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partners, key suppliers and subcontractors.
−Removed: Our strategy is centered on successful execution in healthy core businesses – Commercial Airplanes (BCA), Defense, Space & Security (BDS) and Global Services (BGS) – supplemented and supported by Boeing Capital (BCC).
−Removed: Taken together, these core businesses have historically generated substantial earnings and cash flow that enable our investments in new products and services.
−Removed: We focus on producing the products and providing the services that the market demands, and continue to find new ways to improve efficiency and quality to provide a fair return for our shareholders.
−Removed: BCA is committed to being the leader in commercial aviation by offering airplanes and services that deliver superior design, safety, efficiency and value to customers around the world.
+Added: Our strategy is centered on successful execution in healthy core businesses – Commercial Airplanes (BCA), Defense, Space & Security (BDS) and Global Services (BGS).
+Added: BCA is committed to being the leader in commercial aviation by offering airplanes and services that deliver superior design, safety, quality, efficiency and value to customers around the world.
BDS integrates its resources in defense, intelligence, communications, security, space and services to deliver capability-driven solutions to customers at reduced costs.
−Removed: Our BDS strategy is to leverage our core businesses to capture key next-generation programs while expanding our presence in adjacent and international markets, underscored by an intense focus on growth and productivity.
+Added: Our BDS strategy is to leverage our core businesses to capture key next-generation programs while expanding our presence in adjacent and international markets.
BGS provides support for commercial and defense through innovative, comprehensive and cost-competitive product and service solutions.
−Removed: BCC facilitates, arranges, structures and provides selective financing solutions for our Boeing customers.
Business Environment and Trends
−Removed: Domestic travel continues to recover from the lingering effects of the COVID-19 pandemic before international travel and the narrow-body market continues to follow domestic travel recovery, while the wide-body market continues to be paced by international travel recovery.
−Removed: The pace of the commercial market recovery remains impacted by government restrictions related to COVID-19, especially China.
−Removed: We are seeing a strong recovery in travel demand for our airline customers in North and South America, the Middle East, and Europe, and demand for dedicated freighters continues to be underpinned by a strong recovery in global trade.
−Removed: We and our suppliers are experiencing supply chain disruptions as a result of the lingering impacts of COVID-19, global supply chain constraints, and labor instability.
+Added: In 2023, global air traffic largely recovered to 2019 levels with domestic travel continuing to be the most robust and the single-aisle market following closely.
+Added: International travel has mostly recovered and the wide-body market continues to be paced by the international travel recovery.
+Added: The transition in the international commercial market from recovery to normal market conditions is progressing slowly as China international travel remains below 2019 levels.
+Added: We are experiencing strong demand from our airline customers globally.
+Added: We and our suppliers are experiencing supply chain disruptions as a result of production quality issues, global supply chain constraints, and labor instability.
We and our suppliers are also experiencing inflationary pressures.
−Removed: We continue to monitor the health and stability of the supply chain as we ramp up production.
+Added: We continue to monitor the health and stability of the supply chain.
These factors have reduced overall productivity and adversely impacted our financial position, results of operations and cash flows.
−Removed: Airline financial performance, which influences demand for new capacity, has been adversely impacted by the COVID-19 pandemic.
−Removed: According to the International Air Transport Association (IATA), net losses for the airline industry were $138 billion in 2020 and $42 billion in 2021.
−Removed: IATA also forecasts $6.9 billion of losses for the industry globally in 2022, with approximately $9.9 billion of profits in North America driven by the robust domestic market being more than offset by losses in other regions.
+Added: Airline financial performance, which influences demand for new capacity, has benefited from the resilient demand for travel.
+Added: The International Air Transport Association (IATA) is estimating 2023 industry-wide profit of $23.3 billion, up from its forecast of $4.6 billion a year ago, primarily driven by North America, Europe and the Middle East.
For 2024, IATA is forecasting $25.7 billion in profits for the industry globally.
−Removed: While the outlook continues to improve, we continue to face a challenging environment in the near- to medium-term as airlines are facing increased fuel and other costs, and the global economy is experiencing high inflation.
−Removed: The current environment is also affecting the financial viability of some airlines.
+Added: The overall outlook continues to stabilize as we face uncertainties in the environment in the near- to medium-term as airlines are facing persistently high and volatile cost of fuel and tight labor conditions.
+Added: The global economy is expecting an easing of inflation and interest rates, with regional economic and geopolitical difficulties adding uncertainty to the outlook and the financial viability of some airlines and regions.
The long-term outlook for the industry remains positive due to the fundamental drivers of air travel demand:
economic growth, increasing propensity to travel due to increased trade, globalization and improved airline services driven by liberalization of air traffic rights between countries.
−Removed: Our Commercial Market Outlook forecast projects a 3.8% growth rate for passenger and cargo traffic over a 20-year period.
−Removed: Based on long-term global economic growth projections of 2.6% in average annual gross domestic product, we project demand for approximately 41,170 new airplanes over the next 20 years.
+Added: Our Commercial Market Outlook forecast projects a 3.5% growth rate in the global fleet over a 20-year period.
+Added: Based on long-term global economic growth projections of 2.6% in average annual gross domestic product, we
+Added: project demand for approximately 42,595 new airplanes over the next 20 years.
The industry remains vulnerable to exogenous developments including fuel price spikes, credit market shocks, acts of terrorism, natural disasters, conflicts, epidemics, pandemics and increased global environmental regulations.
−Removed: During 2022, commercial services volume at BGS recovered to pre-pandemic levels.
−Removed: We expect BGS commercial revenues to remain strong in future quarters as the commercial airline industry continues to recover.
−Removed: The demand outlook for our government services business remains stable.
At BDS, we continue to see stable demand reflecting the important role our products and services have in ensuring our national security.
Outside of the U.S., we are seeing similar solid demand as governments prioritize security, defense technology and global cooperation given evolving threats.
−Removed: We continue to experience near-term production disruptions and inefficiencies due to supplier disruption, labor instability and factory performance.
−Removed: These factors have contributed to significant earnings charges on a number of fixed-price development programs which are expected to adversely affect cash flows in future periods.
−Removed: As a result of the war in Ukraine, we recorded earnings charges totaling $212 million during the first quarter of 2022, primarily related to asset impairments.
−Removed: We have closed our facilities in Russia.
−Removed: We are focused on the safety of our employees and retaining the strength of our engineering talent through voluntary transfers to other countries.
−Removed: We have also suspended our business in Russia, including parts, maintenance and technical support for Russian airlines, and purchases from Russian suppliers.
−Removed: We are complying with U.S.
−Removed: and international sanctions and export control restrictions.
−Removed: We have sufficient material and parts to avoid production disruptions in the near-term, but future impacts to our production from disruptions in our supply chain are possible.
−Removed: The war in Ukraine continues to impact our airline and lessor customers.
−Removed: We continue to monitor developments and potential Boeing impacts, and take mitigating actions as appropriate.
+Added: We continue to experience production disruptions and inefficiencies due to technical challenges, supplier disruption and factory performance.
+Added: These factors have contributed to significant earnings charges on fixed-price development programs as well as on a number of mature programs which are continuing to adversely affect margins and cash flows.
+Added: At BGS, we expect commercial revenues to remain strong in future quarters as the commercial airline industry has largely recovered and transitions to growth.
+Added: The demand outlook for our government services business remains stable.
