Boeing (BA)

Maurita Sutedja Vice President of Investor Relations
David Calhoun President & Chief Executive Officer
Greg Smith Executive Vice President of Enterprise Operations & Chief Financial Officer
Sheila Kahyaoglu Jefferies
Doug Harned Bernstein
Seth Seifman JPMorgan
Carter Copeland Melius Research
Peter Arment Baird
Myles Walton UBS
David Strauss Barclays
Ron Epstein Bank of America
Jon Raviv Citi
Hunter Keay Wolfe Research
Call transcript
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Thank you for standing by. Good day everyone and welcome to the Boeing Company's First Quarter 2021 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] At this time for opening remarks and introductions, I'm turning the call over to Ms. of for President Boeing Vice Sutedja, Investor the Relations Company. Maurita Ms. go ahead. please Sutedja,

Maurita Sutedja

Thank to of me morning. XXXX good Boeing's Chief you, and John, Greg and Welcome and Calhoun, President I'm Smith, Chief Sutedja Executive Officer. Officer; David Vice Earnings Maurita Boeing's Operations and are; with President today Executive Boeing's and Enterprise Call. Quarter First Financial

website follow reminder broadcast and our you through can today's at a As presentation boeing.com. slide

issued information As this Projections in earlier in end always, and involve the filings release this have detailed our we release presentation. include morning discussions our various are in the to today. of web financial and our in forward-looking we detailed likely goals risks statement estimates which SEC at our news press provided in are disclaimer

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

Now the I will turn over to Calhoun. Dave call

David Calhoun

morning safe On we hope Maurita thoughts Yes. I you're those everyone. and you Boeing, support of behalf this staying all share navigate want for I and our Thank India to heartfelt as healthy global good in and pandemic. to of who we ago it's and with the back of a year. impact most were been COVID-XX COVID-XX impact began coping a surge. to we as quite think deadly the recent year If are this devastating where unfold

thankfully, proof government While we point And the XXXX to view public together come investments. and industry one a it and support for challenging like critical industry for our a been before. we has US inflection as another never saw those point

distributed and travel never the early everyone signs in including pandemic. I markets. years few likely recovery and in encouraging in full the this be imagine at progress many seeing While certain distribution still a recovery would developed we we're a is on vaccines outset domestic vaccine countries remind away

the communities of as We and where teammates remain and business as our their to well families, continue operate. new adapt and our to supporting customers to conducting ways dedicated our we

XXX on next start program. business let me with on update with the an So the the chart. Starting

know in the flight identified of issues all XXX have in you electrical As we deck select airplanes. MAX of certain locations

finalizing airplanes are to Upon are the the the service. process impacted. and approval with their Approximately FAA operators a airplanes return required airplane. the work the FAA for to we few We by to take plans XXX to days per documentation in-service expect outline

We on complete airplanes our work this same in inventory. will

have on the impact make year. recognize and season. time are the our the over to progress important regret XXX worldwide. have FAA's made we've the XX,XXX Since the returning months now to flight several more airplanes the safely than also balance while to We At deliveries delivered late to than will the in XX,XXX XX deliveries that ungrounding MAX deliveries service on this has than resumption totaling flights our this flown last -- have up and countries We very focused of fleets address broadly summer ready safely we paused MAX in operations. airplanes these their last are for the of we light. had commercial more approved ensuring More and hours. customers' on MAX XX their which operations returned issues, we've We've more expect airlines more April service customers, year catch

the valued the non-US the We customer second an XXX in with approvals aircraft that will most China approval year of year. this remaining the half Ryanair. variant also now received regulatory assume of approval in We likely the recently regulatory X-XXX now for occur important our for

steps ahead. always follow will in continue As to and with work their lead the we global regulators the

a Alaska Airlines Southwest of and Aerospace to in XXX with are now an customers honored the modernization Airlines parked their in enable efficiencies reliability excellent the orders expect approximately operations. burn, and our quarter XX carbon per encouraged fleet gradually family. they had such our fuel one-third commitment We're benefit customers to demand. flying revenue-generating the the quieter which the to as We're week At with support Boeing XXX improved remains low Dubai fleet gradual returning in priority XXXX we increases at service. and quarter, and placing XXX reduced with increase from order of corresponding month last our their serve; Enterprise that in than early trust airplanes fleet backlog. rate flights. on-time currently aircraft first end and and emissions; is previously also communities United parked More These from market along continued that of to Airlines, the with underscore engines by dispatch Our our with customers' orders further the assisting operational in producing the rate XXXX the to

of the rate our to environment discussions. We plans timing assess the plan as and delivery ramp remaining production our determine will approvals and will regulatory customer continue also The we up. engage in shape production monitor market

will We to readiness with stability. to chain and supply ensure transparently communicate continue our

XXX in the our with are March rigorous Turning following program. coordinating testing resumed customers. deliveries closely to and We and analysis

the what a since a deliver we couple to the last of of the expect on month deliveries We end will every Based the of involved -- we majority FAA know aircraft week. the still of with FAA year. We've follow step today, by inventory the XXXs of in total currently way been more the this by the potentially delivered in end or this process. restarting XXX has nine

delivery progress. We will environment and market closely monitor updated the you keep on

a we March, rate which Also of smoothly. the Carolina, final As to quarter. went we've previously by low South XXX end of five transitioned the we in production assembly Boeing consolidated the to communicated

closely working global including program. with development we're all on rigorous program, XXXX the of On aspects regulators test our

also customers delivery anticipate comprehensive of the regular late with will safety Our We're the still and reliability airplane's providing date. first we've team executing to the on that XXXX in made to series our of the occur design XXXX. to we're this that tests remains and focused the updates demonstrate pleased progress and

planned, XXX, the production XXXX are As we per to transitioning two month. combined rate

assessing freighter transition We also production continue to to to our plans are the see efficiently and XXXX. demand strong

our In programs, deliver continued we've our Services and addition customers. to Space commercial for Defense, to

reach we're As milestones, quality and guided integrity. firmly safety, our these and values: grounded program by core we

these a accomplishments. highlight few me Let of

Our F-XXEX Defense, with aircraft Security last production second T-XA Air Space team flight began Force trainer & the of advance delivery first the the achieved US just the and delivering week. Hawk of Red and to

the the program has Air operations well safely Tanker air six months. has began and operational demonstrating passenger use over KC-XXA XXXX over as Force the airlift On cargo conducted and refueling for limited US as last missions

for successfully testing System, SLS hot rocket. completed NASA's Space fire Launch also We

