Boeing (BA)

Matthew Wlech Vice President of Investor Relations
David Calhoun President and Chief Executive Officer
Brian West Vice President and Chief Financial Officer
Doug Harned Bernstein
Myles Walton UBS
Sheila Kahyaoglu Jefferies
Ron Epstein Bank of America
Noah Poponak Goldman Sachs
Kristine Liwag Morgan Stanley
David Strauss Barclays
Cai von Rumohr Cowen
Peter Arment Baird
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 Third 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]. opening introductions. for time, this remarks and At I'll call over to Mr. turn the Welch, Relations Investor President the Matt of for Vice Boeing Company. Mr. ahead. Welch, go please

Matthew Wlech

Thank and Matt Financial Welcome earnings morning. Boeing and 's today you, Chief Third Chief Calhoun, Boeing's and XXXX Executive Executive and Quarter President Officer, are to David call. West, and Officer. Welch Boeing's am President with Brian me I good Vice

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

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

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

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

David Calhoun

crazy navigate as Thanks, other side Matt. staying you're And this well pandemic. hope good everyone. the to I global we morning, of

We continue to the customers, recovery. and to path to and suppliers, our our industry stabilize work chart with our partners our

us ongoing challenges on fleet summer coordinated brought further planning. travel on have protocols, increased vaccination new signs customers this with rates, progress we the international and policies seen discussions While with encouraging and variant, of their

uneven. As expected, been the recovery has

the safe and reopening However, it to and giving proven broader businesses. and to our have health gain us momentum, and effective confidence continues Reopening of their to economy. Vaccines in the travel market. resilience personal global key routes

ensure President executive customers, for and careful vaccine and their with mandates commercial employee Biden's have to After defense, review implemented Our populations. consideration order. both and compliance

being vaccinated have COVID-XX, reasonable or an show U.S. proof for We are from requirement implementing based fully accommodation. approved of employees a to

business, the proud future. of of our have the we of progress pandemic, stability team's continued and resiliency our operations, for employees. to continue we the on and I'm the and investing unwavering prioritize and in in our We're the mission. transforming health, driving important quality focus beginning will making safety since our As our done

I'd our formally our who exceptional is their started, our we're finance the a Beginning with at business into update, have issues, of the to new Brian business chart. to that, efforts start on first delivered next months in spent we an airplanes, our MAX the grateful broader operational him since through XXX with XXXX. return countless With of like go has since update with Brian West, the our we've sites board. to their he the XXX an the In supporting XX quarter let's hours and welcome I to gaining delivered today. X in-depth an business. customers the us and teams, And and here quarter, delivering Brian is digging to fleets Before program, most leader the CFO, understanding with continue on we third service.

airplanes originally have than made receiving approval MAX of including the the delivered in XXX XXX We approved XXX inventory. resumption airplanes, about over XXX We operations. of today, have from countries FAA. And noteworthy more the X/X since progress

placed largely have We that the remarketing. required airplanes

than those And flight XXX to fleets over totaling XXX,XXX airlines to hours. have have flown returned have customers commercial previously than airline airlines Our their airplanes more more XX service. service. flight XXX,XXX returned safely revenue grounded flights

airplane's XXX And to %. backlog, Intra-Europe, continues MAX airplane highlighting to commercial in reliability primarily for the orders, month for traffic schedule impressive an value of has due of demand aircrafts over XXX-Max. fleet proposition. XXXX the rate positive net In At families the as quarter, we September, recovers, straight more end the the regional X the domestic had our the example, and of we Importantly, than improve. XX saw XXX

month per we increased Quarter, XX XXXX. rate airplanes Given progress a of Third XX toward demand during early month to this per production to in and the continue our production rate

While stable to ensure rate we're that to the balancing production inventory, system, materials, to increasing position to to production supply the watch the rate the us We're increase items increase is need deliver to demand making labor decisions from key longer-term. working we chain and will rate. production logistics, for actively be continue further to support increases. prior including also future availability Raw

of As will we plans approvals near-term rate per previously communicated, our month. regulatory remaining beyond and production delivery our the shape XX ramp timing

the to XXX deliveries first to toward the of during of quarter, Following a the China the quarter resumption year in approval next with third work we test of follow the the MAX in continue completion by of flight end year.

make We XXX the MAX the early of MAX anticipate and the the delivery XX. also first first MAX of delivery We X on progress the currently the XX in certification of MAX the to in X continue and XXXX. XXXX

to the regulators operations. always, ahead that On and/or suppliers remain committed stability transparently in lead and identified customers, As follow we have purposeful will and communicated and our a step quality first-time to of every approach certification in engineering the we methodical steps global driving have our issues suppliers we are of fully on XXX our are with addressing, our this program, process, our The all our part way. teams our and matters. regulators,

in immediate a our are to concerns. no also required parts As committed review with supplier. any these flight them. to on communication identified the sub-tier while quality of issues is issues safety we've We're address FAA regular ongoing, are taking and with action recently there And shared,

deliveries. actions we're the generally, we work for XXX FAA inspections continue and resuming we the to and discussions detailed to engage in regarding As the conducting required with

production we and to month. As to rework, rate two approximately of re-prioritize deliveries a exact in producing make clear future with currently to activities our of begin FAA. believe our timing stability, we will make to the inspections are delivering and production our depend Once sight rates continue airplanes and airplanes will to over inspection supplier at to and time. mind Again, but to support upon have and to mentioned of And we we resume, ahead. month the and per regulators Ongoing a five the customer expect we determination, quarter, steady per line Keep continuing the progress resources customers. ultimate deliveries steps last we rework. return production are conversations, the

program. production XXX, Moving XXXX X rate the The per is to combined the month.