Consolidated Results of Operations
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Global Services 19,127 17,611 16,328
−Removed: Boeing Capital 199 272 261
Unallocated items, eliminations and other (167) (191) (296)
Total $77,794 $66,608 $62,286
+Added: Revenues increased by $11,186 million in 2023 compared with 2022 driven by higher revenues at all three operating segments.
+Added: BCA revenues increased by $7,875 million primarily driven by higher 787 deliveries.
+Added: BDS revenues increased by $1,771 million primarily due to higher revenues on fixed-price development programs.
+Added: BGS revenues increased by $1,516 million primarily due to higher commercial services revenue driven by market recovery across the commercial portfolio.
Revenues increased by $4,322 million in 2022 compared with 2021 driven by higher revenues at BCA and BGS, partially offset by lower revenues at BDS.
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BGS revenues increased by $1,283 million primarily due to higher commercial services volume, partially offset by lower government services volume and performance.
−Removed: BDS revenues decreased by $3,378 million primarily due to charges on development programs, unfavorable performance across other defense programs, and lower P-8 and weapons volume.
−Removed: Revenues increased by $4,128 million in 2021 compared with 2020 driven by higher revenues at BCA, BDS and BGS.
−Removed: BCA revenues increased by $3,331 million primarily driven by higher 737 MAX deliveries due to recertification and return to service in most jurisdictions and the absence of $498 million of 737 MAX customer considerations which reduced revenues in 2020, partially offset by lower 787 deliveries in 2021.
−Removed: BDS revenues increased by $283 million primarily from higher revenue on the
−Removed: KC-46A Tanker program and lower charges in 2021.
−Removed: BGS revenues increased by $785 million primarily due to higher commercial and government services volume.
+Added: BDS revenues decreased by $3,378 million primarily due to charges on fixed-price development programs, unfavorable performance across other defense programs, and lower P-8 and weapons volume.
Revenues will continue to be significantly impacted until the global supply chain stabilizes, labor instability diminishes, and deliveries ramp up.
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Global Services 3,329 2,727 2,017
−Removed: Boeing Capital 29 106 63
Segment operating loss (70) (3,158) (2,816)
+Added: Unallocated items, eliminations and other (1,759) (1,504) (1,227)
Pension FAS/CAS service cost adjustment 799 849 882
Postretirement FAS/CAS service cost adjustment 257 294 291
−Removed: Unallocated items, eliminations and other (1,532) (1,267) (2,355)
Loss from operations (GAAP) ($773) ($3,519) ($2,870)
FAS/CAS service cost adjustment (1)
+Added: (1,056) (1,143) (1,173)
Core operating loss (Non-GAAP) (2)
+Added: ($1,829) ($4,662) ($4,043)
(1) The FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments.
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See pages 43 - 45.
+Added: Loss from operations decreased by $2,746 million in 2023 compared with 2022.
+Added: BDS loss from operations decreased by $1,780 million compared to the same period in 2022, primarily due to a reduction in net unfavorable cumulative contract catch-up adjustments, which were $2,328 million better than the net unfavorable impact in the prior year.
+Added: BCA loss from operations decreased by $706 million reflecting higher deliveries and lower period expenses including lower abnormal production costs, partially offset by higher spending on research and development.
+Added: BGS earnings from operations increased by $602 million in 2023 compared with 2022 primarily due to higher commercial services revenue.
+Added: Loss from operations on Unallocated items, eliminations and other increased by $255 million in 2023 primarily due to higher deferred compensation expense.
Loss from operations increased by $649 million in 2022 compared with 2021.
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BGS earnings from operations increased by $710 million in 2022 compared with 2021 primarily due to higher commercial services volume and favorable mix, partially offset by lower government services performance.
−Removed: Loss from operations decreased by $9,865 million in 2021 compared with 2020 primarily due to lower losses at BCA and higher earnings at BGS.
−Removed: BCA loss from operations decreased by $7,372 million primarily due to the absence of a $6,493 million reach-forward loss on the 777X program recorded in 2020, lower period expenses, lower 737 MAX customer considerations and higher 737 MAX deliveries, partially offset by a $3,460 million reach-forward loss on the 787 program in 2021.
−Removed: BGS earnings from operations increased by $1,567 million in 2021 compared with 2020 primarily due to charges incurred in 2020 as a result of the COVID-19 pandemic, as well as higher commercial services volume.
−Removed: Core operating loss increased by $615 million in 2022 compared with 2021 and decreased by $10,075 million in 2021 compared with 2020 primarily due to changes in Segment operating loss as described above.
−Removed: Unallocated Items, Eliminations and Other The most significant items included in Unallocated items, eliminations and other are shown in the following table:
+Added: Core operating loss decreased by $2,833 million in 2023 compared with 2022 and increased by $619 million in 2022 compared with 2021 primarily due to changes in Segment operating loss as described above.
+Added: Unallocated Items, Eliminations and Other The most significant items included in Unallocated items, eliminations and other (expense)/income are shown in the following table:
(Dollars in millions)
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Unallocated items, eliminations and other ($1,759) ($1,504) ($1,227)
−Removed: Share-based plans expense decreased by $60 million in 2022 and increased by $54 million in 2021.
+Added: Share-based plans expense decreased by $176 million in 2023 and $60 million in 2022, primarily due to fewer share-based grants and the timing of corporate allocations in 2023.
The lower expense in 2022 compared to 2021 was due to decreased grants of restricted stock units (RSUs) and other share-based compensation.
−Removed: The higher expense in 2021 compared to 2020 was primarily related to a one-time grant of RSUs to most employees in December 2020.
−Removed: Deferred compensation expense decreased by $243 million in 2022, primarily driven by changes in broad stock market conditions, and increased by $33 million in 2021, primarily driven by changes in broad stock market conditions and our stock price.
−Removed: Research and development expense increased by $94 million in 2022 and decreased by $56 million in 2021 primarily due to enterprise investments in product development.
+Added: Deferred compensation expense increased by $305 million in 2023, and decreased by $243 million in 2022, primarily driven by changes in broad stock market conditions.
+Added: Research and development expense increased by $37 million in 2023 and increased by $94 million in 2022 primarily due to spending on enterprise product development.
+Added: Eliminations and other unallocated items was largely unchanged in 2023.
Eliminations and other unallocated expense increased by $498 million in 2022 primarily due to a $200 million settlement with the Securities and Exchange Commission related to the 737 MAX accidents, lower income from operating investments and an increase in environmental remediation expense.
−Removed: Eliminations and other unallocated expense decreased by $1,131 million in 2021 primarily due to earnings charges of $744 million in the fourth quarter of 2020 in anticipation of the agreement between Boeing and the U.S.
−Removed: Department of Justice that was finalized in January 2021 and higher income from operating investments in 2021.
Net periodic pension benefit costs included in Loss from operations were as follows:
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($2) ($3) ($3)
−Removed: The pension FAS/CAS service cost adjustment recognized in Loss from operations in 2022 decreased by $33 million compared with 2021 and decreased by $142 million in 2021 compared with 2020 due to reductions in allocated pension cost year over year.
+Added: The pension FAS/CAS service cost adjustment recognized in Loss from operations in 2023 decreased by $50 million compared with 2022 and decreased by $33 million in 2022 compared with 2021 due to changes in allocated pension cost year over year.