Additionally, services XXth inducted EA-XXG XXX-XXX delivered and our US team our first the global the Freighter Boeing for Navy Growler modifications. Converted

disruption our programs VC-XXB where COVID-XX to the employee manage to when continue program, including quarantines clearance constraints impedes are also mechanics the exchange on impacts to required. our We ability

significant of successful Year report we're practices. company's in the the to STAR environment sustainability our and of we've also maintained disclosures, the and our received recognition on Award to and for equity, enhancing and later integrated programmatic the Sustained for operational that planning row, great first to proud across energy addition first and in inclusion highlights, ever company global release the In Underscoring making diversity emphasis are this sustainability conservation our ENERGY Excellence our We're we've a XXth sustainability our Partner strides. report year commitment year.

Now the environment. let's to to turn industry discuss slide next the

defense stable. remain Our and government significant services, businesses space and relatively

underscored stability The we increased and is we BDS $X to commercial forward. is the to to countries, for continue near-term market budgets portfolio some strong us are market pressure for help as COVID-XX. another orders, defense strength remains move to pressure portfolio In on defense COVID-XX diversity quarter their the defense spending critical Overall, on solid strong our our by While increasing demand we government response due of global of of in see billion. global programs. provide to adding major spending continue others market, our will continue totaling see The security.

is However, long-term intact. key recovery remains remain traction uneven. many but of gaining our The fundamentals

very anticipate traffic, in has in in and slightly Consistent particularly it quarters, some case place, still rates the what spring. around many traffic will those outpaced customers industry. we February and market seeing continue prior next with in are and markets. including on momentum China, this affected six passenger domestic and then United we've discussed up the was States significant Since high is entire some in the COVID-XX the domestic cases momentum months We're our for XXXX domestic and anticipate in has remain in levels. our restrictions We to travel. pressure the expectations. some regions picked below recovery leading continued airline travel the positive especially be putting world challenging areas XX% it

profiles critical XXXX, And the been passenger US below onset are resilience government twin-aisle. in for are levels, capacity dynamics, than On averages level. routes. drive rates XX% the in rates, the showing traffic of are levels. hurdle remains global they is although TSA a has historic less X.X load April million around cross-border utilization case extremely normal broad absence their the XXXX earlier increase uneven policies with means and with significant concerns passengers seen slightly other slightly Ongoing our approximately are remains of the which to above continue coordinated February world. three recovery markets international recovery are XX% XX% and seeing previous the throughput The increasing areas, global and pandemic leisure US operations airlines to quarters and virus fleet all expectations. pent-up around its traffic distribution still around low the The protocols entry a in still activity we've behind China the with active single-aisle influence Regional with reopening. still an highest demand. at levels and as daily domestic Vaccine the have flying hindered since of airlines factors of size segment. some of such policies on travel of below bookings international the domestic hand, in

such parts of penetration in lower Latin reopening passenger the However uncertainty remain traffic and plans. about of and significantly government new the America vaccine Europe lower strains to of parts as world, virus, other due

spot expected, fuel-efficient commensurate very airplanes. as emission as The their focus February, active market flying the new with XX% that will XX% this removed As of airplanes airplanes much to pandemic. remained XXXX. keeps before growing We as with of bright in higher continue, due limited oldest fleet since number have anticipate are onset retiring belly the or X,XXX and to efficient least retired announced on high cargo the freighter than remains more passenger freighters be more from the pandemic Yields than traffic to another with cargo improvements. the capacity X% them and be replacing will from being around customers our and trend aircraft airplanes retired with

continue the GDP Over will long by our growth. global support on vaccine our in traffic Progress countries to run, outlook dissemination the long-term trade and cargo belief passenger demand in and be to medium-term continue market. many the domestic of strength driven and

then IATA in XXXX expect for as demand levels As Therefore, to and with is and intra-Asia flights; recover we've period. routes. phases; to and industry three to finally, regional shared intra-Americas recovery intra-Europe see longer for domestic markets then will XXXX. a and while remain expected narrow-body wide-body groups, previously return the such traffic; passenger challenged in demand aircraft faster, traffic consistent long-haul XXXX international first still we to other We

has airlines, international to of around demonstrate the of world with continued Initiative domestic we leading resumption to the and Confident positive start medical see signs Travel partner to air universities in safety and travel. air experts the regulators, travel, our As

expect. information travel any new expand Standardized of to to ensure to air use encourage should international to in cabin. matter any where governments working and passengers confidence also decide approach travel. they're travel and the when and safely multilayered on protocols part keep -- secure that transmission Our science, between to approaches what also We risks substantiated safe verify we're analysis the with help be data-driven people seated they associations the and risk-based to minimize in by testing aircraft to has our no been industry air crews traveler based countries. solution disease methods We've know

rates. the move given delivery importance profile recovery. we as As progress future which testing influence the particular Chinese well distribution near-term production interactions global our also US-China on market coordinated will environment and be monitoring in global relations, forward orders, the as to the of drivers of the mechanisms, We're trade vaccine future key

our In dialogue, rebound the We and stable will in continue to engage both the productive with of to countries XX% of we a growth decade. reiterating in mutual to the market, next will prosperous the a recovery industry. we years the preparing leaders are bottom first the increased China and some economic the saw industry over demand benefits commercial global aerospace we represents expect demand That strong urge services for levels continue previous as in reach season. from uneven. airlines take and be said, see summer activity to multiple it seeing trajectory the may quarter. anticipate We're to

accelerated age services. the prolonging Additionally, services of are retirements for lowering and the commercial recovery reducing fleet the demand

liquidity acquire the customers continues to aircraft there to be the to the be recently recovers. for in challenges aerospace On continues our and until airplanes. released liquidity in the front for vital as we generally noted managing market liquidity the outlook current our Despite industry finance market new the market

connect proposition to of were the by XXXX and third In and deliveries understand fundamental value the investors world. the Financiers parties. fact of need long-term aircraft XXX% financed Boeing in

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

meet Our needs. well-positioned customer product lineup to our is

navigate We've term. not we're long losing team, resources our sight to future. care to we customer innovate commitments the initiatives improvement meet for taken our the have and the necessary this drive we to our the and difficult great ensure of time, As investments

investments addition reconfigure. we're fuel-efficient that maintain define will current easier our a our being that In also technology more will performance, and on our We higher anticipate and next aircraft advancing work while to next-generation to easier chapter. offer lead programs, to to our that

driving our business the future change continue and the managing to while to sharper and of the will business to position and COVID-XX market make leaner, adapt We impact long-lasting our take liquidity closely more sustainable. to action right by our for

let that, it me with to turn So over Greg.

