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Boeing (BA)

Participants
Maurita Sutedja VP, IR
David Calhoun President, CEO & Director
Gregory Smith CFO & EVP, Enterprise Operations
Douglas Harned Sanford C. Bernstein & Co.
David Strauss Barclays Bank
Sheila Kahyaoglu Jefferies
Ronald Epstein Bank of America Merrill Lynch
Carter Copeland Melius Research
Jonathan Raviv Citigroup
Seth Seifman JPMorgan Chase & Co.
Robert Spingarn Crédit Suisse
Myles Walton UBS Investment Bank
Kristine Liwag Morgan Stanley
Peter Arment Robert W. Baird & Co.
Call transcript
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Operator

Thank you for standing by. Good day, everyone, and welcome to the Boeing Company's Third 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

conduct Thank Officer; me Enterprise Financial today Boeing's question-and-answer Dave Instructions]. Calhoun, President Welcome a Call. you, of and Operations Maurita Smith, are good Officer. Chief Boeing's President comments, XXXX Vice Executive I'm with Chief Quarter we Greg [Operator After Earnings to and Sutedja, Boeing's John, and and and will Third session. management morning. Executive

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

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

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

the over will turn call I to Dave Now Calhoun.

David Calhoun

Thank everyone. and good Maurita, you, morning,

to XXX their Before on moment to that don't the Lion lost started a accidents goes take Lion Not to these day a ensuring will ourselves I those like remember, flight by who we Air X-year today, get remember XXX. Airlines anniversary of I want and never reflect, flight happen Tomorrow the Ethiopian lives mark Air again. rededicate accident.

the the pandemic. are to during It's loved challenging and today with stay sympathies these you and are their of all every deepest day. COVID-XX since about months safe the been ones hope times. continuing healthy family and members very I X Our onset

course, while Slide rebuild and I our turn on of the navigate difficult and Let's and our our global closely this our travel Boeing's while Through There's close impacts on the safety suppliers confident on deep pandemic business global than having of industry. in employees to across and broad health trade focused on remain health, the globe working future. most and, on our on stronger We're other X. The economy, is among update long-term pandemic communities, that more with all, our side. to history. -- XXX-year the is doubt it customers in the moment through this no to

some Let key the today updates across providing business. me by from start

airlines you COVID-XX As know, on have back to our the dramatically. operations customers and be commercial impacts continue devastating, cut

their to the of minimize industry COVID-XX that our or to are passengers building safety are to risks the our cabin trap compares and layers collaborating Confident journey. that to and maximize XX.X% is industry-wide of of day also understand We and initiative, multiple we customers protection fleet needs are during medium-term and crews across and align engaged Travel well-being we develop every so Through our can pandemic. to the with working to long-term short-term, supply health together their their We're particulates. demand. And filters air the hour times particulate HEPA to in passengers air aircraft exchanged X in Boeing minimum hour. a designed a of times using for high-efficiency That the crew per environment. XX air quality airplane X an XX travel typical per throughout to enhance

ultraviolet, better to in into further have an licenses patent or enhance wand, UV sanitize and entered also partners measures, manufacture this field we interiors. airplane to we As technology health with

the creating year, reinforced who safety cases been We industry while IATA that the is data of air be of XX are with for have and including X was published transmission. the anyone research we're know is U.S. documented technologies Of contracting this economy, Transportation of outlining recent of aerospace and like and found critical data a encouraging low. wearing Command personal flying there all customers by be This how billion every step other precautions, masks of We're wand here people crews, this passengers experience. cooperation. risk to course, travel support this that very responsibility UV of over combined and face air a to filter study COVID-XX in-cabin the will fewer our to of traveling, and to the top reduced United global mind traveled underscores HEPA Airlines fundamentally and This which Recently, safe by the the validating to global seeing have trade air than the also period taking of global of industry travel. way. travel by to have

governments serve Our the important global adapt with to we're on level action and transform We're term. and also leaders our airline customers country. they delivery, serve very more continued That's force and only work our and takes to as entire additional and why global pandemic. to reality part suppliers, we taking industry government everything to employ can watch fully the these new our and airline connecting item. their support potential their of as one understand be of workers, millions It difficult tough driving have through to market only Internally, we part U.S. long times. also to stability or customers to our also delay airlines discussions but key of production role remains to aircraft -- the resilient business the an so get a the sharper we this of together for our global service necessary at every a doing I'm support support in in suppliers economy. during not certain an delay one

workforce with more continue stability resize expect on to smaller workforce. additional of reductions. our of have Each reduce attrition we'll we to functions and bring reshape approach, involuntary of to business to With further to and industry, and on had our by our and will natural carefully prioritize in impact staffing business. make people As we around the our Combined quarter, our these with COVID-XX's our that business shared this impacts XXX,XXX align prolonged market. will reductions impact continued next end employees limit deeper and the the last we year. our voluntary natural and attrition, order have and a units decisions size our

We to ensure will this customers and market a to pandemic assess navigate continue our They on and through decisions plans able our These the for critical easy. adjust to other not to in our global are be position deliver appropriate. actions side. as represent we're

through our these challenging work not not and and on values has our we priorities As waver. will our times, focus

rebuild are always delivering ensure improve standard. quality safety We we are the trust and working tirelessly highest to to transparency, strengthen our culture, our and

implement our to We continue announced a practices to safety culture changes of X series year the and company. of ago meaningful strengthen

our shared, making organization. system, we've our on safety Airplanes significant stood new progress single on We're As together with enterprise initial over and Commercial a safety product and we services into management also organization business. an XX,XXX engineering up enhanced brought teammates our focus

inclusion We taken XX for meets inclusion We've the This and months. are progress and hold as for best and raise accountable lessons plan. the of tougher reflects ensure our developed have equity equity clearing to action a of on the regulators' people that us bar for also key a measures racial bar. reviews will over industry and standards practices that learned past number independent place system our working from as well

business, in world critical help generations. for make We also a innovating place operating our and remain better on focused future sustaining to investments the