Net periodic benefit cost included in Loss from operations in 2023 was largely consistent with 2022 and 2021.
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Non-operating pension income included in Other income, net was $529 million in 2023, $881 million in 2022 and $528 million in 2021.
+Added: The decreased income in 2023 compared to 2022 was primarily due to higher interest cost and lower expected return on plan assets, partially offset by lower amortization of net actuarial losses.
The increased income in 2022 compared to 2021 was primarily due to lower amortization of net actuarial losses in 2022 and a settlement loss recorded in 2021.
−Removed: The increased income in 2021 compared to 2020 was primarily due to lower interest cost and higher expected return on plan assets, partially offset by higher amortization of net actuarial losses and higher settlement charges.
−Removed: Non-operating postretirement income included in Other income, net was $58 million in 2022, compared with income of $1 million in 2021 and expense of $16 million in 2020.
−Removed: The increased income in 2022 and 2021 was due to lower amortization of net actuarial losses.
−Removed: Interest and debt expense decreased by $149 million in 2022 primarily due to lower average debt balances and increased by $526 million in 2021 as a result of higher average debt balances.
−Removed: In August 2022, the President signed into law the Inflation Reduction Act of 2022, which contained provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on stock buybacks, both of which we do not expect to have a material impact on our results of operations, financial condition or cash flows.
+Added: Non-operating postretirement income included in Other income, net was $58 million in 2023 and 2022, and $1 million in 2021.
+Added: The increased income in 2022 was due to lower amortization of net actuarial losses.
+Added: Interest and debt expense decreased by $102 million in 2023 and $153 million 2022 primarily due to lower average debt balances.
For additional discussion related to Income Taxes, see Note 4 to our Consolidated Financial Statements.
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Our BCA segment predominantly uses program accounting to account for cost of sales.
−Removed: Under program accounting, cost of sales for each commercial aircraft program equals the product of (i) revenue recognized in connection with customer deliveries and (ii) the estimated cost of sales percentage applicable to the total remaining program.
+Added: Under program accounting, cost of sales for each commercial aircraft program equals the product of (i) revenue recognized in connection with customer deliveries and (ii) the
+Added: estimated cost of sales percentage applicable to the total remaining program.
For long-term contracts, the amount reported as cost of sales is recognized as incurred.
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Cost of sales as a % of Revenues 90.1 % 94.7 % (4.6) % 94.7 % 95.1 % (0.4) %
+Added: Cost of sales increased by $6,992 million in 2023 compared with 2022, primarily due to higher revenues at BCA and BGS, partially offset by lower development charges at BDS.
+Added: Cost of sales as a percentage of Revenues decreased in 2023 compared to 2022 primarily due to lower charges on BDS development programs.
Cost of sales increased by $3,841 million in 2022 compared with 2021, primarily due to charges recorded at BDS and higher revenues at BCA.
Cost of sales as a percentage of Revenues remained largely consistent in 2022 compared to 2021.
−Removed: Cost of sales decreased by $4,574 million in 2021 compared with 2020, primarily due to higher earnings charges at BCA, BDS and BGS in 2020, partially offset by higher costs as a result of higher revenues in 2021 and the reach-forward loss on the 787 program.
−Removed: Cost of sales as a percentage of Revenues decreased in 2021 compared to 2020 primarily due to higher earnings charges at BCA and BGS in 2020 and higher revenues in 2021.
−Removed: Research and Development The following table summarizes our Research and development expense:
+Added: Research and Development
+Added: The following table summarizes our Research and development expense:
(Dollars in millions)
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Total $3,377 $2,852 $2,249
+Added: Research and development expense increased by $525 million in 2023 compared with 2022 primarily due to higher research and development expenditures on the 777X program as well as other BCA and enterprise investments in product development.
Research and development expense increased by $603 million in 2022 compared with 2021 primarily due to higher research and development expenditures on 777X, 737 MAX, as well as BCA and enterprise investments in product development.
−Removed: Research and development expense decreased by $227 million in 2021 compared with 2020 primarily due to lower BCA and enterprise investments in product development and lower spending on the 777X program.
Our backlog at December 31 was as follows:
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government contract funding.
−Removed: The increase in contractual backlog during 2022 was primarily due to an increase in BCA backlog that was partially offset by a decrease in BDS backlog.
−Removed: If we remain unable to deliver 737 MAX aircraft in China for an extended period of time, and/or entry into service of the 777X, 737-7 and/or 737-10 is further delayed, we may experience reductions to backlog and/or significant order cancellations.
+Added: The increase in contractual backlog during 2023 was primarily due to increases in BCA and BDS backlog.
+Added: If we are unable to deliver aircraft to customers in China consistent with our assumptions, and/or entry into service of the 777X, 737-7 and/or 737-10 is further delayed, we may experience reductions to backlog and/or significant order cancellations.
Unobligated backlog includes U.S.
government definitive contracts for which funding has not been authorized.
−Removed: The increase in unobligated backlog in 2022 was primarily due to contract awards, partially offset by reclassifications to contractual backlog related to BDS and BGS contracts.
+Added: Unobligated backlog was largely unchanged in 2023.
Additional Considerations
+Added: Government Funding The Continuing Resolution enacted on January 19, 2024, continues federal funding at fiscal year 2023 appropriated levels through March 1, 2024, for selected departments and agencies, including the Department of Transportation, and through March 8, 2024, for the remaining departments and agencies, including the United States Department of Defense (U.S.
+Added: DoD) and the National Aeronautics and Space Administration (NASA).
+Added: Congress and the President must enact either full-year fiscal year 2024 (FY24) appropriations bills or an additional Continuing Resolution to fund government departments and agencies after these dates, or a partial or full government shutdown could result.
+Added: government discretionary spending in FY24 and 2025 (FY25), including defense spending, was capped by the Fiscal Responsibility Act of 2023 (FRA).
+Added: Additionally, a Continuing Resolution for FY24 or FY25 in place on April 30 of the relevant fiscal year, would trigger a sequester under the FRA.
Global Trade We continually monitor the global trade environment in response to geopolitical economic developments, as well as changes in tariffs, trade agreements or sanctions that may impact the Company.
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We are mitigating import costs through Duty Drawback Customs procedures.
−Removed: China is a significant market for commercial aircraft.
−Removed: Boeing has long-standing relationships with our Chinese customers, who represent a key component of our commercial aircraft backlog.
+Added: China is a significant market for commercial aircraft and we have long-standing relationships with our Chinese customers, who represent a key component of our commercial aircraft backlog.
Overall, the U.S.-China trade relationship remains stalled as economic and national security concerns continue to be a challenge.
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trading partners have imposed, or announced their intention to impose, tariffs on U.S.
−Removed: has subsequently reached agreements with Mexico, Canada, the United Kingdom, the European Union, and Japan to ease or remove tariffs on steel and/or aluminum.
+Added: has subsequently reached agreements with Mexico, Canada, Japan, the United Kingdom, and the European Union, to ease or remove tariffs on steel and/or aluminum.
We continue to monitor the potential for any extra costs that may result from the remaining global tariffs.
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We continue to monitor and evaluate additional sanctions and export restrictions that may be imposed by the U.S.
−Removed: Government or other governments,
−Removed: as well as any responses from Russia that could affect our supply chain, business partners or customers, for any additional impacts to our business.