Greg Smith

everyone. Dave Great. morning, good and Thanks,

please Let's turn X. to slide

the services revenue. airplane impacted primarily commercial benefits the tax benefits offset also Income partially were offset from partially the higher in First to adjustments largely This period decreased lower benefit to lower higher commercial in by allowance to the quarter revenue $XX.X in impact Tanker true-ups interest due Earnings deliveries pre-tax by KC-XXA and was tax billion, volume. the by and the and quarter XXX expense. and lower of XXX offset deliveries a reflects to by quarter costs, tax higher primarily valuation the recorded losses XXXX.

by slide airplanes lower partially to move deliveries, now $X.X XXX X. on Let's was XXX commercial offset Revenue volume. higher driven by billion

first the prior the pickle compared have quarter lower abnormal Although delivered year first inventory. the continued be in commercial operating and absence MAX to improved they charge margin of quarter quarter XXXX in built XXX performed MAX period stored the XXX to XXX due the approximately airplanes in related XX -- to higher and same XXXNG under they the We pressure, currently We the deliveries, fork repair XXX airplanes in quarter. aircraft to costs costs. in production

As reconfigure these we've have previously to we of communicated remarket potentially expect some and them. aircraft to

As orders you've progress recent making are steady seen by the effort. good the we remarketing on

we the be storage and had delivered by Through quarter the before aircraft delivered XXX majority end of following service, XXX April XXXX will half approximate MAX that we That storage by the also remaining recent unchanged. You aircraft as in of deliveries. of to recall the the right Dave may XX have the around year. XXX we the and of estimated impact return pause mentioned, the delivery first is from the our estimate would end

discussions customer regulatory change remain market XXX material the total and estimated timing delivery expect our rate profile is environment, no and billion. abnormal given $X the dynamic There approvals. costs global remaining for production ramp-up of We the in

the expense billion. the $X.X costs, we $XXX abnormal date to cumulative quarter, which first production cost of abnormal expensed brought During million to

to as incurred We of XXXX. costs remainder in expensed largely expect be the these

considerations including forms concessions the for considerations. timing a prior by cash billion liability and and as cash we've other expected $X.X for paid the customers Our assessment well payments Cumulatively billion of concessions impact other reduced not other liability first estimated customers, liability To as the XXX to compensation potential we our this MAX in the the quarter and $X.X significantly quarter. estimated did we've billion through $X.X assessment. date potential change to of from accrued

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

Turning now to XXX.

airplanes As Based discussed, approximately inventory. deliveries of during we these We in still we the we anticipate March. what we majority currently in XXX on today, we will XXXX. that airplanes XXX have know deliver resumed

deliveries the working customers assess monitor to with We are international our to recovery continue and as we facilitate delivery plans. long-haul our

assessment position. the latest our of first impact the delays Our the to in closing related financial has been and included inspections quarter delivery

quantity reduce or program further forward If quantity. result margins that required XXX previously breakeven near margins a program rates in and production announced gross accounting lower are program record reach periods. the disclosed due other we've in accounting the to future the we As and/or factors to has rates previously loss experience in reductions production could

the However well drivers margin on basis, remain up held unit lower as XXX at a even many relatively has cash profitability rates production intact. underlying

Moving now to XXXX.

expect XXXX cash delivery first flow anticipate flight will progress late delivery. to one we We in peak the mentioned, program We that as Dave late improve after that was first making to deliveries two XXXX in for of we efforts. As of are occur approximately program cash our in and to and years XXXX. cash get and test positive XXXX begin we on good closer flow XXXX use still expect turn the to the EIS still

highly the future margin significant upon BCA progression rates time. headwinds will dependent remain production Given and market, will that in be take the

through possible. offset in to as business take appropriate lasting as to headwinds help efforts order action much continue make our we change those transformation However, foundational to

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

driven and by of prior primarily program absence pre-tax Tanker X.X%, to on impact increased in of performance the revenue in our $XXX aircraft million partially Navy, and operating increased higher XX offset the V-XX including holding a Air which issues Force XX revenue US billion Australian charges Royal steady KC-XXA Osprey quarter VC-XXB due P-XA charge and at supplier. related quarter program $XX to to Tanker the the US was We and largely the to for billion. Boeing the period, by and COVID and $X.X to margins Air First at first orders contracts received Force Poseidon $X to Bell billion quarter, Air aircraft to Force six US the in backlog the Navy US KC-XXA rotorcraft

first declined lower results by were services driven now quarter. revenue quarter Let's the due Services margins $X.X Services to Global the In commercial XX.X% X. decreased operating billion, notable impairments on both to COVID-XX. Global turn to slide volume asset and No booked to in