line Given deliveries supply continued XXX strength in increasing freighter we XXXX. demand, be coordinated chain in freighter our capacity, expect relatively we with and now near have production term, our XXXX XXX in with to the

we while all applicable our development working and the we rigorous test comprehensive to program On safety, to to ensure requirements. demonstrated meet the XXXX program, performance reliability through airplane continue subject it's a to process

with plans. to are and development those regulators FAA learning global this throughout way and into our like continue the the engage any learnings incorporating We along and process, program, we

in and customer is certification The on Boeing data in-line to As began our performing our conduct we the testing tests work, continue we've with and airplane flight engine well date. performance we commitments. progress this month. earlier that flight Based to collected

and We to will in will ensure to validate to the requirements we results FAA with XXXX late we first XXXX. we flight still prior deliver their will the continue expect beginning meet work tests. certification that these We the

the compelling Given timing the XXXX the economics of evaluating demand freighter continued currently airplane. our We're the of and freighter of version robust launching a XXXX.

in you updated We progress evaluation. as will we keep this

next development future MAX the and XX, addition, airplane laying are investing to for our our foundation In X, the -- XXXX, MAX commercial the trip the the we program. XXX

we new quarter, where together up team together. stood commercial can product This an environment bring a and production the to system integrated digital next designed airplane be

design, in our important new launched While and for system. This we not To programs. step continue on we test, build, support journey. development production our an of we and build airplane. Meanwhile, business. defense a holistically the our across It how to is experience our recent our execute will certify, invaluable customers journey and have digitization the airplane evaluate

a Let me milestones. few highlight key

programs. progress and Security Defense, made Our team Space key on

refueling F-XXC our an MQ-XX aircraft. fighter example, unmanned and of aerial test and a jet control completed asset, command EXD For

Chinook Army. the We Royal XX first in also the quarter, the delivered F to CH-XX Australian aircraft including

our cause test in space we opportunities cruise Boeing corrective working valve XXXX, recently As actions. the shared, commercial the identified hardware orbital pending probable flight and Starliner, the have was rocket station and and availability. in the readiness, the toward working are currently NASA malfunction second of most We're manifest launch on for preventative teams through

continue In our we progress. prioritize as the demonstrated, continue global our of to have safety from we will COVID-XX. to recovery our we services demonstrate team and impacts spacecraft sustained As business, of and members, employees, crew perform the

converted Boeing we plans for XXXXXX increases, create demand freighter. the cargo As additional to capacity announced

on continue with partnership a on aviation of In commercial aviation. global sustainable fuel. of And recently to House sustainable addition capable sustainable we our on joined virtual commitment SkyNRG the White our reiterating drive the these sustainable XXXX. commitment a our program running aviation, to to our fuels airplanes to make accomplishments, aviation have XXX supply to by % expand future Boeing event progress of

X also meeting We commitment Ayada also and achieve them our hosted and aviation to excited region, to aerospace aviation we sustainable carbon participate future. Boeing in to sustainable stem toward customers, accelerate more a sectors discuss day experts, students a the were innovation net the general how by future. the We in in Glasgow, to to support ensure bringing X annual safe together a for can efforts path partners emissions XXXX. and

target. CTOs from reaffirmed aerospace Chief to our just leading fact, with this our industry-wide In commitment companies, along yesterday, reaching the Executive Officer, X manufacturing other

the to X a outlook, Now, out XXXX closely to forecast, what trillion X.X forecasts This let's we in the Last markets to a year. up last The XXXX next we which month market market is ago from the slide -pandemic recovery. value and environment. trillion total over turn X.X laid reflecting our industry pre the decade. next aligns from discuss Boeing trillion the released of year forecast continued

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

war our spending stability on health major maintaining and continues of to security. for on are defense adding on in affordable is global base. delivering platforms others COVID-XX market and strong increasing countries, the forward. remains to with budgets innovative, us, move all the as programs. we spending our portfolio the new of creates capable, The increased highest We provide of While our Overall, supplier quality, opportunities some enduring fighter and to government critical help defense the and diversity pressure focused response remain their

building budget support remain fighter, investments critical both for Block process U.S. capabilities domestically and F/A-XX annual national congress as Chinook Boeing II for based the The investing see in like support including intelligently to the key on and expanding customers We programs and capabilities next-generation on to MQ-XX. in our bipartisan platforms, the and continue We technologies, autonomy and foundation engineering through like deliver authorization and its war XXXX. on strong customers. and for our fiscal the continued services, franchise year works security, strategic model T-XA for our focus trusted products needs, and non-U.S.

