What changed in this filing

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Item 1A. Risk Factors

2022-01-31 compared with 2021-02-01 · 110 added, 90 removed, 282 unchanged (41% of the section changed)

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We also face significant risks related to the global economic downturn and severe reduction in commercial air traffic caused by the pandemic.

These risks include materially reduced demand for our products and services, increased instability in our supply chain, and challenges to the ongoing viability of some of our customers.

These risks include materially reduced demand for our products and services, increased instability in our operations and in our supply chain and challenges to the ongoing viability of some of our customers.

In addition, future vaccination mandates or other government requirements may further disrupt our operations and those of our customers and suppliers.

We may face similar risks in connection with any future public health crises, including resurgences in the spread of COVID-19.

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As a result of the COVID-19 pandemic, we are facing increased operational challenges from the need to protect employee health and safety.

These challenges have included, and may in the future include production site shutdowns, and workplace disruptions and restrictions on the movement of people, raw materials and goods, both at our own facilities and those of our customers and suppliers.

For example, during the second quarter of 2020, we temporarily suspended operations in Puget Sound, South Carolina, and Philadelphia, as well as at several other key production sites.

These challenges have included, and may in the future include, production site shutdowns, workplace disruptions and restrictions on the movement of people, social distancing guidelines, increased employee absenteeism due to illness and/or quarantine/contact tracing requirements, as well as reduced availability of raw materials and goods, both at our own facilities and those of our customers and suppliers.

During the second quarter of 2020, we temporarily suspended operations in Puget Sound, South Carolina, and Philadelphia, as well as at several other key production sites.

We had not previously experienced a complete suspension of our operations at these production sites.

While we have resumed operations at all of our production sites, we cannot predict whether or where further production disruptions could be required or what the ongoing impact of COVID-19-related operating restrictions will be.

For example, we continue to experience additional operating costs due to social distancing requirements and other factors related to COVID-19 restrictions.

For example, we continue to experience near-term production disruptions and inefficiencies as well as additional operating costs due to social distancing requirements, increased levels of employee absenteeism and other factors related to COVID-19 restrictions.

We cannot predict the impact that future production disruptions may have on our business, operations, financial performance and financial condition.

We continue to monitor federal, state and municipal health authorities for new or modified guidance and requirements concerning the COVID-19 pandemic, and we may be required to impose additional operational restrictions and/or suspend operations at key production sites based on these requirements and recommendations and/or workplace disruptions caused by COVID-19.

Many of our suppliers also were required to suspend operations during the second quarter of 2020, and they may experience additional disruptions in 2021.

If future vaccination mandates or other similar governmental requirements take effect, or if COVID-19 case rates worsen at one or more of our production facilities, we may face further increases in employee absenteeism and/or attrition, any of which could cause operational disruptions and otherwise have an adverse effect on our business and results of operations.

Many of our suppliers also were required to suspend operations during the second quarter of 2020.

In 2021, we experienced part shortages which disrupted our operations and delayed deliveries.

We may experience additional disruptions and/or part shortages in 2022.

Any such disruptions could have severe adverse impacts on our production costs, delivery schedule and/or ability to meet customer commitments.

Any prolonged suspension of operations or delayed recovery in our operations, and/or any similar suspension of operations or delayed recovery at one or more of our key suppliers, or the failure of any of our key suppliers, would result in further challenges to our business, leading to a further material adverse effect on our business, financial condition, results of operations, and cash flows.

Further production disruptions and inefficiencies, suspension of operations or delayed recovery in our operations, and/or any comparable impacts involving one or more of our key suppliers, or the failure of any of our key suppliers, would result in further challenges to our business, which could have a further material adverse effect on our business, financial position, results of operations and/or cash flows.

Liquidity risks:

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At December 31, 2021, cash and short-term investments totaled $16.2 billion.

Our debt balance totaled $63.6 billion at December 31, 2020, up from $27.3 billion at December 31, 2019.

We expect negative operating cash flows in future quarters until deliveries begin to return to historical levels, and if

the pace and scope of the recovery are worse than we currently contemplate, we may need to obtain additional financing in order to fund our operations and obligations.

Our debt balance totaled $58.1 billion at December 31, 2021, down from $63.6 billion at December 31, 2020.

We expect negative operating cash flows in future quarters until deliveries begin to return to historical levels, and if the pace and scope of the recovery are worse than we currently contemplate, we may need to obtain additional financing in order to fund our operations and obligations.

If we were to need to obtain additional financing, uncertainty related to COVID-19 and its impact on us and the aerospace industry, as well as continued uncertainty with respect to our credit rating could limit our access to credit markets and we may have difficulty obtaining financing on terms acceptable to us or at all.