During BGS approximately contracts the approximately $XX billion. quarter, in worth key billion backlog won $X resulting of

trajectory to airline While comparison services more to expect operations given said, increased are in quarter environment as travel demand recovers. from portfolio right as efforts airplanes our quarterly performance. XXXX That relatively for navigate environment, for we margin was see quarter-to-quarter. market we customers the we to that flying revenue our are revenue support the prepare recovery. and positively and challenging help expect trend vary we the operating and solutions fourth flat downturn Despite business the These the we ensure improve to can to dynamic are services starting our have position continue take industry and future to the evaluating hold our impact to and

advanced flow receipts higher offset by payments. X. and billion, of Operating Let's deliveries, timing and on lower to reflecting to the XXX now turn expenditures $X.X and for XXX flow lower cash the deliveries partially quarter improved slide negative cash

slide to to move position. X our discuss liquidity Let's now

billion on facilities, through with We position remain first undrawn. including increased our cash to newly liquidity We $XX.X quarter pandemic. $XX.X balance continue and our proactively and sheet ended from liquidity, the billion bank access which credit securities to of our marketable manage strong cash assess and our the

to access capital continue also the We to markets. have

remained the of billion balance the debt stable at Our at end quarter. $XX.X

As prudent that ensure these part and to our reflect addition liquidity-enhancing We credit our part seeking expanded strategy These actions of our to will years strengthen suspending merit levels. will opportunities we hard our reducing stock, XXXX of term that our cash These refinanced continue onetime to ongoing liquidity many $X.X revolving disciplined increase. the returns we maintain before, contributions facility are we more normal billion. XXX(k) awarding draw best levels, have be obligations. worked increase and meet early continued believe planning to we in actions, level to actions Once in activities loan efforts. a in a lieu pre-funding sufficient priority. top and most our our due reducing our billion with balanced of our of currently our de-risking sheet dividend, will have liquidity in future $X.X balance spending delayed while by to employees generation stock, not was including flow three we are in pension discretionary discussed debt grant and past We stock matching of debt management, cash are in our proactively approach the and

we sheet. continue However, to will balance actively our manage

Our important our is structure consider to our credit capital strengthen to will of rating aspects to continue investment-grade all balance us. And we sheet.

now turn next Let's summarize. slide to the to

market remains continue including, recovery is with MAX U.S.-China uneven we and the while commercial been opportunities remaining rates from Our ahead recovery passenger relations. approvals risk pace monitor will XXX and along business dynamic. gaining factors and and path environment the work case some traffic certain, and and traction to regulatory vaccination has is diligently far And

affect As and future XXX rates. affect from plan. delivery it for timing China our China an Dave mentioned, order airplanes production the we're activity regulatory from still important awaiting of China will approvals is commercial will our XXX market and our MAX

As will industry recover we've we year. XXXX begins our challenging even discussed, anticipate another as to be

metrics. XXX as the XXXX improvement shared financial what and cash XXXX. deliver will improved that, biggest be improvement XXXX XXX driven significant we expense. last expect based also production and earnings impacts costs with plan what much program, partially commercial lines. in we to performance expect by inventory with commercial cash absent the our we to actions. from by continued will improve to book bear to higher XXXX by by XXX mainly our and higher primarily from and However, we mainly quarter, unwind know to we Consistent all Commercial deliveries, bottom-line to to XXXX still on driver, from continue single Revenue driven from operating today, across deliveries be will revenue, production XXXX, business XXXX benefits improved XXXX, transformation expect charges, offset These operating mind to our trajectories continue from will from deliveries abnormal for XXXX. be burn Also higher the Similar of revenue interest inventory and earnings we driven associated XXX XXX flow programs. -- down, continue to in and to be by business

will of While settlement and the down a be and payments the advanced higher XXX deliveries with tailwind, access continue be timing of higher advanced will burn payment payments payments along to customer headwinds. interest

And most periods. up we the expect challenging ramp was and deliveries a improve remainder of subsequent for we year first XX expect quarter perspective. as We cash the quarter XXX from the trend the in the

could there be trajectory so quarterly some variation could However, timing quarter-over-quarter, be uneven.

needs. market cash ongoing aggregate, As obtaining commercial to our recovery with regulatory remaining fleet discussions and cash. In approvals, MAX dependent XXX we profile customers continue the discussed, expect a our on the planning XXXX be use flow of upon is heavily their to

will lower XXX us XXXX. be commercial earlier highlighted to improvement that in will higher trajectory. well positive program watch The I services cash outlook as due on expect in that continued to our We payments the delivery differentiator recovery in turn considerations and MAX items as enable key the flow customer

well we're environment, for future. Given to positioned continue dynamic opportunities the the risks the we monitor ensure to and

sharper a to transformation year, and resilient out aspects momentum. over gaining period. is into to production performance. more with a multi-year XXXX, efforts and increases so been We're all have safety, now, XXXX our this as We'll widespread our quality to extensive We're is of of updated that And past rate the on take key carried in do in we keeping future. progress examine and closely our the business continuing the of company operating strong and you simplify costs changes effort. our that emerge we recovers. I'm everything we've doing driving streamline, shown while can we execute a market and set pleased of dollars billions Over leaner, the in continue operations

majority cash ensuring expect every productivity, take our in on efforts action result step flow and generation safety, drive further the will quality our commitments. change in that that We as delivering recover. efforts we And margin long-term our only will of to market expansion we're continues as drives lasting key future and

I these a ensure in to get and who our of that have made Boeing the my you. in by the I've work all technology, to take and focused been to I that finally, intent Boeing great you and every shared to unit retire embedded company At the week and from at it people all incredible privilege most. you July. entire at been the possible inspired get the bring of while our I've team want I and Boeing mission products over years every that is know services will continually improving make driving and my to last people the of partners so we're future. will been function honor people at alongside the world. special. the our products miss the that so as years excited, a is all day all it's we to over XXX,XXX moment our efforts every thank operations. XX our business have has It We a true a committed leadership on in know forward aspect an This And team in the is dedicated effort those enduring it to very I the of great it's and And relationships here to and that beyond. decade last to financial well opportunity I've you cherish the fortunate community to had in have the Boeing, include to

cheering a be months, itself transition Over in I confident team my the then will Dave behind Boeing sidelines. ahead, team responsibilities of always from my I the entire Boeing and the career. next will and on be to I'm on smooth focused Company the it. chapter the opportunity the next and on few market the solely in long-term

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

David Calhoun

behalf and dedication our and our for the -- significant On has its know. had for of teams you Boeing very as contributions for entire and has to I His lasting has his and team, well. want quite a across solid also everything that of for Boeing the customers our made for thank Greg know company gotten incredible he function to and the Thanks benefit remarkable leadership to Greg's the his Greg. Thanks, to Board impact stakeholders. oversees, people efforts, I've Thanks people. Boeing

new Greg's we're build a strategic not for searching we legacy, on As direction.

external for positioned transform and but the the We emerge we this commensurate will executives engage process market. has will high talent This the and stronger resilient across to more and to for ensure level continue navigate term. with search through for to Boeing executive pandemic world-class long thoughtful we and the Greg with the a process not and encompass in a We're within skills set. well will business just future that our comprehensive

While as a we to question a year COVID-XX on begin there's inflection view profound had point key emerge. no impact and has as signs that our positive industry, this

travel are global to proud people, as business. of accelerate world we are the cultures. people distribution, and in to to businesses to and to to vaccine getting economies importantly are connect And beginning back connect around governments role As work they back our enabling do, connect get

quality, hand, customers and of on happy our future. focused our at Through challenges the continues in to in steadfast I I and confident into and team face that, we and With to to it your take important commitment transparency. how their all, you. am our Thank be missions Greg remain proud questions. integrity As stay I'm will we our safety,


go Sheila Kahyaoglu ahead. [Operator Instructions] Please with question Our first from comes Jefferies.