+Added: Government or other governments, as well as any responses from Russia that could affect our supply chain, business partners or customers, for any additional impacts to our business.
+Added: Supply Chain We and our suppliers are experiencing supply chain disruptions as a result of global supply chain constraints and labor instability.
+Added: We and our suppliers are also experiencing inflationary pressures.
+Added: We continue to monitor the health and stability of the supply chain.
+Added: These factors have reduced overall productivity and adversely impacted our financial position, results of operations and cash flows.
+Added: The current conflict in Israel and the Gaza Strip has the potential to impact certain of our suppliers, and has impacted some operations for our airline and lessor customers.
+Added: We are closely monitoring developments, supporting our employees and customers, and will take mitigating actions as appropriate.
Segment Results of Operations and Financial Condition
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Airline Industry Environment See Overview to Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the airline industry environment.
−Removed: Industry Competitiveness The industry continues to recover from the lingering effects of the COVID-19 pandemic.
−Removed: The commercial aircraft market and the airline industry both remain extremely competitive.
−Removed: While the impacts and responses have varied globally, the reduction of demand and disruption in production has adversely impacted most manufacturers in the commercial aircraft industry.
+Added: Industry Competitiveness The commercial aircraft market and the airline industry both remain extremely competitive.
Continued access to global markets remains vital to our ability to fully realize our sales potential and long-term investment returns.
−Removed: Approximately 70% of Commercial Airplanes’ total backlog, in dollar terms, is with non-U.S.
+Added: Approximately 78% of BCA’s total backlog, in dollar terms, is with non-U.S.
We face aggressive international competitors who are intent on increasing their market share.
They offer competitive products and have access to most of the same customers and suppliers.
−Removed: The grounding of the 737 MAX in 2019 and the associated suspension of 737 MAX deliveries in multiple jurisdictions significantly reduced our market share with respect to deliveries of single aisle aircraft and may provide competitors with an opportunity to obtain more orders and increase market share.
With government support, Airbus has historically invested heavily to create a family of products to compete with ours.
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This market environment has resulted in intense pressures on pricing and other competitive factors, and we expect these pressures to continue or intensify in the coming years.
−Removed: We are focused on improving our products and services and continuing our business transformation efforts, which enhances our ability to compete and positions us for market recovery.
−Removed: We are also focused on taking actions to ensure that Boeing is not harmed by unfair subsidization of competitors.
Results of Operations
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Research and development $2,036 $1,510 $1,140
+Added: BCA revenues increased by $7,875 million in 2023 compared with 2022 primarily due to higher 787 deliveries in 2023.
BCA revenues increased by $6,312 million in 2022 compared with 2021 primarily due to higher 737 and 787 deliveries in 2022.
−Removed: BCA revenues increased by $3,331 million in 2021 compared with 2020 primarily due to higher 737 MAX deliveries driven by recertification and return to service in most jurisdictions and the absence of charges for 737 MAX customer considerations which reduced revenues in 2020, partially offset by lower 787 deliveries in 2021.
BCA deliveries, including intercompany deliveries, as of December 31 were as follows:
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Loss From Operations
−Removed: BCA loss from operations was $2,370 million in 2022 compared with $6,475 million in 2021 reflecting higher 737 deliveries and lower abnormal production costs, partially offset by higher research and development spending, charges related to the war in Ukraine and other period expenses.
−Removed: The 2021 loss also reflects a reach-forward loss on the 787 program of $3,460 million.
+Added: BCA loss from operations was $1,635 million in 2023 compared with $2,341 million in 2022 reflecting higher deliveries and lower period expenses including lower abnormal production costs, partially offset by higher spending on research and development.
+Added: Abnormal production costs in 2023 were $1,527 million, including $1,014 million related to the 787 program and $513 million related to the 777X program.
Abnormal production costs in 2022 were $1,753 million, including $1,240 million related to the 787 program, $325 million related to the 777X program, and $188 million related to the 737 program.
BCA loss from operations was $2,341 million in 2022 compared with $6,377 million in 2021.
−Removed: The 2021 loss reflects the reach-forward loss on the 787 program of $3,460 million, abnormal production costs related to the 737 program of $1,887 million, and abnormal production costs related to the 787 program of $468 million resulting from continued production issues, inspections and rework, partially offset by higher 737 MAX deliveries.
−Removed: The 2020 loss reflects the reach-forward loss on the 777X program of $6,493 million, lower deliveries and lower program margins resulting from the COVID-19 pandemic,
−Removed: $2,567 million of abnormal production costs related to the 737 program, $623 million of severance cost, $498 million of 737 MAX customer considerations, $336 million related to 737NG frame fitting component repair costs and $270 million of abnormal production costs in the first half of 2020 from the temporary suspension of operations in response to COVID-19, partially offset by lower research and development spending.
−Removed: Lower 787 margins reflecting a reduction in the accounting quantity in the first quarter of 2020 also contributed to lower earnings.
+Added: The 2021 loss includes a reach-forward loss on the 787 program of $3,460 million.
+Added: The improved performance in 2022 also reflects higher 737 deliveries and lower abnormal production costs, partially offset by higher research and development spending, charges related to the war in Ukraine and other period expenses.
+Added: Abnormal production costs in 2021 were $2,355 million, including $1,887 million related to the 737 program and $468 million related to the 787 program.
Our total backlog represents the estimated transaction prices on unsatisfied and partially satisfied performance obligations to our customers where we believe it is probable that we will collect the consideration due and where no contingencies remain before we and the customer are required to perform.
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All such contingencies must be satisfied or have expired prior to recording a new firm order even if satisfying such conditions is highly probable.
−Removed: Backlog excludes options and BCC orders as well as orders where customers have the unilateral right to terminate.
+Added: Backlog excludes options and Boeing customer financing orders as well as orders where customers have the unilateral right to terminate.
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.
We address customer claims and requests for other contractual relief as they arise.
−Removed: The value of orders in backlog is adjusted as changes to price and schedule are agreed to with customers and is reported in accordance with the requirements of ASC 606.
−Removed: BCA total backlog of $329,824 million at December 31, 2022 increased from $296,882 million at December 31, 2021, reflecting new orders in excess of deliveries and price escalation, offset by order cancellations and by an increase in the value of existing orders that in our assessment do not meet the accounting requirements of ASC 606 for inclusion in backlog.
−Removed: Aircraft order cancellations during the year ended December 31, 2022 totaled $11,251 million and relate to 737 and 787 aircraft.
−Removed: The net ASC 606 adjustments for the year ended December 31, 2022 resulted in a decrease to backlog of $4,675 million primarily due to a net increase of 777X aircraft in the ASC 606 reserve, partially offset by net decreases in 737 and 787 aircraft in the ASC 606 reserve.
+Added: The value of orders in backlog is adjusted as changes to price and schedule are agreed to with customers and is reported in accordance with the requirements of Accounting Standards Codification (ASC) 606.
+Added: BCA total backlog of $440,507 million at December 31, 2023 increased from $329,824 million at December 31, 2022, reflecting new orders in excess of deliveries and a decrease in the value of existing orders that in our assessment do not meet the accounting requirements of ASC 606 for inclusion in backlog, partially offset by order cancellations.
+Added: Aircraft order cancellations during the year ended December 31, 2023 totaled $12,925 million and primarily relate to 737 and 777X aircraft.