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This trend has impacted passenger traffic most severely.

Near-term cargo traffic has also fallen, but to a lesser extent as global trade has begun to recover.

Most airlines have significantly reduced their capacity, and many could implement further reductions in the near future.

Most airlines have significantly reduced their capacity, and many could implement further reductions.

Many airlines are also implementing significant reductions in staffing.

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For example, in the fourth quarter of 2020, we recognized a reach-forward loss on the 777X program in part due to impacts related to the COVID-19 pandemic.

In addition, if 737 MAX aircraft in one or more jurisdictions remain grounded for an extended period of time, we may experience additional reductions to backlog and/or significant order cancellations.

Additionally, we may experience fewer new orders and increased cancellations across all of our commercial airplane programs as a result of the COVID-19 pandemic and associated impacts on demand.

Our customers may also lack sufficient liquidity to purchase new aircraft due to impacts from the pandemic.

We are also observing a significant increase in the number of requests for payment deferrals, contract modifications, lease restructurings and similar actions, and these trends may lead to additional charges, impairments and other adverse financial impacts in our business over time.

In addition, to the extent that customers have valid rights to cancel undelivered aircraft, we may be required to refund pre-delivery payments, putting additional constraints on our liquidity.

In addition to the near-term impact, there is risk that the industry implements longer-term strategies involving reduced capacity, shifting route patterns and mitigation strategies related to impacts from COVID-19 and the risk of future public health crises.

In addition, airlines may experience reduced demand due to reluctance by the flying public to travel due to travel restrictions and/or social distancing requirements.

As a result, there is significant uncertainty with respect to when commercial air traffic levels will begin to recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels.

The COVID-19 pandemic also has increased, and its aftermath is also expected to continue to increase, uncertainty with respect to global trade volumes, which could put negative pressure on cargo traffic levels.

Any of these factors would have a significant impact on the demand for both single-aisle and wide-body commercial aircraft, as well as for the services we provide to commercial airlines.

In addition, airlines may experience reduced demand due to reluctance by the flying public to travel as a result of travel restrictions and/or social distancing requirements.

As a result, there is significant uncertainty with respect to whether and at what point commercial air traffic capacity will return to and/or exceed pre-COVID-19 levels.

This uncertainty may have a significant impact on the demand for both single-aisle and wide-body commercial aircraft, as well as for the services we provide to commercial airlines.

In addition, a lengthy period of reduced industry-wide demand for commercial aircraft would put additional pressure on our suppliers, resulting in increased procurement costs and/or additional supply chain disruption.

the extent that the COVID-19 pandemic or its aftermath further impacts demand for our products and services or impairs the viability of some of our customers and/or suppliers, our financial condition, results of operations, and cash flows could be adversely affected, and those impacts could be material.

To the extent that the COVID-19 pandemic

or its aftermath further impacts demand for our products and services or impairs the viability of some of our customers and/or suppliers, our financial position, results of operations and/or cash flows could be adversely affected, and those impacts could be material.

The magnitude and duration of the global COVID-19 pandemic is uncertain and continues to adversely affect our business and operating and financial results.

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The pandemic also is expected to heighten many of the other risks described below.

For example, the COVID-19 pandemic could cause and continue to cause an increasingly competitive labor market due to a sustained labor shortage or increased turnover rates within our employee base.

Further, the COVID-19 pandemic may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not expect to present significant risks to our operations or financial results.

Risks Related to Our Business and Operations

We are subject to a number of risks and uncertainties related to the 737 MAX.

These risks include uncertainties regarding the timing and conditions of 737 MAX regulatory approvals, in certain non-U.S.

jurisdictions, lower than planned production rates and/or delivery rates, increased considerations to customers, increased supplier costs and supply chain health, changes to the assumptions and estimates made in our financial statements regarding the 737 program, and potential outcomes of various 737 MAX-related legal proceedings and government investigations.

On March 13, 2019, the Federal Aviation Administration (FAA) issued an order to suspend operations of all 737 MAX aircraft in the U.S.

We remain subject to a number of risks and uncertainties related to the 737 MAX.

These risks include uncertainties regarding the timing and conditions of remaining 737 MAX regulatory approvals, lower than planned production rates and/or delivery rates, additional considerations to customers, increased supplier costs and supply chain health, changes to the assumptions and estimates made in our financial statements regarding the 737 program and potential outcomes of 737 MAX-related legal proceedings and government investigations that remain outstanding.

On March 13, 2019, the FAA issued an order to suspend operations of all 737 MAX aircraft in the U.S.

aircraft operators following two fatal 737 MAX accidents.