Sheila Kahyaoglu

to destocking commercial chapter. and I and forward how Is both about forward Good your next either and of the think and into congratulations for or we you. the production Thank XXX rate Greg. profitability Dave we resolves itself? everyone look next morning, going there a MAX that you, as do about on Greg, think deliveries we breakeven guess both year? when

Greg Smith

and weigh my mentioned the and tied in I'll I the burning Sheila, that obviously, think, associated here, but with XXX. inventory remarks to Yes. I Dave and as particularly in off really then rates production it's let

we've transformation, and the the trajectory. sight trajectory, the much the same we've cash we've margin and revenue we looking But been earnings what but business talked never to challenging future. to same are on similar and about to for of very period, as this also really been on about going So umbrella as be talked under aspects the time of streamline, we've all -- losing business been at in opportunities very

year, help that to the improve as continue transformation with should that rates we're let So, in to we stay as last same help, weigh But, production business and to focused at But trajectory then very the we still significant our will. the Dave from well. market investments associated time, efforts improved see going in ability as what posted and increase I'll we business continue market. that you've we as on the to seen make

David Calhoun

all leverage we not actions part is to and but even the there. that probably lines the I I'll because add of respect I serve should there's what we and are the begin we out rates But to a than consider to above, to that ever with confidence bring maybe more will bigger stability much Yes, themselves. fixed to there, my can production get costs then readiness am normal add return that taken we've back simply ultimately production just -- would we've as the gotten,

a we track. is up, There productivity enormous move so stable fashion. attached we rates do So, to in as the that can

I I commentary. So, the that Greg with made, that agree all would just comments add

Sheila Kahyaoglu

Thank you.

Greg Smith

You’re welcome.


ahead. the And Doug of go go Harned we'll Please next, to line Bernstein. with

Doug Harned

morning. Good you. Thank

Greg Smith

Good morning.

Doug Harned

years. just you First wish and you've great, done you here. for want to over to thank been all Greg, in want steps the best the I the with your definitely next us work It's of all

Greg Smith

flown very much, Time's Doug. Thank by. you

Doug Harned

also It's kidding, have a Actually kidding. you for question long time. No a time no over industry. I think that Dave, in involved long and goes you're Yes. a the I

back been an true think and over always you particularly And about it years, If share. historically about had have ongoing it's sort on kind battle narrowbodies. that market each talk other of Boeing Airbus They of thing. the against

large today, neos. So, been market has back. MAX still have you big when a backlog. obviously at Airbus There's has a But look for been delivering lot it. situation a They the the held of

call, bit last about we talked the the On XXXXLR. little a

something that about make you would there Is sure forward important you that? is And share? how for to Do is there now, market when narrowbodies is important? number Boeing that look that is that So want level you think at? -- a

David Calhoun

want a I I great market. be that Yes, it's -- question. to want to split

for the played the of better entire I production is, field. for parts make in that we to market can't way. that get make can't do it's about the respect in some it segments with on can do products we put that this that way What up I our to that. I'm And confident That's will right Let's better out say own that I historically. year. They that up created we gap there. other we of market

will not I our I regain this try ground. stable going can rightful so I'm share. think from that bring with hold I I'm in the is simply to also back bring most to point our the try own what going fashion them. rates forward to to to And respect conceivably

Boeing. So, that. that is I pace think for I will good And

think is I for good that shareholders. really

it's been, So, do in the always the some we for, we're be. I have that a continue get to work think think decent And and what to question I I'm suggests confident at a pretty back of it? get want measure that. you period confident where the actually to activity I longer we're I'm look of airplanes our we'll you putting time, all in to need over that to. product of to When a place. time line And over recent period applications

So, it's a question great -- though.

Doug Harned

that here? customer you And to willingness there been the than well your last can that. look get on it them. restarted. months, I they What a capacity have more But are on clearly the averaging since airplanes the four Are delivery? delivered? you've and below that's on little When those follow-up you constraints deliver XX more bit Or out at more -- processes MAXs to take if to

David Calhoun

broadly recovery But confident former. China. than robust. the coming look of this it's is most not I'm quite in when Well, that country the with it's you and world, sooner quite the it's around exception as anywhere coming probably

aerospace always the more little historically stage. you consider markets It's the we going be will will world. very Europe. our which But market, when And And activity uncertain countries in but strides that And then that they the get our each will we year to a it world lot United those pick of of then fair has those And so, share way important when all that in XX%, the got to China. part tumble it a a the up same -- the including in project of trade relationship of that That's back and we've rough that been around to in at is and widebody for and the confident still come it's to get gaps. believe has we most did order need to out our activity. long-term. over they're market that and is share take important is I'm happen going final will picked issue this it's around I little with to year a countries big States. And that going the time. here reinstate get a up the that is

Doug Harned

Great. Thank you.


to Seifman Please with go next Seth we'll JPMorgan. ahead. And go

Seth Seifman

Greg Thanks the morning. for and much all of very luck thanks help much, your and over years you. very best good to

Greg Smith

Seth. Thanks Yes.

