It to marketplace. that in a engineering conveyed work NMA. probably we've to on And be at that we not to and choose. product to at are work continue respect we And an stuff will I strategy think fast We

we're and that and then I whatever capabilities these we have the I investing in market a then faith we'll particularly And eventually at going the world, our a moment actually some currently important believe to develop like lot those -- of the strategies, in in invest time our actually a as technologies priority. the we -- And wide-body a I in next to on continue world this serve it. gen. that's we're changes, probably it meantime, to bring and But freighter of our in with; we secondly, biggest product and

to they'll that's and/or the and former don't any Embraer affect they're end, any way. going the and at significant end to the not So low tooth fight win and market Boeing of -- in that move so, future and Airbus, doing in to and the then marketplace battle significant low the I is of going way think going at nail Bombardier away,

So probably in that's anyway, a nutshell.

Operator

Our is ahead. Kahyaoglu Please next question from Sheila go with Jefferies.

Sheila Kahyaoglu

Hi, And Greg, good just mentioned Dave. you this. on wide-bodies. morning, Dave, up time. on you thank I'm the for following

the You demand of is in. comfortable that seem pretty bottom

not for replacement of and the uniform, you industry? a what largely retirement is granted are this rates Given market type thinking

David Calhoun

That's to going that just my get are airplanes to on retirements there get my are put I not this. Sufficed permanently faster rate. most going down of to tongue. the in they They accelerate a to a say, at retirement view of number have part. put Well, and -- considerably get down don't part tip going permanently, important the are

do I going so is our to where that product think And line actually our I play is. to favor. love

ramp. about going to this feel fair our it's amount think international it. to we'll advantage. respect are structure demand. Unfortunately, with it's But I suffer longer to I going result, retirements fuel take think recover. of route I think good a a And just very to do do fundamentally I And as

Greg Smith

it's Yes. on be years won't And side, have and significant when it, are down those improvements then and they'll And obviously very a are to customers up. put an crosses the efficiency XX well, that I’d just look least number you the the you significant in know add point, old product amount. back look the Sheila, some and at plus customer you in up be airplanes of And we point to at backlog there's we coming to picking line. view, when at what the of of or pipeline entire from Dave’s it

to think I we'll and But we'll lot age Obviously and Dave’s So, take globe fleet, across about production that. a more account we're the how think good not that retiring commitment for it bringing hearing retiring into our we’ll and back see to schedules point, as going continue that goes. we monitor it to forward.

Sheila Kahyaoglu

in Greg, we just on production that think deliveries. line about with point, should

in deliveries and to beyond? So XXXX for production and ‘XX wide-bodies equates

Greg Smith

production think a that the may the is transition as rate. the that through pretty outside from be good that one building little of off to XXXX test balance flight Yes, to of rate that, delivery correlation, airplanes. only I period we're But the XXX the

MAX unique talked Of being earlier. as we Yes. course

Operator

with question next go Please ahead. Our Raviv Citi. from Jon is

Jon Raviv

a is about ask now. a question defense of the right XX% just the to Want that business

mentioned defense how to down due cash items bit of gross But also be over think year investments. on a playing your timing created on in years related being out lot that do playing see this next of plug a year-on-year the that the on going defense that might dynamics end the few a very on by And you here? We've aero out taken being last the do some context you front call programs. I mostly. way in hole to of new to little see clearly flow as risk the of terms How ask down I forward? some portfolio those the in being

David Calhoun

do you to Greg, you or do that want take one me want to?

Greg Smith

sorry. on I I'm of It me. cut part out apologize. I missed it.

David Calhoun

it. business defense and This is with respect to I'll with start our

course will the will commercial defense You while, business This little we year did and course, a have the rates was probably with business some defense where XX%. are than be that XXXX, these business hold bigger the balance, for of in and of new correct. fact probably deliveries.

-- company our portfolio defense people I'm while with wood to an important I'm it, we've believe now not that's elements of part I issues to but to So, largely that, sure lot as a reflect. The risk We're where I it we much of not knock of course say to is on associated de-risked exactly the going we that going had that finish I experience. tanker a write-offs now the believe significant portfolio our of needs result do of and program that well. be. had continuous on our

customers Importantly, none. feel we've to we that going are a our well finished to is have and product like delivered second

do posture So And to one in even kinds tanker and significantly stream will to than supplement attempt the we've experienced continue whose that up until Department believe a future order I largely we time. moment the brighter aircraft, to now. do our then is And help particularly fighter those with production build. of of is the things, in our this to supplement Defense want or

good that. feel again, So about

good. the all we we We're development stages usually at the early might now anything. And sniff programs off plan looking development be. by on quite really have a our that are And front, on not

profile defense just overcome despite So the risk last good anything I Greg, that you couple pretty want of in again we've to difficulties years, about that. to the feel business, attempted our of the add to if

Greg Smith

as program, when is performing Yes, no, go commercial And BGS a mix think business. I development on the it’s that's especially the to look the upfront, everything outside pretty is that most of side outside as I actually mix, MAX But And it. the And differentiate, way had those side. you the back the these the on lot said, at you to Jon, with outlined richer portfolio start of recently. some well it'll up, agree that to obviously, where portfolio ramp we wins services of tried that Dave said, of much a of Dave. Dave government we’ve derisk that

to engine smoothly we as that running So got well. keep

Maurita Sutedja

more Okay. Operator, one time have we for question.

Operator

And Please Walton ahead. that go UBS. be with Myles from will

Myles Walton

to pointing cash is I the you ‘XX MAX also a for north cash talked curious flow advances any at. ‘XX, prior free are of about being year the reason think the you're to just negative? kind talking I'm enough for look In liquidation cash we flow -- be as question, us sizable flow XXXX to shouldn't about be or given headwinds the expect in a there positive that

Greg Smith

profile, progress again, But the well. to a MAX again, still lot in better the on seeing off the Yes. the the a good of There definitely have coming on I deliveries we -- XXX on and in cash the ‘XX the certainly from the ramp elements like least much impact is improved No, burn we're a payment be then MAX is side. as as than forecast more a program. about, said, at is XXXX I’ve and ‘XX, production. operationally key as ‘XX conversion cash -- that talked And has

moving the MAX, improved the pieces there and But there of as on is versus XXXX. will So a lots MAX what is. single more to XXXX much driver biggest contribute that's always in ramp right

Myles Walton

underline, enough say is to feel kind comfortable it improved, to you Do positive? though of just that that? Greg, Sorry,

Greg Smith

Yes.

on based cash the today a had is we forecast rate discussions current positive just flow. Our all XXXX

Maurita Sutedja

Alright.

you earnings quarter XXXX Boeing completes Company’s that first So all conference Thank for joining. call.

Operator

conference for you today. that participation. your gentlemen, your and Ladies does for conclude Thank

disconnect. You may now