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Deliveries of the 737 MAX were suspended until December 2020.

The grounding has reduced revenues, operating margins, and cash flows, and will continue to do so until production rates return to pre-grounding levels.

In connection with the effort to return the 737 MAX to service, we developed software updates for the 737 MAX, together with an associated pilot training and supplementary education program.

We continue to work with certain non-U.S.

The grounding reduced revenues, operating margins and cash flows, and will continue to do so until production rates return to pre-grounding levels.

While we have received regulatory approval to return the 737 MAX to service in most jurisdictions, we continue to work with certain non-U.S.

civil aviation authorities to complete remaining steps toward certification and readiness for return to service worldwide.

Any delays in certification in one or more jurisdictions and/or the ramp-up of deliveries or other liabilities associated with the accidents or grounding could have a material adverse effect on our financial position, results of operations, and/or cash flows.

Any delays in the completion of the certification activities and/or the ramp-up of deliveries or other liabilities associated with the accidents or grounding could have a material adverse effect on our financial position, results of operations and/or cash flows.

In addition, multiple legal actions have been filed against us related to the 737 MAX.

We also are fully cooperating with U.S.

government investigations related to the accidents and the 737 MAX, including investigations by the Securities and Exchange Commission.

In January 2021, we entered into a Deferred Prosecution Agreement with the U.S.

Department of Justice that resolves the Department of Justice’s previously disclosed investigation into us regarding the evaluation of the 737 MAX airplane by the FAA.

We expensed $744 in the fourth quarter of 2020 related to this agreement.

Any further adverse impacts related to any such litigation or investigation could have a further material impact on our financial position, results of operations and/or cash flows.

government investigations related to the accidents and the 737 MAX, including an ongoing investigation by the Securities and Exchange Commission.

We also remain subject to compliance with a Deferred Prosecution Agreement with the U.S.

Department of Justice relating to the Department of Justice’s investigation into us regarding the evaluation of the 737 MAX airplane by the FAA.

We expensed $744 million in the fourth quarter of 2020 related to this agreement.

Any further adverse impacts related to any such litigation or investigations could have a further material impact on our financial position, results of operations and/or cash flows.

During 2019, we announced plans to reduce, and ultimately to suspend 737 production.

Impacts related to these actions significantly increased costs to produce aircraft included in the current accounting quantity and have resulted in reduced 737 program and overall BCA segment operating margins.

Impacts related to our suspension of 737 MAX production from 2019 to 2020 significantly increased costs to produce aircraft included in the current accounting quantity and have resulted in reduced 737 program and overall BCA segment operating margins.

We have also made significant assumptions regarding estimated costs expected to be incurred in 2022 that should be included in program inventory and those estimated costs that will be expensed when incurred as abnormal production costs.

If we are unable to return the 737 MAX aircraft to service in one or more jurisdictions or deliver 737 aircraft to customers on the schedule and/or at a pace consistent with our expectations, we will incur significant additional costs and/or delay the planned ramp-up of 737 production.

These delays would also result in significant additional disruption to the 737 production system and further delay efforts to restore and/or implement previously planned increases in the 737

production rate.

If the completion of remaining certification activities and/or our ability to deliver 737 aircraft to customers is impaired, we will incur significant additional costs and/or be required to delay the planned ramp-up of 737 production.

These delays would also result in significant additional disruption to the 737 production system and

further delay efforts to restore and/or implement previously planned increases in the 737 production rate.

Cash flows continue to be negatively impacted by delayed payments from customers, higher costs and inventory levels, and payments made to customers in connection with disruption to their operations.

In addition, we have experienced claims and assertions from customers in connection with the grounding, and we recorded an earnings charge of $8,259 million, net of insurance recoveries of $500 million, in 2019, in connection with an estimate of potential concessions and other considerations to customers for disruptions related to the grounding and associated delivery delays.

In addition, we have experienced claims and assertions from customers in connection with the grounding and associated delivery delays, and recorded an estimate of potential concessions and other considerations to customers for these disruptions.

As of December 31, 2021, the remaining liability associated with these concessions and other considerations totaled $2.9 billion, of which $0.7 billion remains subject to negotiation.

Any further delays in regulatory approval of the 737 MAX in one or more jurisdictions, further disruptions to suppliers and/or the long-term health of the production system, supplier claims or assertions, or changes to estimated concessions or other considerations we expect to provide to customers could have a material adverse effect on our financial position, results of operations and/or cash flows.

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We have made significant estimates with respect to the 737 program regarding the number of units to be produced, the period during which those units are likely to be produced, and the units’ expected sales prices, production costs, program tooling and other non-recurring costs, and routine warranty costs.