Seth Seifman

when process, process it I of And ask XX, how that more Doug the the Or quarter asked morning here to much think the vast by similar last through we we was is split the pace, about is Sure. this to putting the aircraft deliver plan I is majority too aircraft -- case from delivery corporation And it in in willingness question about hairs XXX. just customers' to the governed but take not about to in by And wanted deliveries? majority. believe governed the of that quarter change a work it's this which done? to then inventory. much here, think

-- inventory into So XXXX? some expectation an there is carry has to that now XXX more

David Calhoun

can. take Can I'll Yes. -- he wants -- add he if I let something let Greg that and to me

issues word of an lot month a and is look logistics from are at getting respect not around and much they That used with important there -- that's You might issue. in we willingness be the Not month to the month coming. policy to when U.S. the them out. month where but to so word. crews getting to It's

airplanes. Anyway respect that's my want of be take word to and playing get and our games Greg be cost not going We of -- lack and you orders to put not because with when move And all be them in there willingness not it destinations. in giant commentary. a to front These take So in delivery known of to going or But It's language. vast of crews was reconfiguration logistical with not a the program. these whether out. see. because orders embedded would add? there's customers -- are just known that to we'll XX with the we're of we no can timing anything

Greg Smith

no. No,

on. right think that's absolutely I

Seth Seifman

you. Thank great. Okay,

Greg Smith

You're welcome.


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

Carter Copeland

guys, the help but next Good chapter. luck for you else. and so nothing the everyone in I and much Greg your of over best echo morning Hi. Thanks. Thank years the

Greg Smith

very you I much. appreciate Thank it.

Carter Copeland

accounting have one geeky me. question to You more with deal only from

Greg Smith

I is, but what won't. let you… I it could guess I'll

Carter Copeland

yourself. in it want Like maybe to I XX production can you balance? the that deferred reduction number about ask ask for the

Greg Smith

my I would was too. had. have That guess

Carter Copeland

Then good. you have go. to Good, the ready answer

quarter. $XXX have been until up you $XXX million So running quarter million, a this

doesn't all you've different You between were and talked you about million numbers the the that on the there are it seem. that the $XXX the got Obviously because is you bridge sitting us a rate inventory. running, rework help change. rate just Can planes not in understand

is think So any color there helpful. I

Greg Smith

got quarter. in prior mean No absolutely. and those all And didn't are exist Yes. it right. other the Carter I pieces actually moving you it's obviously unusual that

you'll lot normalized into pace, trajectory get talked continue But we've your to there. we said not number as on like see They're once I cash… get deliver. a on be and deferred near-term before. So I moving long-term, sitting will before. normalized But we outlined to will continuing of And the through weighing a path the pieces there's on that say point same on in once about level. that it I And that a are we've we to said, like a would start that

Carter Copeland

to revaluation? the is safe biggest it Is say piece that

Greg Smith

me? Pardon

Carter Copeland

is that safe delta piece of it Is revaluation inventory? say biggest the the to of the

Greg Smith

fact Well, it's the That's it. factory. so the much that on disruption in you've got going

Carter Copeland


Greg Smith

which storing and that Between obviously that's inventory as Dave building experiencing indicated when in and the ramping already the earlier that current once what is started. we've -- we period aircraft, not up, be weighing even it's we start rework all will

well see Outside long, basis great of job that's and that say over cash really hard really before holding again, said, work I rate. at all unit a at programs years level a factory testament low I'll like the that's doing productivity back said a and like the cash to burn. So the and I operations initiatives. you'll the that stabilizing -- of And a very on up on gone normalized the

So you're seeing the of benefit that.

on driver aircraft inventoried mentioned and between flow going So as a of up and stabilizes to then of as deliver certainly the into that's goes year we those big the kind XXXX. rate and going this cash I be balance

Carter Copeland

you very much. Thank Okay.

David Calhoun

went of anybody that a longer wanted pause the loops I of think effort even lot a we just rework nagging to us pause for including lot existed one than for cost energy, we could it -- add directed that time. on quite except some of an thing remove is If awful and maybe to I lot our

ability operations for climb exactly out. the that down return confident that's play back going get get to a So standard curve real on way highly now ready with rate. to rework to to I'm that our constraints is this fewer us

So it respect took of we purposeful amount the that work that pause with on. was to

Carter Copeland

Thank color for the Great. gentlemen. you

David Calhoun

Thank you.


from go ahead. next Please with Arment Peter our question is Baird. And

Peter Arment

Thanks. Dave, Greg. morning, Good Yes.

David Calhoun

Good morning.

Greg Smith

morning. Good

Peter Arment

the like all years. said. everything over everyone it appreciate else for thanks Greg, I

Greg Smith

you. Thank

Peter Arment

first that a your taking like you're just bigger really something approving? seems the maybe Hey, kind on Dave in I Or just the a longer? highlighting comment. business of give thought could just and you it's the changed the terms that the you regulator color it? item time relations this expect environment. on us Has of you in picture more what this is timeline be Thanks. little question And is under It it's more would when this guess US-China watch of terms when

David Calhoun

I the Yes. with but respect us to States. for to to has trying relations. walk States they're at significant. on Thank to of a aviation now time want the China administration respect specifically. aerospace day in place economic their little strategies for first stage -- have want where in a China you. I out this here glad their and been firmer the didn't on when the to And just economic to on implications grips a with They're come we I'm broadly. the It's as they're United No to the the on a industry part in a new point the don't of focus with commercial we're quite getting trade the feet United in ground in while, well around hanging recovery as now that. issue the own with office their China doing But administration

know that. all You

both And just so hoping and sides. we're incentivized everybody lobby to get

China. in relationships great have We

sure make knows on confident And me on I'm to just morning that discussion. the just it and relationships that importance be with about to that to We're order administration get We straight. this have firm broadly But about need talk moment why saw orders the will happen. to talk again. China. But of that's that call we the happens you begin in the this the stream going books those to getting and going this our

I is everybody. good think trade for

we've but that the through our time they way process. to them do and give work got I too to think

Peter Arment

to a that next the second into aspect timing drags as that for to alluding the of just were just impacts the decisions what is Is Dave, or that the your is -- middle Okay. on half earlier? rate if follow-up if later, you this year?

David Calhoun

exist much all Well the impact not eventually year, relates -- recovery through we as that it it rates, eventually. the will exit out so will rates the the our drag If year. of way the we

it it is. -- those of impact. before that's widebodies, pace is is recovery of It may the but what So rates what narrowbodies so it. that And anyway

Peter Arment

Thanks it. Got so much.