sustainability an toward This Sustainability This teams and is focused partnership communities. closely how and we meeting in Officer, the we're dedicated our quarter, customers' position on elevate a priorities. challenges customers, on face proud social are our our Chief our remained environmental, galvanizing commitments. with our governance we tremendous am leadership XXX. to we incredibly service and as have our In confronting, of FAA to of continuing important global the appointed to a the safe I Working continue and to steady all focus make with return advancing our suppliers other our regulators, of progress step our

hours and on over past have around completed X.X the airplane. test the there Over X,XXX flights, X,XXX years, check flight been

have the its States, operational Safety Agency, still aviation authorities evaluations of also board from evaluation civil Union Canada, joint ahead and the work conducted certification European FAA, [indiscernible]. Brazil and by conducted of the by us, from encouraged European validation flights United the EASA. The featuring by Aviation and updating Canada Union we While we're rigorous Transport the

to our through global steps closely will certification Aviation We process, in also Civil in we including of robust continue and a lead their These work the as milestones are transparent with global progress others. ahead. to the other regulators, continue follow the process regulators among and China, comprehensive, important Administration

quarter. Our assumption has changed not last from

fourth the to approvals to expect deliveries continue time be quarter year. during of obtained to regulatory support in of We resumption the this necessary

the the course, determined ultimately Of will be time by regulators. actual global

the highlight a to making we're I'll XXX, commercial, defense, few. progress our and space In services across businesses, addition and

test Our Force as program the for U.S. Boeing fleet. autonomous through The and joined awarded Air quarter the XXX-X flight aerospace the excellence final were the Trophy test team X-XXB this progressed for Collier spaceplane. airplane

converted GE important T-XA -- an systems the F-XXEX agreement And Capital along Services team earned Services engineered, U.S. X designator our to the a signed jets XX is Air tested for a P-XAs. advanced first quarter, Our Boeing that designed, thread. contract support Red the freighters also the Boeing trainer and an given X-year defense for secured an Hawk team contract And for and fighter U.S. our digital built secured aircraft from Force. advanced in Global for Aviation Air Force, with signed Australian eSeries

scope, the learnings continue we work XXX On with the on XXXX, reflecting process. the certification from including regulators to the work cert

are development schedule. with inherent affect are As that risks there any -- these can program,

influenced towards defined will XXXX, requirements by regulators. this While into ultimately be we in to continue drive timing certification service by the entry

making and With Boeing BDS COVID-XX released action defense across enterprise stable, the Broad competitive demand business stable, industry remains a our of global additional month, support has $X.X total programs, adjustment the pressure key the market we're down environment. his ago by in mind, term. discuss relatively value Nonetheless, the XXXX we government expansions. most addition services potential update the the create orders which the impact pandemic, due underscored let's both of across to of the Greg that for driven our slide fleet to the progress provide business a defense to our in booked domestic in details for third year of programs. by advantage. and the that portfolio to $X to the The we and market aircraft quarter spending market international more trillion remains our the on our also turn government next outlook, remarks. $X.X and continue next taking over Overall, transform In will decade, significant forecasts outlook market Earlier this future. from our franchise near trillion was across the global and for to billion solid, see of also in military the to add scale major spending defense response programs. space in on

our Our stability services, will government help provide -- and for forward. global space critical moving defense us programs

market. commercial the to Turning

fundamentals market traffic of of While globally greater remain have COVID-XX. to trough the our with this project in passenger many earlier we from than Airlines key pressure long-term and near-term revenue recover year. intact, begun decline XX%

earlier month, time passengers the first X since for TSA screened fact, In million this the over mid-March.

overall the we than has slower originally a pace recovery at anticipated. However, been

passenger of international recovery continues, international traffic to passenger of with based recovery. traffic policy by of coordinated parked fleet to their At as back remains markets dynamics fleets XXXX International keeping pre-crisis of XX% pre-crisis all-time dependent and passenger XXXX prior IATA the restrictions August now reemerge with virus These recovery government XX% to evolve only timing alleviate traffic absence to and its lowered other pulled only service, but As normal X/X COVID about year, a rates, a while on in entry around not XX% Airlines active. upon levels, challenged XX% forecast recovery travel same quarter XX% global levels, wide-scale XXXX the XX% lows. at path market half domestic an the the of continue to on their global coordinated operations versus only heavily less The an the forecast was on was a mix travel traffic decline, passenger seeing protocols. are decline. availability XX% a approximately returned bright expectations fluid. time, where traffic traffic. domestic vaccine. cross-border domestic will China, are incrementally around regions Regional whereas decline will utilization prior and remain ahead of fleet and spots of has XX% lower to the uneven testing, international of progress fourth rapid remain also continue recently be trends drive levels. returning to has restrictions policies the their in active cases

to As or XXXX we look it expected and and longer-haul we Demand demand improvement. wide other industry a to term, narrow-body years will levels growth less, help will to demand see vaccine is our Consistent we trends. holds. and medium original around international still return to the prognosis, groups, and for take long-term beyond than long to markets as to domestic Availability X that routes. accelerate recover for and years expect of distribution may regional faster few still return IATA with the a aircraft outpace travel more wide-body

dynamic many continued term, the uncertainties we variables. situation very with remains near the However, in as expect

lower deliveries commercial impacted airplane bodies. than extent the to a XX% years. as retirements, traffic XX% lesser wide-bodies impact but perspective, over more ago, assumed what to reverts XX-year to year the outlook demand previously XX-year than driving projected. of of XX% From narrow XX next COVID, approximately approximately over to up we -- accelerated anticipate we Near still see a as Our XX significantly is compares time. with replacement we years a term, That long-term also trends market

as replacing. on reduce XX% year plan airplanes, focus even much future and that our retiring than industry this XX% least will environmentally and As more efficient as the will customers fuel-efficient we allow make they're airplanes be more the new deliver oldest to Airplanes their flying sustainable. to airplanes emissions to