In addition to the estimated timing of the resumption of deliveries, we have made assumptions regarding outcomes of accident investigations and other government inquiries, timing of future 737 production rate increases, timing and sequence of future deliveries, supply chain health as we implement our production plans, as well as outcomes of negotiations with customers.

We have made assumptions regarding outcomes of accident investigations and other government inquiries, timing of future 737 production rate increases, timing and sequence of future deliveries, supply chain health as we implement our production plans, as well as outcomes of negotiations with customers.

Any changes in these estimates and/or assumptions with respect to the 737 program could have a material impact on our financial position, results of operations and/or cash flows.

For additional information, see our discussion under “Management’s Discussion and Analysis-Critical Accounting Policies and Estimates-737 MAX Grounding” on pages 55 - 56.

In addition to the impact of COVID-19 described above, our Commercial Airplanes and Global Services businesses depend heavily on commercial airlines, and are subject to unique risks.

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In addition, fleet decisions, airline consolidations or financial challenges involving any of our major commercial airline customers could significantly reduce our revenues and limit our opportunity to generate profits from those customers.

Our Commercial Airplanes business depends on our ability to maintain a healthy production system, achieve planned production rate targets, successfully develop new aircraft or new derivative aircraft, and meet or exceed stringent performance and reliability standards.

Our Commercial Airplanes business depends on our ability to maintain a healthy production system, ensure every airplane in our production system conforms to our exacting specification, achieve planned production rate targets, successfully develop new aircraft or new derivative aircraft, and meet or exceed stringent performance and reliability standards.

The commercial aircraft business is extremely complex, involving extensive coordination and integration with U.S and non-U.S.

suppliers, highly-skilled labor from thousands of employees and other partners, and stringent regulatory requirements, including the risk of evolving standards for commercial aircraft certification, and performance and reliability standards.

The FAA has been working to implement safety reforms such as the implementation of the 2018 FAA Reauthorization Act and the 2020 Aircraft Certification, Safety and Accountability Act, among them changing the process for certification of commercial aircraft.

Comparable agencies that regulate similar matters in other countries may adopt similar changes.

To the extent the FAA or other similar regulatory agencies outside the U.S.

implement more stringent regulations, we may incur additional costs to achieve compliance.

In addition, the introduction of new aircraft programs and/or derivatives, such as the 777X, involves increased risks associated with meeting development, testing, production and certification schedules.

The 737 program has also experienced significant disruption due to the grounding of the 737 MAX and associated suspension of 737 MAX production for part of 2020.

As a result, our ability to deliver aircraft on time, satisfy regulatory and customer requirements, and achieve or maintain, as applicable, program profitability is subject to significant risks.

For example, a number of our customers may have contractual remedies, including rights to reject individual airplane deliveries if the actual delivery date is significantly later than the contractual delivery date.

Delays on the 737 MAX and 777X programs have resulted in, and may continue to result in, customers having the right to terminate orders and or substitute orders for other Boeing aircraft.

We must minimize disruption caused by production changes and achieve productivity improvements in order to meet customer demand and maintain our profitability.

The 737 program experienced significant disruption due to the grounding of the 737 MAX and associated suspension of commercial operations of the 737 MAX aircraft by civil aviation authorities around the globe.

737 MAX deliveries resumed in late 2020 and early 2021 upon approval of the FAA and other non-U.S.

civil aviation authorities.

During 2020 and 2021, we experienced production quality issues, including in our supply chain, which have contributed to lower 787 deliveries, including a pause in 787 deliveries since May 2021.

During 2021, this resulted in reprioritizing production resources to support inspections and rework.

We continue to conduct inspections and rework on undelivered 787 aircraft and engage in detailed discussions with the FAA regarding required actions for resuming delivery.

A number of our customers may have contractual remedies, including compensation for late deliveries as well as rights to reject individual airplane deliveries if the actual delivery date is significantly later than the contractual delivery date.

The regulators will ultimately determine the timing and conditions for resuming 787 deliveries.

Delays on the 737 MAX, 777X and 787 programs have resulted in, and may continue to result in, customers having the right to terminate orders and/or substitute orders for other Boeing aircraft.

We must minimize disruption caused by production changes, achieve operational stability and implement productivity improvements in order to meet customer demand and maintain our profitability.

We have previously announced plans to adjust production rates on several of our commercial aircraft programs.

We continue to engage in significant ongoing development, testing and production of the 777X aircraft.

During 2021, we reprioritized production resources to support inspections and rework on undelivered 787 aircraft.

The 787 program is currently producing at very low rates and expects that to continue until deliveries resume.

We are also continuing to implement changes in the production process designed to ensure that newly-built airplanes meet our specifications and do not require further inspections and rework.