the necessary We will key with support to these largely congress The as commercial in key for is up expected, continues, recovery and program to continue positive to near-term ensure work some broadening place. momentum the remain and administration while seen we pressure COVID-XX We've the shaping due market fundamentals strong. in with long-term the markets. is is

recovery the XX the % Similar the the traffic recovery. % Third However, year, XX global the departures saw to be half of a we levels, continues increase of previous uneven. average quarter. saw first of what we from Quarter, to XXXX the to leading an is in In domestic slightly up

shown progress, loosening travel are as restriction, hindering particularly Limited signs rates. XX flying Southeast segment. is screenings, XX across be world, signs reaching mid traffic momentum there, % parts aisle COVID weekly climb travel Yet summer of approximately in a travel Even traffic of a However, With international an see recently open XX XXXX, August by in Despite parts trends travel global in below market from traffic utilization levels operations % however, notably since traffic was bright protocols September Airlines long U.S. incremental recovery and below load in the to global we're Delta We're % accelerating domestic year-end. protocols. in spikes still are the uncertainty, more Japan's and XX traffic foreign policies to variant, June fleet increased the late % domestic continued improvement and an levels. % the now % remains domestic the in its still have due the reduced back capacity. July. our of is then, Recent recovery continues quarter. Passenger to which August to Since following China this is spot step country from this seeing increasing around travelers improvement protocols on PSA slight The way an % rates changes, state and resulting the large the resuming the peak air coordinated upward it the normal entry its rates trans-Atlantic to Asia, with vaccinated seeing restrictions XX XXXX twin-aisle. with starting in world, emergency. XXXX coordination single accelerate domestic took with the market. travel accelerate of dropped of to lower decision XX the and of previous historic slightly traffic restrictions international And seen full levels. promising November. still after of is there above with factors recovery. most travel has size, bookings the improvement, days are case U.S. for a also approximately traffic in And volumes. significantly vaccination their to other activity XX airlines significantly active European of government below could are due of

we variability However, seen have our capacity chain in and challenges logistics to customers supply facing. are due continued

are expand, planning. airlines their to fleet As continues focus shifting the recovery to medium-term

assessment, fleets to airplanes plans retired approximately our modernize anticipate much part be to the % than compared the capacity freighter With efficiency around emissions to as cargo XXXX more belly new traffic retire is their customers with of The commensurate announced compared passenger This increase operational fuel freighter XXXX carbon deliver market XX as airplanes demand robust XXXX, for end As emissions being of mind or most strong converted with August, trend will reductions to this % reduce through onset airplanes is efficient for freighters replace. % continue quarter since freighters. in healthy airlines our oil ordered Boeing for efficiency. dedicated airplanes in offerings in of cargo to of of XX%-XX and the we higher this prices The as top have pandemic, remains will X the more resulting they are the With higher on operating customers. limited today cargo. we utilized freighter airlines, transport our demand XX additional with and year-to-date at

our annual this fact, new our In freighter tally and of through in history. have orders the first X surpassed converted highest year freighter months already

still our at looked holds. long-term, we we and As medium see original forecast

return to levels recovery trends a to continue to few return in X and We in then expect years passenger 'XX traffic to to long-term that XXXX beyond 'XX, to growth see We phases. still

such with Americas We which international take as into inline First, anticipate traffic phase this translate recovery wide-body markets. markets, then And XXX with long-haul for support Max Intra this domestic, Intra-Asia, strong to mainly Intra-Europe finally, domestic recovery. longer, seen flights. demand year, orders the aircraft We've international regional demand and routes.

market sustained air growth, operational a grows, of goals about year over policy outlook XXX demand the assumed From of equates travel COVID, And e-commerce a global ongoing which such airfreights, and recovery. Our significant we see partnerships. and a reliability. the reflecting pre Through XX-year to new the future planes XX-year an guidelines and through cargo demand to aisle a air to forecast as project airplanes technology, last new global is pandemic, industry per will fleet. ago, about reaching dedicated to until as area the fleet to XXXX, XXXX, we extent, tied XXXX, XX,XXX XX,XXX for for And single increased We and as project we advances. With projected forecast. airplanes, expanding a still perspective, from year's larger demand From converted but freighters, as -pandemic committed demand in XX speed commercial MAX, long-term we roughly reverts lesser XXX and In sustainability, traffic XXX the government impact airplanes, trends. impacts over market airplane and what of as the XXX to for increase of for we're the be has unchanged freighter models. including % well than largely now combination month.

of jobs, relations.Given monitor rely for resolve near-term mutual our recovery, continue well health economy we our China front, well the delivery of market and as support trade trade economic aerospace to the importance as area, global industry's we're the and for this of overall but our strong business, the of to U.S. On America's the economy Chinese stability trade the as orders, in leadership of confident needs health all understand discussions in with industry. fleet reiterating continued just on our our active production words leaders future Chinese trade, their differences and competitiveness. aerospace We the of influence and remain to and customers on benefits leaders profile and a which not Ultimately, aerospace, future importance by of countries both rates. free planning commercial and our prosperous millions fair our as and in