+Added: The net ASC 606 adjustments for the year ended December 31, 2023 resulted in an increase to backlog of $20,605 million primarily due to a net decrease of 777X and 737 aircraft.
ASC 606 adjustments include consideration of aircraft orders where a customer-controlled contingency may exist, as well as an assessment of whether the customer is committed to perform, impacts of geopolitical events or related sanctions, or whether it is probable that the customer will pay the full amount of consideration when it is due.
−Removed: If we remain unable to deliver 737 MAX aircraft in China for an extended period of time, and/or entry into service of the 777X, 737-7 and/or 737-10 is further delayed, we may experience reductions to backlog and/or significant order cancellations.
+Added: If we are unable to deliver aircraft to customers in China consistent with our assumptions, and/or entry into service of the 777X, 737-7 and/or 737-10 is further delayed, we may experience reductions to backlog and/or significant order cancellations.
Accounting Quantity The accounting quantity is our estimate of the quantity of airplanes that will be produced for delivery under existing and anticipated contracts.
19 unchanged sentences
Cumulative firm orders 11,159 1,573 1,346 1,735 253 1,417
−Removed: † Aircraft ordered by BCC are identified in parentheses.
+Added: † Boeing customer financing aircraft orders are identified in parentheses.
Program Highlights
737 Program The accounting quantity for the 737 program increased by 800 units during 2023 due to the program's normal progress of obtaining additional orders and delivering airplanes.
−Removed: We increased the production rate to 31 per month in 2022, and expect to implement further gradual production rate increases based on market demand and supply chain capacity.
−Removed: We expensed abnormal production costs of $188 million and $1,887 million during the years ended December 31, 2022 and 2021.
−Removed: Over 190 countries have approved the resumption of 737 MAX operations.
−Removed: The first 737 MAX passenger flight in China since 2019 occurred on January 13, 2023.
−Removed: There is uncertainty regarding timing of resumption of deliveries in China, which are still subject to final regulatory approvals.
−Removed: We continue to work with a small number of customers who have requested to defer deliveries or to cancel orders for 737 MAX aircraft, and we are remarketing and/or delaying deliveries of certain aircraft included within inventory.
−Removed: We have approximately 250 aircraft in inventory as of December 31, 2022, including approximately 140 aircraft in inventory that are designated for customers in China.
−Removed: We are remarketing some of these aircraft to other customers.
−Removed: We anticipate delivering most of the aircraft in inventory by the end of 2024.
−Removed: In the event that we are unable to resume aircraft deliveries in China or remarket those aircraft and/or ramp up deliveries consistent with our assumptions, our expectation of delivery timing could be impacted.
−Removed: The 737-7 and 737-10 models are currently going through FAA certification.
−Removed: The Consolidated Appropriations Act, 2023 amended Section 116 of the ACSAA, such that applications for original or amended type certifications that were submitted to the FAA prior to December 27, 2020, including those of the 737-7 and 737-10, are no longer subject to the crew alerting specifications of Section 116.
−Removed: Additionally, beginning one year after the FAA issues the type certificate for the 737-10, any new 737 MAX aircraft must include certain safety enhancements to be issued an original airworthiness certification by the FAA.
−Removed: These enhancements are included in Boeing’s application for the certification for the 737-10, and the sufficiency of these enhancements will be determined by the FAA.
−Removed: Beginning three years after the issuance of a type certificate for the 737-10, all previously delivered 737 MAX aircraft must be retrofitted with these safety enhancements.
−Removed: As the holder of the type certificate, Boeing is required to bear any costs of these safety enhancement retrofits.
−Removed: We have provisioned for the estimated costs associated with the safety enhancements and do not expect those costs to be material.
−Removed: We are following the lead of the FAA as we work through the certification process, and currently expect the 737-7 to be certified and delivered in 2023, and the 737-10 to begin FAA certification flight testing in 2023 with first delivery in in 2024.
−Removed: At December 31, 2022, we had 27 737-7 and 3 737-10 aircraft in inventory and 236 737-7 and 720 737-10 aircraft in backlog and have delivered a total of 1,033 737 MAX aircraft.
−Removed: If we experience delays in achieving certification and/or incorporating safety enhancements, future revenues, cash flows and results of operations could be adversely impacted.
−Removed: See further discussion of the 737 MAX in Note 7 and Note 13 to our Consolidated Financial Statements .
−Removed: 747 Program We completed production of the 747 in the fourth quarter of 2022 and delivery of the last aircraft is expected to occur in early 2023.
+Added: We are currently producing at a rate of 38 per month.
+Added: On January 5, 2024, an Alaska Airlines 737-9 flight made an emergency landing after a mid-exit door plug detached in flight.
+Added: Following the accident, the Federal Aviation Administration (FAA) grounded and required inspections of all 737-9 aircraft with a mid-exit door plug, which constitute the large majority of the approximately 220 737-9 aircraft in the in-service fleet .
+Added: On January 24, 2024, the FAA approved an enhanced maintenance and inspection process that must be performed on each of the grounded 737-9 aircraft.
+Added: Our 737-9 operators have begun returning their fleets to service, and many 737-9s have completed inspections and resumed revenue flights.
+Added: All 737-9 aircraft in production will undergo this same enhanced inspection process prior to delivery.
+Added: On January 10, 2024, the FAA notified Boeing that the FAA has initiated an investigation into Boeing’s quality control system.
+Added: This was followed by the FAA announcing actions to increase its oversight of Boeing, including conducting:
+Added: An audit involving the 737-9 production line and its suppliers to evaluate Boeing’s compliance with approved quality procedures,
+Added: Increased monitoring of Boeing’s 737-9 in-service events, and
+Added: An assessment of safety risks around delegated authority and quality oversight, and examination of options to move these functions under independent third parties.
+Added: On January 24, 2024, the FAA stated that it will not approve production rate increases or additional production lines for the 737 MAX until it is satisfied that Boeing is in full compliance with required quality control procedures.
+Added: We are following the lead of the FAA as we work through the certification process of the 737-7 and 737-10 models.
+Added: We continue to work with the FAA on open actions to support 737-7 certification.
+Added: During the fourth quarter of 2023, the 737-10 program received approval from the FAA to begin the first phase of FAA certification flight testing.
+Added: At December 31, 2023, we had approximately 35 737-7 and 737-10 aircraft in inventory.
+Added: We are now planning to incorporate engineering solutions to the de-icing systems on the 737-7 and 737-10, which will delay certification and first deliveries.
+Added: We are currently unable to reasonably estimate what impact the accident, the related FAA actions and certification delays will have on our financial position, results of operations and cash flows.
+Added: During the third quarter of 2023, we discovered non-conforming holes in the aft pressure dome of certain 737-7, 737-8 and 737 military derivative aircraft.
+Added: Rework on non-conforming fuselages with our supplier is complete and newly built aircraft meet our specifications.
+Added: We do not expect inspection of completed aircraft in inventory to result in significant rework or production disruption.
+Added: As of December 31, 2023, we had approximately 140 737-8 aircraft in inventory that were produced prior to 2023, including 85 aircraft for customers in China.
+Added: Return-to-service of the China 737 MAX fleet is complete.
+Added: While there continues to be uncertainty, we are continuing to work with airlines and government officials on delivery timing and expect to deliver most of the aircraft in inventory by the end of 2024.
+Added: In the event that we are unable to deliver aircraft consistent with our assumptions, our financial position, results of operations and cash flows could be adversely affected.