In addition, we continue to seek opportunities to reduce the costs of building our aircraft, including working with our suppliers to reduce supplier costs, identifying and implementing productivity improvements and optimizing how we manage inventory.

If production rate changes at any of our commercial aircraft assembly facilities are delayed or create significant disruption to our production system, or if our suppliers cannot timely deliver components to us at the cost and rates necessary to achieve our targets, we may be unable to meet delivery schedules and/or the financial performance of one or more of our programs may suffer.

If production rate changes at any

of our commercial aircraft assembly facilities are delayed or create significant disruption to our production system, or if our suppliers cannot timely deliver components to us at the cost and rates necessary to achieve our targets, we may be unable to meet delivery schedules and/or the financial performance of one or more of our programs may suffer.

Operational challenges impacting the production system for one or more of our commercial aircraft programs could result in production delays and/or failure to meet customer demand for new aircraft, either of which would negatively impact our revenues and operating margins.

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Operational issues, including delays or defects in supplier components, failure to meet internal performance plans, or delays or failures to achieve required regulatory approval, could result in significant out-of-sequence work and increased production costs, as well as delayed deliveries to customers, impacts to aircraft performance and/or increased warranty or fleet support costs.

For example, in the fourth quarter of 2020, we expanded the scope of production inspections on the 787 program, and those inspections and associated rework are delaying scheduled deliveries and resulting in additional 787 aircraft in inventory.

For example, in 2021, we performed additional inspections and associated rework on 787 aircraft in inventory and continued discussions with the FAA regarding required actions to resume deliveries, resulting in additional costs and further delays in aircraft deliveries to customers.

If our commercial airplanes fail to satisfy performance and reliability requirements, we could face additional costs and/or lower revenues.

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government to enact relevant legislation such as authorization and appropriations bills.

Although FY21 appropriations have been enacted, long-term uncertainty remains with respect to overall levels of defense spending beyond FY21, and it is likely that U.S.

government discretionary spending, including defense spending, will continue to be subject to pressure.

In addition, the timeliness of future appropriations for government departments and agencies remains a recurrent risk.

A lapse in appropriations for government department or agencies would result in a full or partial government shutdown, which could impact the Company’s operations.

The timeliness of FY22 and future appropriations for government departments and agencies remains a recurrent risk.

A lapse in appropriations for government departments or agencies would result in a full or partial government shutdown, which could impact the Company’s operations.

Alternatively, Congress may fund government departments and agencies with one or more Continuing Resolutions;

however, this could restrict the execution of certain program activities and delay new programs or competitions.

however, this would restrict the execution of certain program activities and delay new programs or competitions.

In addition, long-term uncertainty remains with respect to overall levels of defense spending in FY22 and beyond, and it is likely that U.S.

government discretionary spending, including defense spending, will continue to be subject to pressure.

There continues to be uncertainty with respect to future acquisition priorities and program-level appropriations for the U.S.

DoD and other government agencies (including NASA), including tension between modernization investments, sustainment investments, and investments in new technologies or emergent capabilities.

DoD and other government agencies (including NASA), including changes to national security and defense priorities, and tension between modernization investments, sustainment investments, and investments in new technologies or emergent capabilities.

Future investment priority changes or budget cuts, including changes associated with the authorizations and appropriations process, could result in reductions, cancellations, and/or delays of existing contracts or programs, or future program opportunities.

Any of these impacts could have a material effect on the results of the Company’s operations, financial position and/or cash flows.

Any of these impacts could have a material effect on the results of the Company’s financial position, results of operations and/or cash flows.

In addition, as a result of the significant ongoing uncertainty with respect to both U.S.

defense spending and the evolving nature of the national security threat environment, we also expect the U.S.

DoD to continue to emphasize affordability, innovation, cybersecurity, and delivery of technical data and software in its procurement processes.

DoD to continue to emphasize affordability, innovation, cybersecurity and delivery of technical data and

software in its procurement processes.

If we can no longer adjust successfully to these changing acquisition policies, our revenues and market share could be impacted.

Also, additional federal appropriations to cover the increased costs of federal contractors’ compliance with evolving U.S.

Government contractual requirements associated with COVID-19 mitigation are unlikely, reducing the U.S.

Government’s buying power.

Our ability to deliver products and services that satisfy customer requirements is heavily dependent on the performance and financial stability of our subcontractors and suppliers, as well as on the availability of raw materials and other components.

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If one or more of our suppliers or subcontractors experiences financial difficulties, delivery delays or other performance problems, we may be unable to meet commitments to our customers or incur additional costs.