and As airlines adapt price differentiation we these realities, key. be see to market versatility will

supports gain efficiencies plans they market-leading well and Our to airline product positioned remains our goals. needs line as to for their meet reach customers' emission

cost believe long-term Accelerated of commercial provides has previous seen to focus market trends. as a aligned will as for help in retirements watermark which critical recovery. to to and market multiple prolong the the levels. attractive solutions Our continue from success. meet the Digital on fleet we've emerging reduce foundation demand take services a a objectives also the backlog and In recovery operations are market, in services reach and operations. terms support been to the will anticipate our slow, newer emerge and will strong we will efficiency customers portfolio demand, result years low diversity although we demand of impacts, enabler its Life leaner we their services and pandemic cycle customers recovery as scale

customer and Our these knowledge to position deep broad services customer portfolio us well needs. support

production maintained assumptions across rate on Now let's turn commercial to programs. commercial airplane Slide X. plans airplane rates regarding our We've all production our prior

far, traffic risks will and rates, weak, of of the supply to demand. market so XXXX demand. dynamic, production rate further program to expect However, closely we in the and We're remainder recovery, which, as the the by to low expect beginning very be our for monitor the XXXX, gradually continues prudently wide-body balance the particular, increases gradual passenger and international watching and downside assess has the we market to been at We XX XXX. correspond with XXX to still rates produce increase to

delivery We to will XXXX inform will rate if assess production continue our we it XXX adjust for ramp profile as need up. help to the

have we apprised XXX continue third supply chain At end to keep the backlog. of X,XXX will quarter, the We our in of our our plan. aircraft

uncertain turn to And with this be let to time, our does, an Greg. customers. are support remains we that, travel will will and air it Although it we when over unprecedented return. me positioned confident And

Gregory Smith

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

turn please to X. Slide Let's

most of action pandemic, is the taken decisive have history. year and merge As Dave attempt get Since mentioned, company's prudent the beginning our difficult in to we to the of XXX-plus we more moment cash ahead in reshape company. business this among can this so as competitive that that this preserve so a our navigate and also sharper, and more resilient can crisis we

look of cash and you actions around March, back these potential Starting risk provide focused on proactive efforts. efforts accelerated we've with transformation further. taken term We've to in continue take COVID-XX virus as the $XX.X disciplined business proactive be been and time, took draw through time factors delayed some in to and management our the line risk being our of to our a early billion for and on of a action. derisking I'll assess has update the appropriate step XXXX will quick then escalated, are and middle an We of fully and down draw we our corners go a loan.

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and portfolio opportunities sustainability our core the portfolio our and and our shaping to investment on We're pillar. to aligning efforts. business, Moving focus market investments

pandemic, to the impact market have were near growth conditions we have the have impact But made addition COVID-XX In and market decisions business. Prior to will in in investing demand term for -- -- we also opportunities. on new to swift of term, -- near adapt. the growing as timing changed, markets the

and make all and That forward. originally invest pared invest decisions have investments You've we in our our we do this billion. billion to business. these $X year. plan We of start prioritization, seen back approximately going have $X over Through reprioritize lines to us continue we investments, by to and will prudent said, so will we to continue

years in our key of than more XX last In billion business. strategic over the fact, invested areas we've $XX

exciting in that will not we sight and of pillar, technologies travel. future the take of we the lose future reshape action our air will As this

principle guiding decision period through every this is our we make diminishing difficult us that Our also navigate while future not competitiveness. here must help

to are chain are. and diversity that without small we pressure of suppliers are businesses experiencing Dave scale. mentioned pillars, our Many the of supply Moving our same them portfolio

are to our every actively suppliers Our day. talking teams

work We of together get industry time have come the side. as an on to this we to through difficult that out this healthy can so other

to warehousing greater set our down return we're and our transportation, our services. a and streamline to also on our like improve internal enhancements made a capital supporting whole to industry term, improvement enterprise we the build spend near warehouse simply to we exploring growth in are over to as supply as have lower recalibrate supplier, We can. industry our XX% material our and have The driving coming and to targeting management optimizing warehousing issues, solutions freight our transportation assessments in indirect standards equipment, logistics efficiencies. each in the the as network, financing of operations. less things closely stability also demand and the and And to mitigating long than while will enterprise reducing reality monitoring that transforming facility risk medium overhead possible support costs and spending that approach our way years. much chain and our And and positioning term. We're partners getting them while We're maintaining is help creative best

spending, drive this be We overall highest we levels process significantly managing we have the reduce closely and our to indirect will to and safety of continue quality. an to opportunity ensure

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As sustainable, that that these financial period. we the every commitments. improvements cash generation step These for in dollars, and to ensuring and our to them we've foundation to are market margin key expect environment, we're billions be our take in future must lay to here actions, and actions our current furthers multiyear cost The take lasting our how delivering lower are on the expansion we're we lasting adapt executed and over in only meaningful safety, are change drive of structure. the a structural, these as meant performance In operate we we to efforts and demand. What quality create flow recovers. trying achieve efforts objectives established to measured

for third quarter our let's X Slide turn with So to results. that,

XXX financial be grounding. COVID-XX impacted to MAX the by continue significantly results and Our

deliveries of to lower revenue and costs commercial severance quarter Third primarily, and Commercial quarter XXX for the were $XX.X COVID-XX. impacted reflects for BCA charges again, billion services costs related by volume, program due also Earnings the to Airplane abnormal in provision the to the related losses. leaving additional carryback as by Act the an the offset well income the approximate tax through impact were NOL of end in pretax X,XXX company 'XX. CARES the as partially of benefit impacts These employees

Similar for profile. preparation MAX XXX XXX to pandemic, third our as was XXX operating lower delivery Commercial across the lower rework. statements, billion, have well all the programs million we delivery Airplane volume Let's financial impacts of deliveries $X.X Slide as X. now quarter reflecting associated to the BCA move on third declined margins due assumptions quarter and period, primarily issues certain in program. of related rates significant costs to to due Airplanes quality and a Revenue the abnormal Commercial well to as prior production as $XXX on made