+Added: See further discussion of the 737 MAX in Note 7, Note 13 and Note 23 to our Consolidated Financial Statements .
+Added: 747 Program We completed production of the 747 in the fourth quarter of 2022 and delivery of the last aircraft occurred in February 2023.
Ending production of the 747 did not have a material impact on our financial position, results of operations or cash flows.
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We are currently producing at a combined rate of 3 aircraft per month.
−Removed: 777 and 777X Programs The accounting quantity for the 777 program increased by 40 units during 2022 due to the program's normal progress of obtaining additional orders and delivering airplanes.
+Added: 777 and 777X Programs The accounting quantity for the 777X program increased by 100 units during the year ended December 31, 2023 due to obtaining additional orders for the 777-9 and 777-8.
We are currently producing at a combined production rate of 4 per month for the 777/777X programs.
−Removed: The accounting quantity for the 777X program increased by 50 units during 2022 reflecting the launch of the 777X-8 freighter during the first quarter of 2022.
−Removed: First delivery of the 777X-8 freighter is expected in 2027.
−Removed: During the first quarter of 2022, we revised the estimated first delivery date of the 777X-9, previously expected in late 2023, and now expect it will occur in 2025, based on an updated assessment of the time required to meet certification requirements.
−Removed: We are working towards Type Inspection Authorization (TIA) which will enable us to begin FAA certification flight testing.
−Removed: The timing of TIA and certification will ultimately be determined by the regulators, and further determinations with respect to anticipated certification requirements could result in additional delays in entry into service and/or additional cost increases.
−Removed: In April 2022, we decided to pause production of the 777X-9 during 2022 and 2023.
−Removed: We implemented the production pause during the second quarter of 2022, and it is expected to result in abnormal production costs of approximately $1.5 billion that are being expensed as incurred until 777X-9 production resumes.
−Removed: During the year ended December 31, 2022, $0.3 billion of abnormal costs were period expensed.
−Removed: The 777X program had near break-even gross margins at December 31, 2022.
+Added: We are following the lead of the FAA as we work through the certification process including obtaining approval from the FAA to begin certification flight testing.
+Added: We expect the first delivery of the 777-9 to occur in 2025 and the 777-8 freighter to occur in 2027.
+Added: First delivery of the 777-8 passenger aircraft is not expected to occur before 2030.
+Added: In April 2022, we decided to pause production of the 777-9 during 2022 and 2023, which resulted in cumulative abnormal production costs of $0.8 billion.
+Added: In the fourth quarter of 2023, the 777X program resumed production.
The level of profitability on the 777X program will be subject to a number of factors.
−Removed: These factors include continued production disruption due to labor instability and supply chain disruption, customer negotiations, further production rate adjustments for the 777X or other commercial aircraft programs, contraction of the accounting quantity and potential risks associated with the testing program and the timing of aircraft certification.
−Removed: One or more of these factors could result in additional reach-forward losses on the 777X program in future periods.
−Removed: 787 Program During the fourth quarter of 2022, we increased the accounting quantity for the 787 program by 100 units due to the program’s normal progress of obtaining additional orders and delivering aircraft.
−Removed: The increase in the accounting quantity improved the program’s profit margin.
−Removed: We received FAA authorization to resume delivery on July 28, 2022 and deliveries resumed in August.
−Removed: During 2022, we delivered 31 aircraft to customers.
−Removed: We continue to conduct inspections and rework on undelivered aircraft.
−Removed: During 2021, we delivered 14 aircraft between March and May 2021 prior to deliveries being paused in May 2021 due to production quality issues including in our supply chain.
−Removed: We have implemented changes in the production process designed to ensure that newly-built airplanes meet our specifications and do not require further inspections and rework.
−Removed: At December 31, 2022, and 2021, we had approximately 100 and 110 aircraft in inventory.
−Removed: Most of the aircraft in inventory at December 31, 2022 are expected to deliver by the end of 2024.
−Removed: We are currently producing at low rates and expect to gradually return to 5 per month in 2023.
−Removed: In the third quarter of 2021, we determined that production rates below 5 per month represented abnormally low production rates and result in abnormal production costs.
−Removed: We also determined that the inspections and rework costs on inventoried aircraft are excessive and should also be accounted for as abnormal production costs that are required to be expensed as incurred.
+Added: These factors include aircraft certification requirements and timing, change incorporation on completed aircraft, production disruption due to labor instability and supply chain disruption, customer negotiations, further
+Added: production rate adjustments for the 777X or other commercial aircraft programs, and contraction of the accounting quantity.
+Added: One or more of these factors could result in reach-forward losses in future periods.
+Added: 787 Program The accounting quantity for the 787 program increased by 100 units during 2023 due to the program's normal progress of obtaining additional orders and delivering airplanes.
+Added: During 2023, we delivered 73 aircraft and increased the production rate to 5 per month beginning in October 2023.
+Added: At December 31, 2023 and 2022, we had approximately 50 and 90 aircraft in inventory that require rework which we expect to complete by the end of 2024.
+Added: Beginning in 2021, the 787 program lowered production rates and paused deliveries in order to improve production quality and implement changes in the production process designed to ensure that newly-built aircraft meet our specifications.
+Added: In the third quarter of 2021, we determined that production rates below 5 per month represented abnormally low production rates.
+Added: This resulted in abnormal production costs, which we expensed as incurred through the third quarter of 2023.
+Added: We also determined that the inspections and rework costs on inventoried aircraft are excessive and should also be accounted for as abnormal production costs.
Cumulative abnormal costs recorded through December 31, 2023 totaled $2.7 billion.
−Removed: During the fourth quarter of 2022 we adjusted the total estimate of abnormal production costs up to $2.8 billion with most being incurred by the end of 2023.
−Removed: At December 31, 2021, we were expecting to incur approximately $2 billion of abnormal production costs on a cumulative basis.
−Removed: The increase was primarily driven by a decision in the fourth quarter of 2022 to slow down near-term production due to supply chain constraints and increased inspection and rework costs.
−Removed: We continue to work with customers and suppliers regarding timing of future deliveries and production rate changes.
−Removed: During the fourth quarter of 2021, we recorded a loss of $3.5 billion on the program primarily due to the additional rework, as well as other actions required to resume 787 deliveries, taking longer than expected.
−Removed: These impacts have resulted in longer than expected delivery delays and associated customer considerations.
+Added: The costs associated with the remaining rework are not expected to be significant.
Fleet Support We provide the operators of our commercial aircraft with assistance and services to facilitate efficient and safe airplane operation.
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The costs for fleet support are expensed as incurred and have historically been approximately 1% of total consolidated costs of products and services.
−Removed: Program Development The following chart summarizes the time horizon between go-ahead and planned initial delivery for major Commercial Airplanes derivatives and programs.
−Removed: Go-ahead and Initial Delivery
−Removed: 737-7 2011 2023
−Removed: 737-10 2017 2024
−Removed: 777X-9 2013 2025
−Removed: 777X-8F 2022 2027
−Removed: Reflects models in development during 2022
−Removed: The development schedules shown above are subject to a number of uncertainties, including changes in certification requirements.
−Removed: The timing of certifications will ultimately be determined by the regulators.
Additional Considerations
The development and ongoing production of commercial aircraft is extremely complex, involving extensive coordination and integration with suppliers and highly-skilled labor from employees and other partners.