In addition, if one or more of the raw materials on which we depend (such as aluminum, titanium or composites) becomes unavailable or is available only at very high prices, we may be unable to deliver one or more of our products in a timely fashion or at budgeted costs.

In addition, if one or more of the raw materials on which we depend (such as aluminum, titanium or composites) becomes unavailable to us or our suppliers, or is available only at very high prices, we may be unable to deliver one or more of our products in a timely fashion or at budgeted costs.

In some instances, we depend upon a single source of supply.

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As a result, we are subject to risks of doing business internationally, including:

• changes in regulatory requirements;

• changes in regulatory requirements or other executive branch actions, such as Executive Orders;

• changes in the global trade environment, including disputes with authorities in non-U.S.

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China is a very significant market for commercial airplanes and represents a significant component of our commercial airplanes backlog.

In addition, the U.S.

and European Union (EU) have been engaged in two long-running disputes at the World Trade Organization (WTO) relating to large civil aircraft, including one that has resulted in the imposition of tariffs on certain of our products.

Impacts from these or future potential tariffs, or deterioration in trade relations between the U.S.

and one or more other countries, could have a material adverse impact on our revenues, operating earnings, and/or cash flows.

and one or more other countries, could have a material adverse impact on our financial position, results of operations and/or cash flows.

We use estimates in accounting for many contracts and programs.

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Several factors determine accounting quantity, including firm orders, letters of intent from prospective customers and market studies.

Changes to customer or model mix, production costs and rates, learning curve, changes to price escalation indices, costs of derivative aircraft, supplier performance, customer and supplier negotiations/settlements, supplier claims and/or certification issues can impact these estimates.

respect to timing of future certifications could have an impact on overall program status.

Changes to customer or model mix,

production costs and rates, learning curve, changes to price escalation indices, costs of derivative aircraft, supplier performance, customer and supplier negotiations/settlements, supplier claims and/or certification issues can impact these estimates.

In addition, on development programs such as the 777X, we are subject to risks with respect to the timing and conditions of aircraft certification, including potential gaps between when aircraft are certified in various jurisdictions, changes in certification processes and our estimates with respect to timing of future certifications, which could have an impact on overall program status.

Any such change in estimates relating to program accounting may adversely affect future financial performance.

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Changes in underlying assumptions, circumstances or estimates may adversely affect future period financial performance.

For additional information on our accounting policies for recognizing sales and profits, see our discussion under “Management’s Discussion and Analysis – Critical Accounting Policies – Contract Accounting/Program Accounting” on pages 53 – 55 and Note 1 to our Consolidated Financial Statements on pages 68 – 81 of this Form 10-K.

For additional information on our accounting policies for recognizing sales and profits, see our discussion under “Management’s Discussion and Analysis – Critical Accounting Policies & Estimates – Accounting for Long-term Contracts/Program Accounting” on pages 51 – 54 and Note 1 to our Consolidated Financial Statements on pages 64 – 77 of this Form 10-K.

We may not realize the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures.

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New procurement regulations, or changes to existing requirements, could increase our compliance costs or otherwise have a material impact on the operating margins of our BDS and BGS businesses.

These requirements may result in increased compliance costs, and we could be subject to additional costs in the form of withheld payments and/or reduced future business if we fail to comply with these requirements in the future.

Compliance costs attributable to current and potential future procurement regulations such as these could negatively impact our financial condition and operating results.

These requirements may also result in withheld payments and/or reduced future business if we fail to comply.

For example, proposals to raise domestic content thresholds for our U.S.

government contracts could have negative impacts on our business.

Compliance costs attributable to current and potential future procurement regulations such as these could negatively impact our financial position, results of operations and/or cash flows.

government may modify, curtail or terminate one or more of our contracts.

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government finances its operations through temporary funding measures such as “continuing resolutions” rather than full-year appropriations.

Any loss or anticipated loss or reduction of expected funding and/or modification, curtailment, or termination of one or more large programs could have a material adverse effect on our earnings, cash flow and/or financial position.

Any loss or anticipated loss or reduction of expected funding and/or modification, curtailment or termination of one or more large programs could have a material adverse effect on our financial position, results of operations and/or cash flows.

We are subject to U.S.

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While fixed-price contracts enable us to benefit from performance improvements, cost reductions and efficiencies, they also subject us to the risk of reduced margins or incurring losses if we are unable to achieve estimated costs and revenues.

In addition, increased compliance costs and costs due to loss of productivity due to COVID-19 may not be reimbursed.

If our estimated costs exceed our estimated price, we recognize reach-forward losses which can significantly affect our reported results.

For example in 2020, we recorded additional reach-forward losses of $1,320 million on the KC-46A Tanker contract reflecting $551 million of costs associated with the agreement signed in April 2020 with the U.S.