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expect of We the which to half of aircraft the of now delivery currently storage will delivery reconfigure about some potentially in them, frame. these have to aircraft expect of remarket and We time extend the to storage be of will end next return year from priority year. after following service. our customers Delivery majority continue the by with our in the assisting remaining their and to the

production uncertain. timing, total and remains we ramp-up dynamic the over be abnormal along of We to the change be will dictated MAX to with commercial expenses the expect expect these ultimately and material is as billion, slow estimate the profile will this cost been market year which in recovery, incurred continue the rate pace year. by delivery of next has XXX the and be $X no There costs for they

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billion the of balance agreements $X remaining liability billion. have approximately covering $X.X of We settlement

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

in more backlog financial at front-end impacts. a assumptions orders Commercial considerations more recognize the impact few aircraft We require valued Airplanes quarter of accounting to additional also years. decline in backlog the of The includes the expect over to first $XXX these with cancellations other from X,XXX to and any concessions due than to billion. changes backlog to provided be the years XXX Any could our standards. us aircraft third ASC continue removal order reflected the aircraft number loaded to in or cash be

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our We rates downside risk forward. will going continue to of the assess production

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

by offset partially derivative reflecting decreased Third award $X.X timing, slightly aircraft quarter to volume. higher fighter revenue billion,

inefficiencies. to primarily continued million X.X%, productivity Third margin decreased tanker COVID-XX and including $XX performance, a due reflecting favorable to quarter KC-XXA less disruptions charge operating

additional worth BDS Block for Space NASA Army awards During the billion, contract a won the for including key International II the extension Chinook helicopters Special for United $X Ops. and a contract for X States quarter, contract Station

States. $XX now XX% Our the from billion, of backlog United with stands at outside

Let's commercial offset service truck by In Global due additional $X.X partially X. commercial results to Global volume. Slide third to was lower X billion, by volume driven to quarter, the now on and Services margin in services revenue lower higher COVID-XX. declined an reflected volume government costs. services the Services Boeing Operating turn quarter This

brings During worth which now $XX billion, backlog to BGS key billion. its contracts the won $X approximately quarter,

scale also employment service service their would slight industry only in for a to trends quarter, third downturn uptick saw business right and near-term as multiple actions the and demand services in includes and our we and have we recovery future. the our to inventory we predict not customers demand This take navigate but sure upward. position the operations take the making product, we solutions action to the right rightsizing, Although years, continue help

turn in achieved Airplane lower government for global delivery to flow from cash continue mainly cash XXX from XXX associated and Operating significantly $X.X on line Commercial improved cash XXXX. from billion and to timing our XX. our flow flow the be anticipate We flow significant inventory our now cash quarter put receipts. increasing slow the cash Let's and government programs 'XX disruption uneven pressure with roughly pressure on cash commercial cash We XXXX deliveries to the caused and generation economy The to recovery airlines to the COVID-XX the near on by currently by third much improve and we flow burn to Slide impacting to was continues The and of side continued volume, profile driven term. and in our payment And our -- driven by programs. solid services with negative commercial XXXX, volume. expect down expect earnings advanced from cash continue commercial is business. future to be further market

late continued turn challenging. more the While cash that the it's in be flow-positive today, will likely frame. path virus XXXX we cash more Based know much we're on still in to cases 'XX, elevated aiming the looking positive time recovery what make the and we

and of flow be Progress the work moving commercial clearly nature deliveries cash the how customer travel on forward. and government And progress factors, given diligently to testing dynamic recovery risk current will pacing environment. market we dependent and will will protocols, of trajectory on restrictions opportunities pace items. vaccine be the this Our monitor continue

discuss move our we'll Slide XX, to now position. liquidity Let's and

and capital and $XX.X to daily cash bank of our undrawn our credit strong markets. continuing to assess billion billion our assess continue our marketable with We remains which liquidity, access securities through the cash the quarter sheet $X.X to and We liquidity third as balance on well this including proactively facility, challenging as manage ended time.

Our our debt we pandemic, work debt seek balance this impacts year. the fourth may And this through further in $X at year, of To was billion to we as we just debt maturing. the end of have under of the the liquidity billion. the the bolster $XX maturing end of quarter quarter through refinance that

This we've billion over than next months. $X future. plans decided addition, stock XX gradually will In our preserve rather the to for contribution approximately employees' the to cash Boeing's of company foreseeable fund cash use XXX(k) to

quarter, also cash pension to retirement benefit move and be funded a will our of We outflows. in This plan balance by stock. plans our minimizing and to status make our totaling while will our to employees $X contribution Boeing's funded defined improving sheet retirees fourth also the benefit further billion, discretionary future position which plan strengthen the

COVID-XX will our these focus cash strategy part normal as cash of previously, key to cash continue reducing mentioned of balance proactively and in seeking we area. Therefore, These We be returns debt actions to remainder strengthen the this to flow navigate balance to our will will continue top to challenging priorities liquidity we past we levels hard efforts. we our sheet, the expect be our to maintain and more management of and use to Once our we sheet derisking as reflect future due worked year our for meet balanced obligations. proactively our As and environment. ensuring into 'XX. this generation managing continue levels, continued leverage approach opportunities while disciplined

our now I today, on addressing profound covered our health just to clarity Through slide customers approach want focused on and turn impact and but provide the on our navigate in pandemic other working We closely rebuild this the to a our lot global had and suppliers summarize. and has this to pandemic have the the and and our side. we on of employees communities last further the while time, our to you with tough actions Let's stronger industry. company safety

achieving remain our reality. transforming in priorities to market this also to on business We new our focused adapt

will and forward. transform adapt, focused. in place. so right team the we continue do They across to decisive outlined are took As our today, going we got business X we've continue We've the will early actions we to And pillars. to

future. Stay As is, is proactive the been long-term mission be of we continue our all action as situation has take industry committed for the to resilient. all market this emerge actions that on with executing confident to business The across more eyes challenging We're clear: our aspects our liquidity, market and dynamics, and outlook. on stronger today our position currently and and in company on laser-focused

with turn I'll for So to that, over closing Dave comments. it some

David Calhoun

circumstances. will a recover. thank Yes. long-term Greg, industry through for travel has proud remain The we're thanks. our unprecedented communities. the our challenges been fundamentals in team, difficult year strong. them any they've I and industry our our and of I'm company, tremendous other, unlike facing This work done and Air these

Greg your and future. products Maurita. turn take it I'll questions, you. will and technology positioned, to Thank and is of be I'm confident that, in With portfolio well I to and Our our back happy

Maurita Sutedja

analyst the for question ready we're John, now.