David Calhoun



Please from question with Myles go Walton ahead. our UBS. And next is

Myles Walton

morning. the help on all wishes Thanks pursuit. the the Thanks, good years. through best Greg, next for

Greg Smith

Thank you.

Myles Walton

that helpful. an the execution shouldn't is be for pushbacks The fair as at Dave was get structural the is maybe the you system? or that I go were how curious actions. to might not just actually Even call the to chain how there's perfect be structural cost Boeing for been a supply the which added to maybe has think of need you to given respond the innovation structural need I'm one program would IR I on that you Raytheon lot down absence actually out question know Greg much put execution you cost putting the of cost. or list. I the health. respond would program taking comments actually can cost into instead of whether And But last

David Calhoun

and made cost not less. adjustments at the resource actually reject all insignificant the added course, we all important research that programs put those didn't and development completely last into of sustained, I to programs. argument. -- have remarkable were Well, we works represent that make in we of face, and programs more these put making. the the but in I sustained year. Yes. that in as accounting And sustained investments We've light everything time we development We of take quite the they're of They we that would. reflected and But end we've we've we maintained have it's been

confident. So very I'm actually

I with especially our think Greg, BDS can and programs duplication that between removed living development you give of respect world. technology lot color effort. awful to have of commercial in we an And our overlapping

our put about. our competitors, I I the care the we development our So about. benchmark That's great of confident into the I level future in anyway, great think feel we investment feel I'm about. research to and differentiators compared most and

I'll So it be Greg. my over to would anyway that turn commentary.

Greg Smith

within key -- our space. step all within all over Yes. efforts I that back. to look last surprise. $XX also and factory, think technologies years our agree. got programs has and over billion And I We've completely No XX you got and been in invested the

to middle on you saw in of have the means. last line stability in cases, for other we be we've XXX been great by year say I'd our area more on not made partners. even business. investments the the pandemic, some And industry investment continue And order So any in right It's end on even the and but appropriate company, our going ultimately our the we to great of indicated. like to make as short capture Dave the the investment in for

have long So game lot of leadership at what we're money here. playing in layers of also spans Dave even even and just or we they those where down to where and ourselves a some constraints said program have And duplication we And money cases cases, or have we've we money down best-in-class of program what's challenging as how a in can around level effort. constraints. and levels constraints remove for we're shifted moved because looking areas in we're or added a

the of not making on than idea. are that sight frankly, future. comes but losing stability we we quite And forward going some and going any stability indicated this moves that's see Dave it's better -- the more of So different whole even programs. these rate to That provide as and no the out did going coming in up, of as XX other of

be helping are stability helping and sight and entire of losing no yes, be will it's all ultimately is done. But driving lots can speak lots continue of and to -- future good our done being So to the that workforce, being think I behalf the for I there here here going -- everybody be about and on industry. our suppliers

Myles Walton

Thanks for the color.

Greg Smith

welcome. You’re

Myles Walton



David Strauss Please ahead. Our next question is with Barclays. go from

David Strauss

let couple Greg, years. of else you. good a echo on said. Thank job me particularly everyone these Congrats last what

Greg Smith

David. Thanks,

David Strauss

quarters. how so to can want actually make XXX, And on to same implying take XXX you're next the deliver that implemented? proportion think airplane? are aircraft fixes the an XXX-plus does you the it on over long just fixes you the we're to that three so or aircraft those page have What all had individual of here, I ask parked the And today.

Greg Smith


sequentially, But the start I'll in can of maybe as here. and through number certainly Dave Dave. So we're them aircraft, far as working weigh

we're them So through number working tail tail by in number.

as that's up through plan. informing So those with aligned delivery we're our working

work how by it's going them to going the not in it's deliveries reworked not it see at so you to the all and can see that's far to as -- not you're That's of but progressing is same working, increase going So being to time. well how date. the

of it station as far takes far we're But whatever As days as per spec. get over this and work improving is taking in required, amount it measuring in to rework our time the aircraft completed as you're but done the aircraft. --

So as the teams a learning are actually rework, down coming they are curve. completing the

So majority And with ahead very but of to customer be stabilize around inventoried we all like said, stay how move tail cycle anticipate customers schedule XXX we year. the lined the the of aircraft time that by that we're customer do of how final got to complete -- Dave gets customer a and by we the to our aligned specific right on, ramp number, the our could that And that the that up by delivered delivery rework overall -- month, making and now with indicated, from with the by trying we're staying as up end deliveries. and of around we'll look, time improve. and we've engaged which and frames so we

don't to anything, I was there Dave, that? So, know, add you wanted to if

David Calhoun

can, long the airplanes. the work of all applied the on be probably we I and day, deliveries. going trick one what No, to to more customers again, how rate planes or these It's position demonstrates in of that's and in we're XX to itself. ability position. as productive applied get position coming for said XX The work this and it's that airplanes And then opposed we their that's do. no. depending and about, day. rate at move customers the more at This and as hold clear in month to the move how the a end we're is this through itself, going from that out to And can is that before, as getting just as the logistics -- of we take every at pretty And

on that front. place pretty So, we're in a good

David Strauss

the free cash Thanks. quarter flow mentioned And Greg, cash sequential positive? fourth that you flow you by improvement the free expect had year. you're through Would

Greg Smith

little going quarter-over-quarter. be David. prior to going was minus play bumpy back a Yes. linear. No, to what I said plus It's first more month-over-month, just right or to that, was that's into be the going XX not on Dave's one. It's the quarter it's But delivery the challenging profile comment

quarter lumpy get second the over everybody laid trajectory get exactly extremely again play on customers' some end all XXX. the that's not and between the to and year. the to these to a hard continue quarter. quarter-over-quarter and be and it's of same out what's aircraft thing or think working then to going detail, -- profile So, us reworked but quarter-over-quarter, And our the month to is -- the appropriately it's that's expect then meet the fourth on month particularly the But in in. going it get our I a look, of so in obviously and third commitments I'd delivery by to course same better better But

David Strauss

Great. Appreciate the comments.

Greg Smith

you are Yes, welcome.