Air Force to develop and integrate a new Remote Vision System, and the remaining costs reflect production inefficiencies including impacts of COVID-19 disruption.

For example in the fourth quarter of 2021, BDS recorded additional losses of $402 million on the KC-46A Tanker contract reflecting continued disruption in the factory and in the supply chain, including impacts of COVID-19, and an increase in costs to complete the new Remote Vision System as the customer’s requirements definition has evolved.

New programs could also have risk for reach-forward loss upon contract award and during the period of contract performance.

For example, in 2018, in connection with winning the T-7A Red Hawk and MQ-25 competitions, we recorded a loss of $400 million associated with options for 346 T-7A Red Hawk aircraft and a loss of $291 million related to the MQ-25 Engineering, Manufacturing and Development (EMD) contract.

The long term nature of many of our contracts makes the process of estimating costs and revenues on fixed-price contracts inherently risky.

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Risks Related to Cybersecurity and Business Disruptions

Unauthorized access to our or our customers’ information and systems could negatively impact our business.

Unauthorized access to our, our customers’ and/or our suppliers’ information and systems could negatively impact our business.

We face certain security threats, including threats to the confidentiality, availability and integrity of our data and systems.

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While these measures are designed to prevent, detect and respond to unauthorized activity in our systems, certain types of attacks, including cyber-attacks, could result in significant financial or information losses and/or reputational harm.

In addition, we manage information and information technology systems for certain customers.

Many of these customers face similar security threats.

If we cannot prevent the unauthorized access, release and/or corruption of our customers’ confidential, classified or personally identifiable information, our reputation could be damaged, and/or we could face financial losses.

In addition, we manage information and information technology systems for certain customers and/or suppliers.

Many of these customers and/or suppliers face similar security threats.

If we cannot prevent the unauthorized access, release and/or corruption of our customers’ and/or suppliers’ confidential, classified or personally identifiable information, our reputation could be damaged, and/or we could face financial losses.

Business disruptions could seriously affect our future sales and financial condition or increase our costs and expenses.

Our business may be impacted by disruptions including threats to physical security, information technology or cyber-attacks or failures, damaging weather or other acts of nature and pandemics or other public health crises.

Any of these disruptions could affect our internal operations or our ability to deliver products and services to our customers.

Any significant production delays, or any destruction, manipulation or improper use of our data, information systems or networks could impact our sales, increase our expenses and/or have an adverse effect on the reputation of Boeing and of our products and services.

Our business may be impacted by disruptions including threats to physical security, information technology, or cyber-attacks or failures, damaging or extreme weather (including effects of climate change), or other acts of nature and pandemics or other public health crises.

Any of these disruptions could affect our internal operations or our suppliers’ operations and delay delivery of products and services to our customers.

Any significant production delays, or any destruction, manipulation or improper use of Boeing’s or our suppliers’ data, information systems or networks could impact our sales, increase our expenses and/or have an adverse effect on the reputation of Boeing and of our products and services.

Risks Related to Legal and Regulatory Matters

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government, the heavily regulated nature of our industry, and in the case of environmental proceedings, our current or past ownership of certain property.

Any such inquiry or investigation could potentially result in an adverse ruling against us, which could have a material impact on our financial position and results of operations.

Any such inquiry or investigation could potentially result in an adverse ruling against us, which could have a material impact on our financial position, results of operations and/or cash flows.

Our operations expose us to the risk of material environmental liabilities.

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We could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, as well as third-party claims for property damage or personal injury, if we were to violate or become liable under environmental laws or regulations.

In some cases, we may be subject to such costs due to environmental impacts attributable to our current or past manufacturing operations or the operations of companies we have acquired.

In other cases, we may become subject to such costs due to an indemnification agreement between us and a third party relating to such environmental liabilities.

In addition, new laws and regulations, more stringent enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new remediation requirements could result in additional costs.

In some cases, we are subject to such costs due to environmental impacts attributable to our current or past manufacturing operations or the operations of companies we have acquired.

In other cases, we are subject to such costs due to an indemnification agreement between us and a third party relating to such environmental liabilities.

In all cases, our current liabilities and ongoing cost assessments are based on current laws and regulations.

New laws and regulations, more stringent enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new remediation requirements could result in additional costs.

For additional information relating to environmental contingencies, see Note 13 to our Consolidated Financial Statements.

We may be adversely affected by global climate change or by legal, regulatory or market responses to such change.

Increasing stakeholder environmental, social and governance (ESG) expectations, physical and transition risks associated with climate change, and emerging ESG regulation and policy requirements may pose risk to our market outlook, brand and reputation, financial outlook, cost of capital, global supply chain and production continuity, which may impact our ability to achieve long-term business objectives.