Turning to peak a supported market, the quarter saw demand during services improve airlines again in season. third we as summer commercial their the we

trend said, this be ahead across critical continue managing a will airlines highlighted remains for a to At is as liquidity to improving key expect anticipate full slightly our evolving the industries multiyear versatility be may near-term, to Liquidity and that recovery uneven. recovery market we realities. still industry bridge expectations. product differentiation previously, the We aerospace of adapt we and

to demand XXX most the wide-body been has fact, In for during airplane the the the utilized MAX continues pandemic grow. and

of our and year, versatility the far from and to reflecting positioned I'm well XXX meet on up, the be chain is sold to of we due our that With availability value incrementally to economic facing positive confident COVID-XX, product growth. models within supply line have customer we're for activity broadly, executing Dash-XX, challenges So demand. than will the item. picking labor Despite the more focused critical is across is passenger watch each increasing seeing this XXs indicators economic Dash-X commonality. continued and we're industry more our traffic

robust positive designs, technologies, capability, us define performance, and on strategic we're key in decision. expanding enable customers a create opportunities investments ahead. will delivering our sustainability autonomous lasting for focused investing manufacturing our create for long key every chain technology position we We're to platform processes, some value, digital improve our a solutions, be or As whether advances, capturing cases, engineering, return in And the that recovery, margins. capabilities maintaining continuing and, us factor and and generate our technology, will future. flow in which We're supply will healthy transformational foundation a efforts to to cash to in help we're

While we confident let committed turn me do in quality, our we and remain it to this, Brian. to that, future. and over safety, With transparency, I'm

Brian West

future Thanks, In highest Dave, morning, priorities of our do, for and delivered we everyone. I've the the generate safety, time levels here, drive instability good positive, innovate customers, more short for free flow. cash all be and been the clear, sustainable the couldn't in quality,

I'm have share our the path we and challenges, of our While team forward. in impressed confident

Let's turn please. to Slide X,

to quarter quarter, the per benefits. billion $X.XX We offset to $XX.X share primarily and commercial driven in services higher loss increased primarily due Third volume, tax by partially commercial deliveries lower volume. a recorded higher revenue commercial by

Third impacted XX charge. Starliner XXXX, the costs Crew quarter and by abnormal Commercial was also

XXX partially was to offset move Now Revenue by $X.X Commercial X. slide billion deliveries. let's deliveries, reflecting lower XX Airplanes on higher

deliveries. backlog BCA Although to at currently quarter under operating $XXX pressure and airplane margin improved the commercial And commercial to higher is airplanes the in the continued billion. be valued

of to where and of and in and XX currently given we delivered remarketed. the material China successfully our quarter. There ramp we anticipate This end demand for We assessment and the that rate customers. assumptions other for customers the regulatory our stability. XXXX. and of vast the airplanes the resumed liability store dynamic costs our MAX, quarter considerations profile MAX built airplanes We of chain the during XXXX. airplanes delivering the have This potential discussions, in the remains we by delivery of estimates change supply including XXX airplanes concessions to those these given assumes XXX are to have the delivery environment, in is majority timing or MAX customer first know XXX the abnormal production we inventory, the approximately going, to most Moving no XXX market approvals,

will work deliver Dave costs accounting the XXX, of the the s mentioned. continue low be rate rate. we XXX low in Quarter not recorded continue complete well inspection while We abnormal as we we practices, and reviews production remain abnormal approximately Turning currently Third abnormally did in any at In total to anticipate XXX and as while rework to as the due million of the periods future costs our and production, in costs with our $XXX Quarter XX line FAA Third we rework, to costs. we an $X billion. the with These

the these health be fleet Our has long delayed margin XXXs near latest closing abnormal quarter, overall deliveries we program XXX remains over third financial necessary the customers, inventory. closing and demand included XXX up relatively our estimated assessment the The activities out costs unit to rework, the conversations in will of FAA. and deliveries and of At hold ongoing customers third inspections with program in impacts the approximately the have completing of our of breakeven. the our Timing of with well. been position. expect end dependent planning the to term. upon in impact in the quarter margins And still we're confident XXX We

While stability the driving time, will commercial recovery focused on the we XXX and remain the on business. take across program

expect to performance by airplanes, for the we commercial the increasing we transform continued in improvements efforts recovery, bridge to to deliveries As the team due and financial future. BCA

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

and We a of Force. Block during assessment U.S. for contract quarter, Chinook commercial received our X slightly the orders XXXX orbital crude to U.S. latest by Army, revenue an Starline billion $XXX $X including anticipated on quarter Third the to the award earnings tor work. JDM and due billion primarily Air second charge the flight test, $X.X million margin driven crew and now program, helicopters was operating decreased on X.X% in the in X remaining to

award currently from BDS the X The received $XX at Germany is for TXX also valued backlog billion. aircraft. We

In quarter, Global and revenue mix of impacts margin services severance costs Let's higher Operating and of now $X.X COVID-XX. commercial products the as turn third X. also favorably to by Services billion XX.X% lower grew to was market services services. and recovers impacted Slide margin global operating to on the the driven by for increased

the During quarter, the performance key freighters $X of XXX including contracts fleet. logistic Total global BGSX billion, at approximately converted BBAM Boeing for an for worth CXX backlog MAX-XXX remains additional base and award support XX $XX billion.