Operator

Instructions]. [Operator

question Our from with Doug Bernstein. comes first Harned

Douglas Harned

like you've we back hopefully more I'd too be a understand some to in got airplanes not once ungrounding, on which the MAX slow as got XXX ramp. path on about it, production long. deliveries will parked, about with look we've at And number,

there needed but -- for will modifications Like So of issues. a for recertification. number airplanes these to are be --

think reconfigured we FAA customers. You process for delivery parked inspection be these would will need airplanes that an have to affect other many timing. And of

be the ultimately start-up given deliveries will deliveries over you your year in happens for the due challenges do And out next once issues? of to COVID, lastly, these So there governing given think or ramp the of factors about how what then ungrounding the so? demand the timing

David Calhoun

Yes.

So long answering a there's RTS, to for a on service, But lot very, in question. that been this return very working remember, embedded, of course, we've this time.

fly mean are going airplanes that between the and rehearsed be rehearsed and rehearsed confident itself, we're has So ticketing to our through. it's been as process will they It and process that's that's in cert delivered. airplane, us and new, somewhat regulator. ready, while And doesn't each a

actually process. don't On the other hand, much delay expect in I that

to do, of ready be our to cycle And of thing I And are will that, the is not longer about teams of will are can to we do And course, and not problem the we're final within production reconfigurations do where of those to we then on determined fairly deliveries then as have than movement we rate. with. or which going will not of our stream a just early begin that for the better December, to be, inventoried think hostage all bigger who times, be be the able have conservatively all how mods, have contract required. provisioned going homes, than we of quickly themselves of that to that that. about end suggest and we've do I cetera. the be the would -- be think that. to XXXs et think positioned customers airplanes think to be it's we to midterm, in to that. I We're we for respect I going be But the deliveries And we have to And return started guess for yet will our create these ready planned. with what to here airplanes think

again. inch the so of low such delivery and those that scheduled then in and And airplanes to is and will then, movement rates work until up their our are need rate therefore, that can begin stay mods place production predict scope that those production we

be to going that's So pretty fluid.

there's worry it's vaccine, bit and everyone's a bank may when for narrow-body that. But of just maybe frankly, my And to run suggests the maybe up got; maybe somewhere moving a I that. my renewed come. And little when sure that, much opinion, ready we'll the response next it's I of answer my schedules, middle really that respect the sudden, second want and the recovery to stable of distributed. does as airplanes. But be itself, be and then the all a wave, honestly, suggests see moment, then question we've to and airplanes And am I Your about make the to and confident in all we're as to happens. is wrong. there going waking being that, in with the that. a that's on will over psychology of a we're year lend dead

Operator

from Strauss with question's Barclays. Our next David

David Strauss

I already think in either on And in have all, down few of aircraft? ask, not that take reaffirmed very it pretty 'XX have first much they Because everyone's they want what like rate why to 'XX? that how said XX XXX you your guess, come want out the airplane. around storage. much airplanes earlier, to given wanted somewhere take XX, you you've then seems have that built on in and or inventory the I on that the the of I so actually customers aircraft storage, or MAX, proportion

Gregory Smith

aircraft. rework Yes. Look, it. there doing able David, we result heavily the on It's XXX, associated been is have with of most inventory not quality customers to the is and more that the take the of the assessment the that it we've than weighted

mentioned, back. I seeing to Dave effort. assess 'XX. as here, in deliveries then And and linked how But our I we're So quality paced and particularly said inspections basis the by fourth that reiterated, that and going to have as coming I to day-to-day again, on on a will big and quarter pick international wide-body we're continuing we're up think a market

probability backlog, And very So we're what's delivery, think, around potential who aircraft. where in frame, the there and the we've being, the positions, of assessing risk unsold got that. probability real got we've then movements the clear-eyed the of time I

really, I'll every recontracting potential certainly contractual kind tied are to we've maybe it on to very changes, just delivery and look at contractual pandemic. with challenges and move Obviously, you've across of to then the further risks, sometimes, seen ways to the frames. airplanes cancellations I'll other, customer We're really is changes health, the the time and to the assessing recovery the out we of those assessing going focused make jump that's the have hand then got major X just Dave. around profile kind the say, parked, XX to the the we again, continue financial to And and XXs say, and look, globe and the which that that I'd on conditions back But it. of, on diligently will And to further but be then adjustments down, we demand. discipline, So match if our we're, it.

really in But to to moves engaging materialize, at doing had a own and eye time want the upside those you, dedicated frames. time. that for tell If our And add. It certain all with does say, clear towards don't that I'll If understand, to it's time, including, anything real got I do ability that the risk take pretty taken doing that it's band I'll So making into that's adjustments not the you But liquidity. that customers, then look, more obviously, contact is customers assessment. We've team if know, our same a we're baseline Dave, with a go our in plan liquidity? from around. aircraft to dynamic. risk see have that we the risk, through us. those thorough and and skyline assessment we're you account, we of bolster their how risk day-to-day kind place. profile, over of we But risk we

David Calhoun

mean, you could as Yes. as anything No. fluid I it's imagine.