Changes in environmental and climate change laws or regulations could lead to additional operational restrictions and compliance requirements upon us or our products, require new or additional investment in product designs, result in carbon offset investments or otherwise could negatively impact our business and/or competitive position.

Increasing aircraft performance standards and requirements on manufacturing and product air pollutant emissions, especially greenhouse gas (GHG) emissions, may result in increased costs or reputational risks and could limit our ability to manufacture and/or market certain of our products at acceptable costs, or at all.

Physical impacts of climate change, increasing global chemical restrictions and bans, and water and waste requirements may drive increased costs to us and our suppliers and impact our production continuity and data facilities.

Finally, from time to time, in alignment with our sustainability priorities, we establish and publicly announce goals and commitments to improve our environmental performance, such as our recent operational goals in areas of GHG emissions, energy, water and waste.

If we fail to achieve or

improperly report on our progress toward achieving our environmental goals and commitments, the resulting negative publicity could adversely affect our reputation and/or our access to capital.

Risks Related to Financing and Liquidity

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As of December 31, 2021, our debt totaled $58.1 billion of which approximately $11.4 billion of principal payments on outstanding debt become due over the next three years.

In addition, as of December 31, 2020, our airplane financing commitments totaled $11,512 million.

If we require additional funding in order to pay off existing debt, address further impacts to our business related to the 737 MAX, COVID-19, or broader market developments, fund outstanding financing commitments or meet other business requirements, our market liquidity may not be sufficient.

In addition, as of December 31, 2021, our airplane financing commitments totaled $12.9 billion.

If we require additional funding in order to pay off existing debt, address further impacts to our business related to the 737 MAX, COVID-19, 787 production issues or broader market developments, fund outstanding financing commitments or meet other business requirements, our market liquidity may not be sufficient.

These risks will be particularly acute if we are subject to further credit rating downgrades.

A number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for debt.

These factors include disruptions or declines in the global capital markets and/or a decline in our financial performance, outlook or credit ratings, including impacts described above related to the

COVID-19 pandemic and/or associated changes in demand for our products and services.

These factors include disruptions or declines in the global capital markets and/or a decline in our financial performance, outlook or credit ratings, including impacts described above related to the COVID-19 pandemic and/or associated changes in demand for our products and services.

The occurrence of any or all of these events may adversely affect our ability to fund our operations and contractual or financing commitments.

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Our estimates of future costs associated with these benefits are also subject to assumptions, including estimates of the level of medical cost increases.

For a discussion regarding how our financial statements can be affected by pension and other postretirement plan accounting policies, see “Management's Discussion and Analysis-Critical Accounting Policies-Pension Plans” on pages 57 - 58 of this Form 10-K.

For a discussion regarding how our financial statements can be affected by pension and other postretirement plan accounting policies, see “Management's Discussion and Analysis - Critical Accounting Policies & Estimates - Pension Plans” on pages 54 - 55 of this Form 10-K.

Although under Generally Accepted Accounting Principles in the United States of America (GAAP) the timing of periodic pension and other postretirement benefit expense and plan contributions are not directly related, the key economic factors that affect GAAP expense would also likely affect the amount of cash or stock we would contribute to our plans.

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The amount of our insurance coverage may not cover all claims or liabilities, and we may be forced to bear substantial costs.

For example, liabilities arising from the use of certain of our products, such as aircraft technologies, space systems, spacecraft, satellites, missile systems, weapons, cyber security, border security systems, anti-terrorism technologies, and/or air traffic management systems may not be insurable on commercially reasonable terms.

For example, liabilities arising from the use of certain of our products, such as aircraft technologies, space systems, spacecraft, satellites, missile systems, weapons, cybersecurity, border security systems, anti-terrorism technologies and/or air traffic management systems may not be insurable on commercially reasonable terms.

While some of these products are shielded from liability within the U.S.

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Our portfolio is also concentrated by varying degrees across Boeing aircraft product types, most notably 717 and 747-8 aircraft, and among customers that we believe have less than investment-grade credit.

aircraft that are concentrated in our portfolio suffer greater than expected declines in value, our earnings, cash flows and/or financial position could be materially adversely affected.

If one or more customers holding a significant portion of our portfolio assets experiences financial difficulties or otherwise defaults on or does not renew its leases with us at their expiration, and we are unable to redeploy the aircraft on reasonable terms, or if the types of aircraft that are concentrated in our portfolio suffer greater than expected declines in value, our financial position, results of operations and/or cash flows could be materially adversely affected.

Risks Related to Labor

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors