Financial Performance - The company reported revenue of $23.9 billion for the quarter, a 57% increase, marking the highest quarterly total since 2018, driven by improved operational performance and higher commercial deliveries [16][17] - Core earnings per share reached $9.92, primarily reflecting a gain of $11.83 from the digital aviation solutions divestiture [16] - Free cash flow was positive at $375 million, slightly exceeding expectations due to higher commercial deliveries and improved working capital [16][27] Business Line Performance - The Boeing Commercial Airplanes (BCA) segment delivered 160 airplanes in the quarter and 600 for the year, the highest annual total since 2018, with revenue of $11.4 billion [16][17] - The Defense, Space & Security (BDS) segment delivered 37 aircraft in the quarter, with revenue growing 37% to $7.4 billion, despite a negative operating margin of 6.8% [21][22] - The Global Services (BGS) segment reported revenue of $5.2 billion, up 2%, with an adjusted operating margin of 18.6% [24] Market Data - BCA booked 336 net orders in the quarter, including significant orders for the 737-10 and 787-9, ending the year with a record backlog of $567 billion [17][19] - BDS secured $15 billion in orders during the quarter, contributing to a record backlog of $85 billion [21] - BGS achieved an annual high of $28 billion in orders for 2025, ending the year with a record backlog of $30 billion [24] Company Strategy and Industry Competition - The company is focused on stabilizing its business, executing development programs, and improving its culture to restore trust with stakeholders [3][10] - A significant investment was made in the Spirit AeroSystems acquisition to enhance safety and quality across operations [8][9] - The company aims to increase production rates for the 737 and 787 models, with plans to ramp up to 47 and 10 airplanes per month, respectively [6][19] Management Commentary on Operating Environment and Future Outlook - Management acknowledged challenges in certification timelines for the 737 MAX derivatives and the 777-9 but expressed confidence in meeting revised schedules [10][11] - The company anticipates positive free cash flow of $1-$3 billion in 2026, despite some temporary impacts from the Spirit acquisition and delayed certifications [28][30] - Management emphasized the importance of continuous improvement and operational stability to meet customer commitments and enhance future performance [14][15] Other Important Information - The company completed the $10.6 billion sale of Jeppesen, strengthening its balance sheet while retaining essential digital capabilities [9] - A new five-year labor agreement was ratified with the IAM workforce in St. Louis, supporting production stability [8] Q&A Session Summary Question: Clarification on cash flow building blocks - Management discussed the excess advances and customer considerations, indicating that while both will normalize, excess advances will burn down quicker than customer considerations [41][42] Question: Free cash flow expectations - Management reiterated confidence in achieving $10 billion in free cash flow, emphasizing the need to complete certification programs and ramp up production rates [49][50] Question: Production ramp challenges - Management identified potential bottlenecks in increasing production rates, particularly from 47 to 52 for the 737, and emphasized the importance of managing the supply chain effectively [60][62] Question: BCA margins and Spirit's impact - Management acknowledged that current cash margins for the 737 and 787 are depressed but expect improvements over time, with Spirit's performance contributing positively in the future [68][70] Question: Defense program updates - Management clarified that the charge taken on the KC-46 tanker program is specific to that program and does not reflect on other BDS programs, with plans to deliver 19 tankers in 2026 [83][84]

Financial Data and Key Metrics Changes - Revenue increased by 30% to $23.3 billion, driven by improved operational performance, higher commercial deliveries, and defense volume [18] - Free cash flow was positive at $238 million, marking the first positive cash flow quarter since Q4 2023 [18][19] - Core loss per share was $7.47, primarily reflecting a $4.9 billion charge related to the 777X program [18] Business Line Data and Key Metrics Changes - Boeing Commercial Airplanes (BCA) delivered 160 airplanes in the quarter, the highest quarterly delivery total since 2018, with revenue up nearly 50% to $11.1 billion [20] - BCA's operating margin was negative 48.3%, impacted by the 777X charge [20] - Defense business (BDS) delivered 30 aircraft and two satellites, with revenue growing 25% to $6.9 billion and an operating margin of 1.7% [25] - Global Services (BGS) revenue increased by 10% to $5.4 billion, with an operating margin of 17.5% [28] Market Data and Key Metrics Changes - The backlog ended at $535 billion, including over 5,900 airplanes, with strong demand across all market segments [20][30] - BDS secured $9 billion in orders during the quarter, with a record backlog of $76 billion [25][28] Company Strategy and Development Direction - The company is focused on safety and quality improvements, with a commitment to culture change and operational excellence [4][15] - Plans to increase 737 production to 42 airplanes per month were announced, with a disciplined approach to future rate increases [5][21] - The 777X program faced delays, with first delivery now expected in 2027, leading to a $4.9 billion non-cash charge [10][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery trajectory, highlighting positive cash flow and improved performance across the company [17][30] - The geopolitical environment is seen as favorable for the defense business, with ongoing demand for military capabilities [12][27] - Management acknowledged challenges in the supply chain but remains optimistic about future production rates and operational stability [59][71] Other Important Information - The company is undergoing significant investments in its facilities, particularly in Charleston, to support future production increases [89] - The integration of Jeppesen and Spirit AeroSystems is a priority, with expected impacts on free cash flow next year [85] Q&A Session Summary Question: What is the negative cash flow in 2026 on the 777X? - Management expects a headwind of about $2 billion in 2026, with a path to break-even cash flow anticipated by 2028 [32][33] Question: What changed regarding the 777X program? - The delay is due to underestimating the work required for TIA approvals, not due to new issues with the airplane [39][41] Question: How will the supply chain be managed for the 777X? - The revised schedule will be communicated to suppliers, with negotiations on a case-by-case basis to manage impacts [53] Question: What are the production rates for the 737? - The company plans to exit the year at a 42 per month rate, with future increases being carefully managed [58][60] Question: What is the status of the 737 MAX 7 and 10 certifications? - Certification is progressing, with a focus on engine anti-ice design updates and expected completion in 2026 [66][67] Question: What are the plans for the 787 production ramp? - The next increase will be to 10 per month, with challenges anticipated in the supply chain, particularly for seats [71] Question: What is the outlook for free cash flow in 2026? - Management is optimistic about a break-even or low to mid-single-digit inflow of cash, depending on operational performance [75]