know we in So what the don't have will again, tend I accountants suggest, -- to to do light I'm want customers of more respect everything. -- we for and their for to everything conservative suggest not are through about I we intentions. our that ourselves, be to than with

to we every on and we a week are we'll informed. it's We'll have But in So go more adjustments, to we're to to yes, be because planned this and they conservative ready you update and each be. not Anyway, half for already are been month, do. and we to it where are perfect than front are, probably more keep through than we tend now. fact, continue do world. we're going have customers But what

Operator

is Kahyaoglu question Sheila next from Jefferies. Our with

Sheila Kahyaoglu

you're mentioned inventory us lead really some a in help which XXXX. XXXX, I light you to square quarter-over-quarter. positive unwind. production month that, especially be cash to you on rates And would haven't of Greg, production think in believe comments unlikely MAX us XX of you in the some Can changed

inventory biggest the it's or or PDPs XXXX concessions? whether are profitability, what BCA So cash, drags on

Gregory Smith

bit elevations certainly, timing as specific in particular, virus, around become Yes. the continued of Probably dialogues I a we've of then, therefore, Sheila, it's challenging delivery. more little mean, the just around customer and that. around, everything, seen the

in drivers than transition fleet. of parked to It's how XXX year challenging. that little that whether today, mentioned, the on And just the near-term around of continue key XXX is having timing headwind. looking again, has on cash it as delivery expect, give 'XX more return that still up, elements. it's we going particular, 'XX I'd said ramp which time we 'XX, you made say same the it's is that really gotten everything from work it's and backdrop made cash some But all inventory the in 'XX specifically positive But like So 'XX be then overall, the But we more build, for 'XX, certainly between to that, and it focus 'XX a see said, know shooting flow the year be today. actually likely it. next this service will to but us it, more to to again, frame. PPs I slots we'll -- that's or that's challenging, based we're better

Operator

with And of America. next, to Bank we'll Ron go Epstein

Ronald Epstein

at fact this guess my losing seem do, question given for do is, confront point, both [indiscernible] that Maybe like Boeing And narrow-body to a really you you it all a bigger think you picture is it you is, the constraints in can question Airbus. It problem? one, if of how today? market as see company the share of I for address I both you. the been it's does

David Calhoun

Yes.

does, without -- by and advantages competing a competitions our airplane of without certain our think I So give year will. let share. going the me a will. When produce you an a and against narrow-body I'm don't don't up With airplane don't we with their XXX, routes, fleet, we've part take airplane future They for have not Market believe other to I one. lost take their hit to airplane, a any got you definition, a for to ground, respect doubt. share. share, big guy this doubt, the respect I and that's don't particular some

family of frankly, a the Our play not about I we course, And family. back. wide-bodies, the with But advantage. market And then respect competing cost, is a a think each. rough advantage I'm AXXX respect airplane, middle of mix I'm going ultimately to going that against with XXX will sure we advantage, routes number route, seat to enjoy with to the while environmental not to of continue have the and big and despite going and gives I in us how in it's out market's an of think to And the to take fact efficiency worried the respect the that the performance, time. that part get to

sitting we're product's around, that respect I'm yes, So then no, going our my next come sucking thumb And offering. along. not with to the product disadvantaged to

We airplane. are that to year. in We're based think we to a technologies on some design and this going winning next I probably to these the assess be underlying will technologies the out next the support market able everything pull that going And have that underlying that's we'll incredible point last of and happened create that point call think design year airplane.

actually let of NMA up. what of things. out not market the never it slot based deferral time today our is us those this we're design But think point some business. -- or I the going in This the will in technologies, spending it. changing We're we on I or was, underlying the we whatever And will advantage So covers call are not and still development up to let determining conditions. on that

believe our I -- on with that to not, front. a we've give line, room I'm and respect competitor I'm any to way, going in yes, any up got product very So competitive

Operator

with next Copeland Our Melius is question Research. Carter from

Carter Copeland

just wondered, in assumptions those could assumptions impact around of what in But Q. the could be program us the quarter Greg, and was general, Carolina changes whether Any that last you and whatnot. for for you the any pretty program South these consolidation, cost means the a low that helpful. Obviously, give and margin profit, portfolio? decision margin I all color across the actions big and would were your cost-out your to speak there on

Gregory Smith

on a not quarter significant bit. on little down up bit I'd little and change were Carter. And we XX. little a booking the rates, XX on bit. XX XXX Yes. was the was XX slightly then say within up a

is, Some that of as you customer mix. said,

some of cost, of it's escalation. it's Some and

So movement program. not lot a on of the quarter within

Carter Copeland

And skyline, are type skyline and those on kind is that themes had or Okay. there in or the that standpoint, any observations how planes managing comments customer are a where out skyline respect process broader going regional you or with settling the is how to from of evolving? the

Gregory Smith

I there's term, and here sit can't I probably specific any say Yes. themes. dynamic. an know it's it's but overused

liquidity, their where liquidity, to fleets their were happening they what access is So and in any different planned what's regards different. It's the are, what government own with on each within considering their travel. to customer situation region restrictions

really want have to customers within to needed it to the then to and and because some by remained for So time a customer taking but of variety deliveries frames varies out move reasons. right remain committed them

is can weekly teams are by assessments that the tail-by-tail, customer-by-customer engaging with this you So customers. again, imagine,

the do if through recognizing So then relates in we've liquidity lens actions got that's see it's date, may to that it? risk maturing cash ahead building, a assessment we be it the certainly, around been as we're the to have and again, comments stay debt as action, a we to good the but do the agile we own taking to dynamic. applying line taking of how look with sight, we've fourth well quarter and ensure that And seek my the in that any risk our refinance But of to we to just pension and that at XXX(k).

mind can't that other obviously, pandemic's specific throughout everybody. significant say is if the having I as to comes than, thread impact anything on the there's common So a

Operator

Raviv Citi. And we to Jon go next, with

Jonathan Raviv

much it's really to Xx, for are in below think here. doesn't at Backlog's the you it So lumpy. a look a But bit just year. of moment, this part be the pretty talking flow Xx generation of cash area. I kind story growing about a defense when seem it, The margins important

on developing Can going decelerating can what's you full future next a year. see the of enterprise change government. And how there? So do sort that the years? maybe few dynamic? over And growth you seeing is of including next us defense you the guys give picture, BGS Everyone's total

Gregory Smith

Maybe margin, Dave. a hand year, I'll development in this business and year particular, production production for across you transition, But the is programs is business. it the rotorcraft the certainly, the the fighter the and I'll whether it's aircraft. MQ-XX on and take to But a on of a programs, over top residential then line shot if this or in take and the the T-XA steady

once say, start obviously, So associated those and that. the development get of with production, out you'll into to the, modest way see growth move their I'll

core I support there. domestically, at to we're programs. our to continuing competing win we're good for the time, same mean, I think, see Jon, But

But know, development Dave, -- more we anything expect COVID programs of effort for transformation So doesn't think, really that the improve we production got margin question it's and of BDS apply a do growing But we've programs, portfolio, heels I it's at experienced the near term. couple this what to of we've effort lot a margin we're on development of once performance on the we've on have business, disruptive been impacting is and KC-XX that on into experiencing impact move then -- here year. add. mix side and certainly And all to no off well. as I had programs, again, to development just stable, you seen, the the this that that, we on to defense development commercial, outside we're we've time. coming the overall some see there's on if Jon, of there other a don't as our

David Calhoun

thing business Yes. that quite The continues it great comment I one, broadly. services well. majority I And to government our about business. the on of would is, broadly, feel only is go now the franchise In

resource to So has some not, way, I that. any government. expect growth Two, strangle tried planning in in our do

it's In opposite. fact, been the

hurdle something applied of that net have against the our commercial business. our described in our across so as need tanker. that been you a of customer The for business tanker. beginning to years can like all on way to respect then clear we've X the franchise, commercial of in for we're drag has tanker or a But we're having almost in us are our company finally, reductions and that the with starving So the its not in difficulties defense And we fleet result performance been the X every their with investors. with think their respect to

our opposed in franchise. relationship, will to drag begin So believe been, year. will on whole it's strength that a it to believe, next a I as become And transition I franchise being our

in up -- defense this combination spending just say, situation. I I I in think that's Greg on we're think I I and go will the said said, way. planning not with morning, it what any appreciable to So

a the believe that be spending defense been COVID-related -- there fact, spending world we experiencing. In governments result of that's as on have the around all been will pressure

expect at rose-colored pressure market. that So real looking on think we're that world don't I I through glasses.

Operator

with Our next Seth JPMorgan. question from is Seifman

Seth Seifman

a about aircraft, time? then XX-year second and all, Kind competition think countries break and we on market, that are see your over one do you question get one you plan mean, you part And look market see what for XX-year two how their picture. two the of China is into such certification expectations specific authorities? about to from the between we when of of for the explicit time the eroding assuming and you specifically, kind a for XXX, it and And I we that market? new production you and big in China, strategic Chinese think do increasingly potentially forecast, frame bigger of at how efforts over delivery terms when when

David Calhoun

Yes.

So there's a narrow a together. giant question question and

had et up, they start let stream We the CAAC, to time, attempted all the well through X the working it's a respect the And the been with are of on China, ago technical people cetera. with at EASA better And later for lined the me So narrow productively, Europe. we've our a in one quite on a for derisk months. the the we to are such FAA inventoried and field going did body team certification Chinese and airplanes out And that probably the with delivery. airplanes here in narrow-body same like quite our process delivery just part pushed deliveries. that the and while

we is the that of And we that So get deliver quite happen, it. happen to deliveries. the be business. can airlines this And knows, X people in lift, and And while. X I'm ultimately, kind as confident a be then need that, of will everyone that world back to can in China that and process back for will way

great we've So had relationships.

I have them. to When going there know around how We're continue around competitive that up, since think our going is And ultimately, going We're what's a the what round We threat not wants for world, that XXXX. for we don't and quite -- for it over form that shows We're do it. a discussion that of threat that is been we customers. manage be to will takes, to right while. competition. there. be, it compete up of we'll continue I've time, continue the it, afraid to to year to to

where anyway, to long that's have view great the So China, to and -- view and respect accomplish here. have positioned. a to Boeing But to and they want going constructive I what we're with respect remain for is China I'm still

Operator

go Rob Next, with to Crédit we'll Suisse. Spingarn

Robert Spingarn

little I Greg, ask to further you on wanted a cost.

next the You laser-focused about talked in Everett with how the about that? there? gets there and would the Dave is think mean, and on cost. think alluded Or that point? to moving some MAX created How capacity XXX this up we leaving about excess that you I about -- XXX I just aircraft is do explore the reducing think does concluding. we footprint go at it to wanted

Gregory Smith

Yes.

as in we're as globe, Dave we're space for there, Just around see the it Rob, the remarks, with at -- today our some the not that's looking to maybe the but in that's And BDS in looking work efficient. more certainly ways to as I mean, forward well. question, we of I of just mentioned all response stepping we're back, and his said as looking be

of strategically, and fully a think do the fully we as need utilization all So improved way be all about about, not doing how fact that overall we're do utilized, and trying company that are consideration we and of got we to our it is a in it utilized. get facilities do together efficiency. we do about very and how to But take our methodical into and And get that them to strategic it.

also all important but that's of opportunities it doesn't current just potential an one be mean, building, those kind It's and certainly is center it. it. so But looking about make no on. before future going of it's being about near-term make office decisions we and to lease, every I every utilization. all more our really And part looking efficient So improved mistake around space, through lenses one every But it. at of demands, every site. having

As of office we'll continue all estate. it's aspects I so. we're real space to targeting a and I do there, like mentioned, XX% in reduction something alone, said, just And across like

So more We're... come on to it.

Robert Spingarn

Right.

not ruling big changes? you're out So

David Calhoun

mean, just all another not it ruling one to think Everett more use in is a than really our to because and that we're this the lean we out lot place want of capacity footprint reinvigoration workflow smaller And ruling have, not that most it's space same lines to available. we do and But produce part, will because or off line We're freed to of the even related up, the the for suggest no, Boeing, can actually today. in we how things changes. we it, by out I big from way I of just about -- that's move quite don't that going while a we're for

freed the to that we're XXX and we're And XX, program, So just fill that et off on a going things get result not the try to line stay we're it. the going to cetera. going decisions as of up like and to

there's try going no fill space. will just And not doubt. not to matters really we skills in demands and know in need really we're the next would where -- also to But to that to the ultimately see all a best be We some lot, footprint sit. play needs be that interest. empty that We We that would have and return. need market great our area, that out where factor. to That

Operator

Walton from is question next UBS. Our with Myles

Myles Walton

to I clarification a had question. really question The leading a was

-- guess, of broader the Is XXX(k) plan. And and rather, Greg, go-forward So more prefund one-and-done is. the obviously, then the for the of What that? on And a clarification a what this the the pension equity such $X portfolio on sort of question, is above towards the it's an stock then, to on a of ongoing? an and for open to I sheet, XXX(k) $X years? make is would billion basis, the $X few billion the that sort balance annual basis, -- sale equity years, rebalance issuance consider a a of billion to you beyond this then number that

Gregory Smith

is the all, Yes. No. the of you're first about well, thinking XXX(k) pension I way right. mean, and

said, So it's minimize an the -- I the be really really pension like outflow several to will is, attempt the over next years.

stock So the table. as we contributing at the today, off see of billion it risk takes an that amount $X really

we should and and So ultimately, health. said, that. between our us on, again, an we're, to whole do mean, and we kind profile credit like more sheet cash the I important annual significantly focused diligently help so our derisk. is levers the overall balance idea on I equity how what Certainly, on debt our going of it's the balance rating have, it flow of And XXX(k) to approach forward. sheet yes, But is,

the we this, a of between continuous balance. approach are balance again, think through we've bank looking doing and the to as each with debt of with think and done find the mix. of and internally, So it's areas what X. of what these that, the right trying a combined and continuous It's just now, a drawdown, one balanced And we

year. too, mention, maturing $X did we've got I billion over As debt next of the

So at and we'll at refinancing look again potentially look that. that

basis. stay And So that balanced again, again, in here, levels plan to beyond appropriate But XXX(k) at approach day-to-day the the to objective second, understanding fits each is ahead right But of again, this of the the liquidity very manage -- and on our looking and baseline with have pension, effect around the a believe, we into challenges try a order possibilities our just near-term the is pulling them. some as third appropriate time. of and category. we it's

Operator

go And with to next, Kristine Morgan Stanley. we'll Liwag

Kristine Liwag

I would have the fund flow incrementally that been decision stock, Boeing free thought With positive. with XXXX in cash guess, to would your pension I have

in onetime expecting So And bridge to so little do the cash and a flow stock? can more in XXXX, can outlook we moving that and to items you with bit then expecting your first, operating XXXX also and were you XXXX? fund parts any color positive pension to provide were the on initially in you second,

Gregory Smith

Yes.

modeled -- requirements. and on it started some as it, the Kristine, or kind funding in rates and beyond see pension So frame But we to all of time incremental know, discount funding as 'XX depends the you the rate. we the

So we the we of didn't see forward. to 'XX, of that a said, see start I significant funding essentially, but in amount some required We years pulled did it like that. beyond in

improve pull that again our forward. So this and stock was going opportunity to profile the an and cash forward utilize

consistently you as know, reviewing a the funding approach net-net, it pension before, know do. do again, balancing So of prudent we've just thing it. in and capital and particular. the structure All how done we part to think we the to was, it to strategy And

I'd is talked say very 'XX, 'XX, and are year-over-year. the the time, of as key contribution of but I'll 'XX say, similar far again, elements changing last As kind what we to evolving to level

it you single as is an 'XX today cash flow, to over as which bridge XXX be, biggest So in MAX it contributor. 'XX, will see the improved we

looks then Dave to single is return like, ultimately, marketplace the the starting to the ramp, biggest getting and Outside the as rates, our what of then informing one the to So deliver next and off production recovery be service, said, and that's the XXX. that, driver. going

largest over into as and have second 'XX, two As 'XX today. the be and profile 'XX delivery inventory, aligned I building sits biggest. single we're Those are to inventory will said, we'll that contributor that it and your

finish year. as how we services see defense, it's If think you look to at or it we're year-over-year, with we pretty today in this much line going with

those So the product XXX does with the X being lines, it particular, to down biggest really contributor. narrow in

Maurita Sutedja

we question. time one All right. have for last John,

Operator

Peter will with Arment Great. be that Baird. from And

Peter Arment

you Or how move the any final outlook gains assembly you're on XXX, to maybe facility -- thinking the the of maybe how just change overall thinking profitability productivity of with you'll you're the of at through about achieve talk consolidation Carolina, times kind the kind that just -- on can of be the Greg, about facility? -- just does able South that one to program? in one the

Gregory Smith

Yes.

competitive. know, Peter, you how that really efficiencies, is it as and outlook do starts kind certainly then, this to And with at key had, the looking we ultimately, think, we I of contributor become then market a that. and more

And won't going the looking But mid not and more where that's the beyond the the logistics, looking As a as see as significant with having far is at associated around final and and -- crews it rate transportation half said we'll cycling, a from really, rates. capture particularly production and the the it see certainly impact again, rates But that, logistics body assembly and dedicated not on at and efficiencies, the program we'll earlier, Dave efficiencies. right the beyond over higher we'll having a current more into marketplace we're perspective, that ultimately where margin near much term. have today.

Maurita Sutedja

Boeing All right. Call. XXXX Third Thank joining. Quarter That Company's Earnings you Conference Thank you all. the for completes

David Calhoun

Thank you, everyone.