−Removed: Meeting or exceeding our performance and reliability standards, as well as those of customers and regulators, can be costly and technologically challenging, such as the 787 production issues and associated rework.
+Added: Meeting or exceeding our performance and reliability standards, as well as those of customers and regulators, can be costly and technologically challenging.
In addition, the introduction of new aircraft and derivatives, such as the 777X, 737-7 and 737-10, involves increased risks associated with meeting development, production and certification schedules.
−Removed: These challenges include increased global regulatory scrutiny of all development aircraft in the wake of the 737 MAX accidents.
+Added: These challenges include significant global regulatory scrutiny of all development aircraft.
As a result, our ability to deliver aircraft on time, satisfy performance and reliability standards and achieve or maintain, as applicable, program profitability is subject to significant risks.
−Removed: Factors that could result in lower margins (or a material charge if an airplane program has or is determined to have reach-forward losses) include the following:
−Removed: changes to the program accounting quantity, customer and model mix, production costs and rates, changes to price escalation factors due to changes in the inflation rate or other economic indicators, performance or reliability issues involving completed aircraft, capital expenditures and other costs associated with increasing or adding new production capacity, learning curve, additional change incorporation, achieving anticipated cost reductions, the addition of regulatory requirements in connection with certification in one or more jurisdictions, flight test and certification schedules, costs, schedule and demand for new airplanes and derivatives and status of customer claims, supplier claims or assertions and other contractual negotiations.
+Added: Factors that could result in lower margins (or a material charge if an airplane program has or is determined to have reach-forward losses) include:
+Added: changes to the program accounting quantity, customer and model mix, production costs and rates, changes to price escalation factors due to changes in the inflation rate or other economic indicators, performance or reliability issues involving completed aircraft, capital expenditures and other costs associated with increasing or adding new production capacity, learning curve, additional change incorporation, rework or safety enhancements, operational and supply chain challenges, achieving anticipated cost reductions, additional regulatory requirements in connection with certification in one or more jurisdictions, flight test and certification schedules, costs, schedule and demand for new airplanes and derivatives and status of customer claims, supplier claims or assertions and other contractual negotiations.
While we believe the cost and revenue estimates incorporated in the consolidated financial statements are appropriate, the technical complexity of our airplane programs creates financial risk as additional completion costs may become necessary or scheduled delivery dates could be extended, which could trigger termination provisions, order cancellations or other financially significant exposure.
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United States Government Defense Environment Overview
−Removed: The Consolidated Appropriations Act, 2023, enacted in December 2022, provided fiscal year 2023 (FY23) appropriations for government departments and agencies, including $817 billion for the U.S.
+Added: In March 2023, the U.S.
+Added: government released the President's budget request for FY24, which requested $842 billion in funding for the U.S.
DoD and $27 billion for NASA.
−Removed: The enacted FY23 appropriations included funding for Boeing’s major programs, including the F/A-18 Super Hornet, F-15EX, CH-47 Chinook, AH-64 Apache, V-22 Osprey, KC-46A Tanker, MQ-25, and the Space Launch System.
−Removed: The FY23 appropriations support F/A-18 production further into calendar year 2025.
−Removed: The FY23 appropriations did not include funding for additional P-8 aircraft.
−Removed: The P-8 program continues to pursue additional sales opportunities to extend production beyond 2024.
−Removed: There is ongoing uncertainty with respect to program-level appropriations for the U.S.
−Removed: DoD, NASA and other government agencies for fiscal year 2024 and beyond.
−Removed: government discretionary spending, including defense spending, is likely to continue to be subject to pressure.
+Added: The President's budget request does not request funding for F/A-18, V-22, or P-8 production aircraft.
+Added: The P-8 program continues to pursue U.S.
+Added: sales opportunities.
+Added: In addition, there is ongoing uncertainty with respect to program-level appropriations for the U.S.
+Added: DoD, NASA and other government agencies for FY24 and beyond.
Future budget cuts or investment priority changes, including changes associated with the authorizations and appropriations process, could result in reductions, cancellations and/or delays of existing contracts or programs.
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F-15 Models 9 12 16
+Added: T-7A Red Hawk
CH-47 Chinook (New) 11 19 15
−Removed: CH-47 Chinook (Renewed) 9 5 3
+Added: CH-47 Chinook (Remanufactured) 9 9 5
AH-64 Apache (New) 20 25 27
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Total 162 165 169
+Added: BDS revenues in 2023 increased by $1,771 million compared with 2022.
+Added: This increase is not indicative of future projected revenue trends.
+Added: Revenues related to BDS’ five major fixed-price development programs increased by $1,767 million in 2023 compared with 2022.
+Added: This increase reflects lower unfavorable net cumulative contract catch-up adjustments in 2023 as well as higher costs incurred in 2023 to complete these contracts.
+Added: Net unfavorable cumulative contract catch-up adjustments in 2023 were $648 million better than in 2022 largely due to lower charges on development programs in 2023, partially offset by unfavorable performance on other programs.
BDS revenues in 2022 decreased by $3,378 million compared with 2021 primarily due to charges on development programs.
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Cumulative contract catch-up adjustments in 2022 were $1,858 million more unfavorable than the prior year largely due to charges on development programs.
−Removed: BDS revenues in 2021 increased by $283 million compared with 2020 primarily due to higher revenue on the KC-46A Tanker program due to new orders for 27 aircraft received during the first quarter of 2021 and lower charges in 2021.
−Removed: This was partially offset by lower revenues on rotorcraft programs, Commercial Crew and VC-25B.
−Removed: Cumulative contract catch-up adjustments in 2021 were $56 million less unfavorable than the prior year, largely due to the lower charges described below.
(Loss)/earnings From Operations
+Added: BDS loss from operations in 2023 of $1,764 million decreased by $1,780 million compared with $3,544 million in 2022.
+Added: The decrease is primarily due to $2,863 million of lower charges in 2023 on fixed-price development programs that were partially offset by lower earnings across other programs including satellites and F-15, as well as higher period expenses.
+Added: During 2023, losses incurred on the five fixed-price development programs totaled $1,585 million compared with $4,448 million in 2022.
+Added: Charges on fixed-price development programs in 2023 included VC-25B ($482 million), KC-46A Tanker ($309 million), Commercial Crew ($288 million), T-7A Red Hawk ($275 million) and MQ-25 ($231 million).
+Added: Loss from operations in 2023 includes a $315 million impact from an agreement with one of our satellite customers which includes customer considerations as well as increased costs to enhance the constellation and meet lifecycle commitments.
+Added: Net unfavorable cumulative contract catch-up adjustments were $2,328 million better than in 2022.
BDS loss from operations in 2022 of $3,544 million decreased by $5,088 million compared with earnings from operations of $1,544 million in 2021 primarily due to unfavorable impacts of cumulative contract catch-up adjustments ($4,284 million more unfavorable in 2022 than 2021).
Volume and mix and higher research and development also contributed to the year over year earnings decline.
−Removed: Charges of fixed price development programs in 2022 included VC-25B ($1,452 million), KC-46A Tanker ($1,374 million), MQ-25 ($579 million), T-7A Red Hawk Production Options ($552 million), T-7A Red Hawk Engineering, Manufacturing and Development (EMD) ($203 million), and Commercial Crew ($288 million).