We improvement continue support airline in revenue services during quarterly we the to to as commercial incremental expect trend quarter see flight improve and increasing the third we operations.

revenue. Looking market a ahead, expect increase the percentage commercial we continued to drive to services of commercial BGS as total recovery

by Let's flow lower higher our reflecting now order X. a refund. was billion, cashflow $X.X importantly, higher impacted quarter billion flow Slide wide-body rates, production cash income business benefits turn commercial to favorably was Operating and reduced efforts. receipts, deliveries, negative for the Operating transformation and cash expenditures tax on $X.X from

advanced from While order be and we saw benefit payment third the some burned We continue next to we benefit down see expect cash year. still in activity to through to quarter. headwind a payment flow advanced

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bank $XX.X undrawn. across credit a to total billion our facilities, access remain of have which We

maturities. bond Our balance from billion decreased last quarter of $X.X billion, to paydown the debt driven by $XX.X by

remaining of paydown, and loan. expect to mentioned bonds, the the delayed due $X total year last lower maturing a the debt billion have we early quarter, pay-down at term draw As to of we end the

vigilantly business Given currently stabilize to continued commercial prudent Therefore, our believe to committed sufficient remain uncertainties have balance begin managing seen environment, we reducing and across deliveries. we actively to cash. managing and actions sheet. due levels our we our taken are the in cash We the We've debt balance liquidity. increasing

expect in very to We to a will investment-grade quarter. Our XXXX and cash and our strengthen of of aspects structure, last our shared to we all largely Cash unchanged turn consider expectations full-year important flow from us Sheet. cash are Balance we capital flow be positive still what is use rating XXXX. credit

vary advances quarter-over-quarter may as to and flow volume. XXXX cash of flow the higher some balance. including offset key XXX cash will in progress compared driver expenditures, delivering cash the timing potential the airplanes customer from tax XXX always, and inventory XXXX reduction working deliveries The MAX is in The benefits delivery for well and receipts capital further of significant payments payments. to as of settlement As benefit have of due to

As we previously shared, reflects the before balance MAX our plans at from largely pandemic pause. delivery production advances

burn While keep there Also we the cash impact anticipate meaningful the by will in be next year, we end XXXX. normalize balance will of a mind, expect an down to flow skyline for order year. in which XXXX near-term improved from fill some compensation helped delays, and to customers headwind for and cash XXXX the deliver in the strong book, flow, this calendar

look vaccine environment In resumption remainder is to generation, XXX XXX year MAX our protocols, recovery. of performance we this approvals, manage proactively trade and sheet. balance and business financial key closing, strengthen business trying our we're confident our in include the our facilitate As we Remaining commercial the cash dynamic, our U.S. continue bridge for to The enablers relations, liquidity of flow to free and sustainable future. which ultimately will distribution in for and XXXX market travel the regulatory deliveries. into while

Our Dave comments. it team all turn make stability, Above to simplify closing sustainable for closely our aspects stay lasting we'll innovation cash quality, that, generating all safety, and flow. and I'll on change. of With long free else, back while our business, work, examine streamline continues to focused

David Calhoun

our and the We're that can But our in taking Brian. drive while past we be actions progress. to important to you've every We're best and your do. are commitment, recovery dynamic, Boeing our stability, making in the drive in everything bring Thanks, right I'm confident safety continues close quality and challenging long-term resilience, and your day. growth. I'll to continued passion, impress. times thanking each teammates, your to by These your to

that we to career And people, Company, happy we're to for that, important Brian and and your sure the our be to a Thank future, other. each questions. to customers, look do all contribute our As will take support to be our I and you our place remains Boeing mission. investing unique with build teams, in in our to you


gentlemen, question. be you We clearly use Please that ask Ladies heard. use that or handset phone and to order your ask a headset. your in not cell question phone, a speakerphone,

a is sure reach equipment. so your switched mute our If you're your on can please be function signal speakerphone, off,

we a in to part yourself the that As time, reminder, single question. of X you limit interest asking are

Our please Harned Doug Bernstein, with first ahead. question from go

Doug Harned

Thank you. Good morning.

David Calhoun

Doug. Hi,

Doug Harned

Is pricing? it's time. related is to you -- have from new and pressure the available To many at discount potentially. down spoken and customers? out are as over demand compensation an and first, deliveries an a for compensation. discounts X.X to others orders think an largely billion or would this out you through new complete understandably and at I X.X, And on back that how this to customers issue taken that remaining then it me these paying a can compensation But helped with around the customer see other So just are with billion work second, of I'm look is how do matter max max tough discounts that getting you of this environment.I airline, X.X. added your the not if effectively be benefiting issues two effective words In point? your seeing hold of negotiations from put

David Calhoun

the our to of new that settlement as everything you done from discounts. and separate So power we've airplane orders have the think Doug, we contract experienced know, I misses in

share in complete, we've done be negotiation power fact very the But we've this to perfectly can't in separate on so is we and successful lion front. our keep process. everything in until So that in complete are, the it's accurate been No I them

David Calhoun

we with ones. to final wiggle the mirror. We respect them. where the rear-view think room And know is

more hand, we we're other the I On say until done. has maintained. to from confident discipline I quite we're been has I going I in in I all to -- pricing. problem our a think never the be course shift trends done place I of we're well am pricing and year, demand to separation problem used this on as be with will good a forward what and to and of fact, calendar continue been pretty supply managed sustained in And of that, respect think the and in are that front. next issues, favor a of those disciplined the really in that think

Doug Harned

you're talking made customers you you the sense is to are kind years essentially? MAX, essentially last the normally deals would in other you've around be that a two with is by over the of the sense pricing us, new back Your nothing when at on that handicapped words, in

David Calhoun

we that in Doug, I've Yes. fact, feel the have them involved been points very in so, case I and proof strongly that is, yes. and

Doug Harned

you. Okay, great. Thank


Next, we go a have with line please of Walton Myles UBS, ahead. the

Myles Walton

made Thanks. you was I out similar the of the the Could the for liquidating or on wondering I get think out-the-door? timeline on timeline comment you'd can XXX aircrafts. you comment don't you lay a think those inventory. max exhausting those you XXX

David Calhoun

they all it But even you as depends Yes, moving that for be me We'll I one. think out. fleet. it's as the Planning to can as know, on them early too that them aggressive as we ultimately changes in suggest throat. to rethink take anybody's We've going when planning. to can't down they them, customers cause to free want employ. their take I them, They're jam harm them our date,

the a respect real will as have to timing good as you of So, firm that, clarity guidance with on give soon we all we it.