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

Ron Epstein

echo Boeing. Yes. at else's working been comments. Good and I both everybody you It's morning over Raytheon the at guys. Greg, pleasure a years with

for you thank that. So

Greg Smith


Ron Epstein

on. what's going question with of for Best luck you. a Dave,

want So question. Myles' follow I on to just up

and now be You've has issues, KC-XX XXX-X transformation. fit end issues, One What's had Air XXXX how issues, ultimately, had lot XX Because about to Force fair, had that talked And business issues, has issues has the Starliner engineering vision? into issues, XX issues. does has a the state?

how fix business transformation that? So, does

David Calhoun

the everybody the the remind that AXXX, AX... I'll AXXX, AXXX, Well, the

Ron Epstein

Airbus. about talking talking not We're Boeing. We're about

David Calhoun

remind I that but programs want -- complicated. and they These little But just to they're had everybody, well. trouble are big a they as

up real broadly, better, it. practices at. has better need up that signed will get inside in everybody company function to It company the about process. The for disciplines of that cycle engineering the better done that up a I with the time be in the that respect endeavor engineering they feels surrounds that And idea half to that whole done function we management data investments not idea sign can a to faster we're company respect processes ultimately can makes lead going avails So how The I into to fix it. the fundamental for data. sure, work making to sign signed And company. I'm up great this a to we've just and lot for that. to everything, do and new and design which that work itself the our the company and and our reinvestment everybody that data system we we've of decisions to in the instill And align we're with that safety around that

So, I of very way that resolved. an it don't And along to good that. a feel issue run very, it flight get the needs all that somewhere into we will about test, in very, -- mean, does not

is our well. and And do to very big them things industry of nature so it the do

our to and and in example over hard these things that over once which also fit with with I'm taken communication significant. this XX when issues just fuselages respect see of -- the was And new goes for a this we were and this So year issue side. hand-in-hand of anyway, we that, stability, of in that. an actions stop QX new this them difficult get are the confident engineering. finish to all. course confident actions with fixed talent process expertise We've supply problems And efforts problems. production lines controls, I'm glaring real really transformation on and engineering These nagging applied joints to our

and we to think should I very can by So that could stuff loops anymore rework with and be not and that our eliminate go product. of ultimately you and surprised on I that we're apparent to signs travel the on. some But on customers. on and and on the

Ron Epstein

see to On the expect smoother? would next product, we it go

David Calhoun

the goes dependent Yes. basis propulsion Yes and a in next package it. product I with the get and way to way built and engineered the on expect of on differentiated less the probably that it's significant

Ron Epstein

it. Got

you. Okay. Thank

David Calhoun

Thanks. Yes.


with ahead. Please And next we go to Jon Citi. go Raviv

Jon Raviv

Good and on best next luck very afternoon. of of the endeavor. Thank you much Greg kind obviously

Greg Smith

you. Thank

Jon Raviv

over to one the you leverage But times at look your looking I continue EBITDA question consume three that climbs we peak as cash. number appreciate here sheet, when levered versus mean, and you're balance net related at

company this mid-XXXs issued and So some on commitment the I but for the you for ago, of here? it's the depending another how you've to are here $XXX pension the has we know crisis conversation I IG given god how But versus a in forbid realize are position your prepare day. evaluating different rating. stocks XXX(k). it

that So at how do you how dynamic this think about point?

Greg Smith

of timing don't we options understanding looking point out the thinking and been is different -- them I Look, we them, and since to corners Yes. of And sure and think second about the any have some than matters around sometimes your making have beginning, playing sequence the matters. and which it's order these it third we're and of effect. them

again capital takeaway them big go making the do with to should our got pull constantly that so. said on don't going So call and we right we'll extended And also liquidity, as and line seen that. we've need doing things you've need for be and if a be do we see bank of to We're as and the there. need it sure keep all what the as as how place the additional the what just we in But our balance as all prepared looking I credit case, how -- facility. would see understanding think to handled we've to implications but pull and but we if that the table. base today, just we we And a would we're around the the that would that have going we're options structure corners the I keep not review it be think when strength we on and about we open strategy sheet. we and just of levers the to long-term And is

Jon Raviv

Thanks for in. me very much fitting

Greg Smith


You’re welcome.

Maurita Sutedja

time have one for question. we Operator, more


Research. that Hunter go ahead. you. be Thank And from will with Keay Wolfe Please

Hunter Keay

on. been getting the for much one say pleasure. Greg, so last congratulations. me let be you It's Thank to a

Greg Smith

Thanks. Hunter. Likewise, Yes.

Hunter Keay

elaborate from it's say perspective? that for the about? manufacturing to comment continue to there perspective, going I'd on also dependent at Ron to from the Can guys What package. but on a Of and course. what's propulsion next about a continue made just you product love you this you on to thinking what you're you to end are about please? how Dave, less What is involve the

David Calhoun


that a focus And, lower yes, to manufactured this, the the on cost and the of all a respect goes it's the happened is there's that that performance. efficiency we from side, deliver Most I the to I going with whatever over into improvement derived next marketplace. it's a of whatever performance new developed to developed we're by when generation with come is engine the airplane view So and often per it's it's it of next advantages offers but engineered important package usually a efficiency way think it's period displacing. ultimately understand. get my from everyone versus way kind to cost can more package propulsion when time. long lot way That's environment. And XX% a either respect one it to out XX% that then believe airplane a therefore, are with sustainable seat the don't in around a

motion programs processes modeling great efficiency. that with parts defense tap the done we our and focused directly, on. awful lot pressure modeling create assembled like the respect manufacturers. means can be our what all then in work we with to technologies that's puts in of using engineering engineering So That to have fantastic manufacturing that are We've deploy that on the an be I that technologies. one

very, are time. has our Secondly, curves we've huge with front. in getting know a composite learning The platforms that efficient Boeing at in advantage composites I associated significant. development invested long as on you very for believe a

over so quick and that that with demonstrated the trainer done these programs. defense then modeling we airplane like assembly composite years, the how and bring And we've development engineering we've work other simple

when that do love we and going scale. that to the have to And I just in do front we time scale Boeing next advantages be developed. have view it at it is those are to We the But on gets comes. my that prove can to at where airplane ourselves to positioned

Hunter Keay

Thank you.

David Calhoun


Maurita Sutedja

That conference right. Boeing Company's All for quarter joining. first all earnings the call. XXXX Thank completes you