Myles Walton

the you're damages calculated those would or that ongoing to big that included to given if concessionary starting and that's and there mount have follow-up year those a correct. program And the still been is that things being into imagine

Brian West

closed as there we as customers quarter, with those stand for and believe talk actively what today. are we are We be to here the we concessions provisions

Myles Walton

I'll to thanks. it you. All leave Okay. right.

Brian West

you. Thank


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

Sheila Kahyaoglu

you the Good time. for Thank Brian. and morning, Dave

X underlying -- a on XXX. on little the the are production your that we what think gave -- could month for the do XXX, better color bit if restarting gating to a demand you how factors You're and you give actually more, month a on about

David Calhoun

through with increasing getting respect Yeah. you be that also really and get to when these the to we rates I wish from have because prevent give us to It's little it's deliveries, I to be a could going beginning more going do issues ticketed. clarity.

with analytics doing I give rework teams to through clear time their issues, then While that to all we're agree get everything and we've sight the on the etc. and of our line believe the respect FAA we with have got own to we plans,

David Calhoun

it. it, but not are through we're well We through

hard cost can have if costs month an happens, we'd you me thought a make anytime guidance. demand, would It that give less abnormal adjustments Abnormal until look going With at bigger for we be until announce I deliveries me and soon, be scenario. commencing. So below could of to I to to respect for we five were something

David Calhoun

this running ready are and comes up keep costs back. important when line to X fresh

I customers happen And their we on basis just are. from the with testimony so And that's the the also believe of to experience airplane. where and

out most the story It's As on that an been it's everything factor we of I the played. cargo has on promised. as delivering whole irony I wide-body the which It's reiterate there. got efficiency, role and the its in delivering utilized important said, it's capability

we think half I time, to at can't going and of demand think real next to quite is deliveries. out will we all play be year, get as of to But us. definitive in just I moment begin I second the commenced be that this for until robust the

Sheila Kahyaoglu

you. thank Okay,


to Next, go ahead. Bank Please of line a America. go of the with Epstein Ron we

Ron Epstein

Hey, morning, good guys.

David Calhoun

Ron. Hi

Ron Epstein

guys in give can you had XXXX, are why you're the of confident effective you that completed saying just you on reasonably the to there? XXXX. end Most going color just next would be year. confidence at fair, some year be the late that's gives you think us airplane the have to this the the would case? guys, Dave, around into not slipping be you developments, Maybe What

David Calhoun

ourselves doing we chart. research, a we It prior been sort time the the the total of for put would've this We XX MAX never starters, we lot here to gave would straight time just would've opposite. into from that have included. been the lines Well, of to

put we everything learned on we've MAX. in from based the have time So

Quarter Boeing have Fourth we test, and the And been to discipline did was Maintaining same we Boeing max. for posture our that with experience run this FAA they the have stuck your do the of has far, the plan is that part pauses get the this taken. before all original XX. So do we that. that that there timing and house in before of that order

at or that So we're posture isn't still on plan taken moment still in that the -- this has workable. has nothing of suggested plan, time sort

was take. that that that's us think the that still to So confidence. it moment in why first was when really the time It was that, delay all it involved gives the we I surprised and planning everybody with going

Ron Epstein

technical but follow What are that that a an as keep indeed to sitting outside is followers Company just that you, indeed not the have question. I the That And the milestones on, are to same right? were can on-track. on we Company, eye you understand

David Calhoun

other this, meaning Well, the to commitments thing. that milestones, on and technical efficiency, customers our

I confident. reason well think That's place in on not one own of been We've we No so them. we that we technically. good a and that our those and all all tests. expectations can flying, done we're flight we've are another front believe shortfalls why front so on pretty surpassed if meet

that to be thing you, front, was documentation protocols that's there safety way, if the that I guide got in where the all don't thing, gets can't required the I believe through all would one any and work going be. but ever any on really is there a to we you As and one it

Ron Epstein



question Our ahead. from Noah Goldman with Poponak Please Sachs. go is next

Noah Poponak

Hi. Good everybody. morning,

David Calhoun


Noah Poponak

to to the of with you You regulator you at for the tell for now have Dave, sight. line -- those just were FAA's deliveries. to us required uncertainty are were you're conducting Are but the and do are you mentioned still this required resume then actions potential the some -- are point? rework? here you to you having the there sight mentioned inspections. FAA there's know mentioned you about or everything discussion still new in on looking inspections Can what actions find you found and the issues inspections going the I up it's XXX,

investment feels uncertain. I very for the think, community, this timeline

us just have some you to us even some uncertainty you degree If tell could there if is help here just everything of -- visibility. know some

David Calhoun

word the that. certainty can't characterize certainty. as I something I'm On give very. I the a use than certain. would a until I you subject quite less wouldn't bit it

then time out us is there to particular had I did brought by sub-tier to mentioned we to for their material inspection, I supplier regulators suppliers think is and hunting together it every unfortunately track a a detail this last we're where We the of track substitution tip from late so supplier breaking all we're a sort that parts through a anything. and Our every have question other to supplier not have us. part was that complete,

takes time. just So process that

good We there's place. We believe safety a have, those We believe parts. of don't segmented in we're course, ramifications.

of some that have We're we're the included we're We're time On working material the finish And to to and all compliant with this. that that agree ones line, go. agree of on well respect We're in judgments reasonably working And some have our the specs to % compliance, set it's to time. in the satisfy we we're the sure with the subject FAA added our just our those been it, was with transparent our other but down hand, then the we the XX they analytics workload, -- one have of word Boeing. halfway. And with design. we've has the compliant. to that that's are and to make make. That well then the to that way ourselves past takes from ultimately through way

are So data with surprises on conclusions. be the our the what there any won't to collecting that or we're respect support issues ultimate and

we we've start to get moment an I I but So place. use say delivering. very uncertain that think we and uncertain, are we're in got that wouldn't term, can where don't to okay I but

Noah Poponak

done tip is detail possible searching is a or You're done for the additional the FAA still issues? FAA inspection,

David Calhoun

from -- Boeing. I wouldn't they've been this This way. Boeing is in very mostly on beginning, suggest they no, for been Yeah, the profound any hunting has

everything find way a ultimately and straight to to take it and work us, FAA and then it. supplier that anything we our but through or we So, we to the begin volunteers

that to they things want sure I it to careful, our the to this work. FAA. with problem agree again, bring We So judgments. not make are them these and They their with solve by be and ourselves is just doing a have

Noah Poponak

like So it's now down component issue. input to this that it just Is sounds correct? titanium

David Calhoun

tent. the a correct. That's That's long in pole

Noah Poponak

a Okay. Alright, lot. thanks

David Calhoun



Our ahead. Please next Stanley. with go Morgan Kristine question is Liwag from

Kristine Liwag

Hey, good morning, guys.

David Calhoun

Good morning.

Kristine Liwag

the and aircraft XXX -- on inventory Dave, MAX inventory.

initial to than how done had the of work you that and Some and be takes? on the delivered long can in more airplanes airplanes color needs testing before customers provide customers, these they're terms process of these that different additional

David Calhoun

got you're them. get a work. to They plans significant that's into our included previously and all estimates airplanes I respect and performance. very gets It's to how number program bit of airplanes and some of some Most I we there fast that that them forward in with move move. going means determined of everything, incorporate the like are Well, to we're plans. they has relative manageable consider That's wouldn't right unilaterally 'XX, to it under the drift that. it think the require about do And get our well don't been their to decide, into going why of who fleet little it's repositioning them them within all, to

respect can to is So that's 'XX deliveries. why probably there But into drift the is some best give it I that to you. color with

Kristine Liwag

seeing The production I some chain production supply now, on max there's a of for can are raw Considering industries a to has low materials, confidence and for the guess and per sustain lot month supplier time see.And get the also gives that with the year? other I inventory what XXX XX right? been labor that in that chain, constraints and to next system. you the regards supply you

David Calhoun

evidence number be half of supply second Well, chain. believe is the to the to I industry the in was used that because supply our XX we by continue the next year, will evaluate beginning constrained. support to we

have trying we for what at the determine that, a right us would and can be handle right. we believe chain to rate in supply you're that XX, So

that chain, these forward, us of think able go low think We rates. production get respect of assessment the build we we With months, demand, to the of I the amount pretty have for assessment current during number be have place do in from of good a to second that as inventory and the be to an asked to. will supply through we're half not With gets we XX, to year an increasing we that. that whatever

I we're half true, think be constrained to industry. all for from to in world, through And I the of narrow-bodies. 'XX believe a that's respect second going probably supply with

Kristine Liwag

you. Thank

David Calhoun



Next with we'll to move Barclays. Please David ahead. Strauss go

David Strauss

into XX MAX taking Good market I out like there follow-up %. deliver A you you're China, Dave, is look at adjusting what XX not more market even can't If for question. that morning. the year-to-date, something delivering for Thanks is aircraft? of on my reason share deliveries, MAX. %, the share MAX is narrow-body --

share of So would about levels? that is FAA issue, MAX market should a issue see terms it is it when share, -- market or issue? an we when to Thanks. -- rework, would with you expect in is talked When it see back XX you delivery an getting to %

David Calhoun

respect to Good we into that are with production off question bringing fresh to the service, are variability opposed of the back bigger airplanes and -- source deliveries line. completions inventory we is The ones David. coming as on

at to the to what a this lot sure find, warming know need make said work do time there's you do airplane So we've it get got the there's on a -- of course, needs And the as readiness you going team, of what is things have that to you a exactly to Depending the take be. up, all do. to to one right. We're to time. you that of you lot is

in more then have would still we I that to like So have. variability

We stable. more are getting a little

were high. year, at the on But rate, most extremely That that to our that to discipline. of of we And we're going think stable got we rates next at, been has to we're is front. the MAX. we into any quite be source delivery keep at have as I that keep reliability which do we variation -- on move why the is

David Strauss

do whatever skewed going and is that, are to and towards XXX remains 'XX, through can it bit is year is inventory, 'XX? bit liquidate the And more specific of a then be or still the end the that more MAX more it any little of more it's on half is all, 'XX kind half a a we be of little at -- in you follow-up Dave,

David Calhoun

to It more yes. will more skewed be be 'XX. to Ought 'XX, to skewed

David Strauss

All right.

David Calhoun

Remember, like don't -- all airplanes I we homes. these have said,

and our so that into plans, we one of -- turmoil deliver plans has fleet we've and when all created the these lot like and got into the moving we the counter -- so said, them, we party to for deliver do 'XX. And with it's customers fleet of incorporate a has I deliveries a tail sway every with that to respect lot fleet their to how and a

David Strauss

Thanks very much.

David Calhoun



Rumohr go from Please is Our Cowen. next question with von ahead. Cai

Cai von Rumohr

Yes. Thanks so much.

percent are So for inventory of China? Dave, approximately what XXX in planes are the

David Calhoun

tongue then that But also the have delivery interested the of ), number Brian I continues the people door. with risk at the on you taking in to market potentially to say secondly, of risk, don't if of the will go down some the as this tip we related That's that. risk, what to continue if the move number I -- and number don't question percentage out might. robustness big that I (ph rates. willingness my And is is the portion related have of the the to

a to our big risk it once It's not felt. as it's Company So as

tongue. tip On the the the don't other my hand, I have number of on

Brian West

it's third. Cai, a roughly

Cai von Rumohr

That's very helpful.

XX. in deliver to to inventory XX the so And quarter, math, and down -- only the I and much next third X/X a really you one you're XX production rate is, average going have an maxes going September, XXX more of you're per really stronger. to have I or By guess, more. storage, about problem look if X of you -- than take to the October -- didn't doesn't my little So have planes you're the going at year over month in raise

get am mean, problem I I do how that huge like just a What we there? seems deliveries. there missing? a in Is there? So increase

David Calhoun

that and the mentioned to a at know front -- kind of have variability I be better on you had work and we airplanes, I which to I we've completion that we out Yeah, the at of is we delivering to center as of before, that inventory got lot that better get will, doing. we're or think I

And I'm confident. the So ballpark. I've the we to math you've in you're I'm when not reasonably have got sure But nonetheless, commit to same that's got. do.

Cai von Rumohr

Excellent, very thank much. you

David Calhoun



Peter ahead. Arment please to Next, Baird, with go go we'll

Peter Arment

morning, Good Dave, Brian.

David Calhoun

morning. Good

Peter Arment

he Brian, over there. for one he's maybe seem And getting lonely maybe

of a maybe what's versus Just drivers, Thanks. we of you're of determined And the as lot thinking 'XX. think how XXXX kind parked. on buckets, the liquidations comparing some about these about obviously bigger

Brian West

is of going So lot to the the the as a going same piece Looks it talked big unwind. deliveries I is thing to the about be, XXX. inventory with mentioned, the subsequent unwind. how and a We've XXX

that a going We and advanced always benefit We will by make they be those to to take XXXX would naturally happen going down of huge temper want the -- from end appreciate the to occur negative as it's burn to sure place. folks positive. continue that deliveries

stability operations the to hire vast the our cash it's drive in transformation really flow, majority continuing to continuing So to that well it's swing of efforts. as deliveries, and as business work

Peter Arment

Is any on like there burn any that. what there on on color the Is follow-up line? -- just and advanced looks down the a

Brian West

activity accomplish delivery some the burn not preparing headwind, that flow we because we're generation have a lot that. can't year that airplanes. cash free for it's much we but We that but that specifically, we're going don't to large deliver a between X the down years, and so on of going It's so more this do to have based and the from know naturally the to timing order

Peter Arment

Thanks, Appreciate the calling. Brian.


Keay And Wolfe go Please our next Hunter question Research. with from ahead.

Hunter Keay

And XXX quick require to assuming the of Thank the start in you. delivered 'XX you how rework right tax you have gave Thank you What pretty X delivering again, for the I inventory for green FAA penciling be for getting many me of now, are many on, could refunds cash guide? those flow XXX good the the have morning. additional light free XXXs how in then, quickly? that and ones.

David Calhoun

answer me the Let second question.

taxes Brian way the hill. down First, all discuss I'll let

up Most view on have forecasted. us. of for is of rework the the mirror rear respect in come the with XXX issues that the to One

will been may to these nonstop about find ahead that, you whatever be in months. have doing front, less us. last the is a this do of that parts know little in on we've So anything as we last for of set we I But X said, rework that

ops significantly becomes Then So -- giant Now all not customer they are us. to grew, a want remember, be. almost of it's just of a still when do mountain question it? it of below they customers where international ahead our used

their do we accommodative fleet to our So How when does center going And the incredibly second, orchestrate want how be it them? completion movement melt that. alongside the into we're plan? they through to FAA. just then Because

So the those be airplanes. that will is but giant determinants, from backlog rework not a to be going us will delivering prevent it

Brian West

to something, a On not in that taxes. the we could We but a execute suite when underwriting lot. not positive, it's expect factor case, from so negative our

Hunter Keay

Got it. Thank you both.

Brian West


Matthew Wlech

Quarter Third you Conference Earnings Company's Boeing the for Call. concludes joining. Thank That XXXX