+Added: on fixed-price development programs in 2022 included VC-25B ($1,452 million), KC-46A Tanker ($1,374 million), MQ-25 ($579 million), T-7A Red Hawk Production Options ($552 million), T-7A Red Hawk Engineering and Manufacturing Development (EMD) ($203 million), and Commercial Crew ($288 million).
These were partially offset by charges on the KC-46A Tanker ($402 million), VC-25B ($318 million), and Commercial Crew ($214 million) recognized in 2021.
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See further discussion of fixed-price contracts in Note 13 to our Consolidated Financial Statements.
−Removed: BDS earnings from operations in 2021 of $1,544 million increased by $5 million compared with earnings from operations of $1,539 million in 2020 primarily due to less unfavorable impacts from cumulative contract catch-up adjustments, which improved $219 million from the prior year, largely due to lower KC-46A Tanker charges in 2021 compared to 2020 and other charges on development programs.
−Removed: The $219 million change in cumulative contract catch-up adjustments was offset primarily by lower volume and mix on rotorcraft programs and lower equity earnings for United Launch Alliance (ULA).
−Removed: During 2020, BDS recorded charges on KC-46A Tanker ($1,320 million) and VC-25B ($168 million).
−Removed: BDS (loss)/earnings from operations includes our share of income from equity method investments of $13 million, $53 million and $141 million primarily from our ULA and non-U.S.
−Removed: joint ventures in 2022, 2021 and 2020, respectively.
−Removed: Earnings from our ULA joint venture increased in 2022, partially offset by losses on other operating investments.
−Removed: Total backlog of $54,373 million at December 31, 2022 was $5,455 million lower than December 31, 2021 due to the timing of awards and revenue recognized on contracts awarded in prior years.
+Added: BDS (loss)/earnings from operations includes our share of income from equity method investments of $44 million, $13 million and $53 million primarily from our United Launch Alliance and other joint ventures in 2023, 2022 and 2021, respectively.
+Added: Total backlog of $59,012 million at December 31, 2023 was $4,639 million higher than December 31, 2022 due to the timing of awards and revenue recognized on contracts awarded in prior years.
Additional Considerations
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Some of these programs have cost-type contracting arrangements.
−Removed: In these cases, the associated financial risks are primarily in reduced fees, lower profit rates or program cancellation if cost, schedule or technical performance issues arise.
+Added: In these cases, the associated financial risks are primarily reduced award or incentive fees, lower profit rates, or program cancellation if cost, schedule or technical performance issues arise.
Examples of these programs include Ground-based Midcourse Defense, Proprietary and Space Launch System programs.
Some of our development programs are contracted on a fixed-price basis.
−Removed: Examples of significant fixed-price development programs include Commercial Crew, KC-46A Tanker, MQ-25, T-7A Red Hawk, VC-25B, and commercial and military satellites.
+Added: Examples of fixed-price development programs include Commercial Crew, KC-46A Tanker, MQ-25, T-7A Red Hawk, VC-25B, and commercial and military satellites.
A number of our ongoing fixed-price development programs have reach-forward losses.
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and data analytics and digital services.
−Removed: During 2022, commercial services volume at BGS recovered to pre-pandemic levels.
−Removed: We expect BGS commercial revenues to remain strong in future quarters as the commercial airline industry continues to recover.
+Added: In 2023, commercial services volume at BGS exceeded pre-pandemic levels.
+Added: We expect BGS commercial revenues to remain strong in future quarters as the commercial airline industry transitions from recovery to growth.
Over the long-term, as the size of the worldwide commercial airline fleet continues to grow, so does demand for aftermarket services designed to increase efficiency and extend the economic lives of aircraft.
−Removed: Airlines are using data analytics to plan flight operations and predictive maintenance to improve their productivity and efficiency.
+Added: Airlines are using data analytics to plan flight operations and predictive maintenance to improve
+Added: their productivity and efficiency.
Airlines continue to look for opportunities to reduce the size and cost of their spare parts inventory, frequently outsourcing spares management to third parties.
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government services market is the single largest individual market, comprising over 50 percent of the government services markets served.
−Removed: Over the next decade, we
+Added: Over the next decade, we expect U.S.
growth to remain flat and non-U.S.
fleets, led by Middle East and Asia Pacific customers, to add rotorcraft and commercial derivative aircraft at faster rates.
−Removed: We expect less than 20 percent of the worldwide fleet of military aircraft to be retired and replaced over the next ten years, driving increased demand for services to maintain aging aircraft and enhance aircraft capability.
+Added: We expect approximately 30 percent of the worldwide fleet of military aircraft to be retired and replaced over the next ten years, driving increased demand for services to maintain aging aircraft and enhance aircraft capability.
BGS’ major customer, the U.S.
−Removed: government, remains subject to the spending limits and uncertainty described on page 35, which could restrict the execution of certain program activities and delay new programs or competitions.
+Added: government, remains subject to the spending limits and uncertainty, which could restrict the execution of certain program activities and delay new programs or competitions.
Industry Competitiveness Aviation services is a competitive market with many domestic and international competitors.
8 unchanged sentences
Operating margins 17.4 % 15.5 % 12.4 %
+Added: BGS revenues in 2023 increased by $1,516 million compared with 2022 primarily due to higher commercial services revenue driven by market recovery across the commercial portfolio.
+Added: The net unfavorable impact of cumulative contract catch-up adjustments in 2023 was $16 million worse than the net favorable impact in the prior year comparable period.
BGS revenues in 2022 increased by $1,283 million compared with 2021 primarily due to higher commercial services volume, partially offset by lower government services volume and performance.
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The net favorable impact of cumulative contract catch-up adjustments in 2022 was $137 million lower than the prior year.
−Removed: BGS revenues in 2021 increased by $785 million compared with 2020 due to higher commercial and government services volume.
−Removed: The net favorable impact of cumulative contract catch-up adjustments in 2021 was $37 million lower than the prior year .
Earnings From Operations
+Added: BGS earnings from operations in 2023 increased by $602 million compared with 2022, primarily due to higher commercial services revenue.
+Added: The net unfavorable impact of cumulative contract catch-up adjustments in 2023 was $9 million higher than the prior year.
BGS earnings from operations in 2022 increased by $710 million compared with 2021, primarily due to higher commercial services volume and favorable mix, partially offset by lower government services performance.
The net unfavorable impact of cumulative contract catch-up adjustments in 2022 was $148 million worse than the net favorable impact in the prior year.
−Removed: BGS earnings from operations in 2021 increased by $1,567 million compared with 2020, primarily due to charges incurred in 2020 driven by impacts of the COVID-19 pandemic as well as higher commercial services volume in 2021, partially offset by an inventory write-down of $220 million recognized in the fourth quarter of 2021 driven by revised cost estimates on certain customer contracts.
−Removed: Charges in 2020 included $531 million of inventory write-downs, $178 million of related impairments of distribution rights primarily driven by airlines’ decisions to retire certain aircraft, $398 million for higher expected credit losses primarily driven by customer liquidity issues, $115 million of contract termination and facility impairment charges, and $72 million of severance costs.
−Removed: The net favorable impact of cumulative contract catch-up adjustments in 2021 was $98 million lower than the prior year .
−Removed: BGS total backlog of $19,338 million at December 31, 2022 decreased by 6% from $20,496 million at December 31, 2021, primarily due to revenue recognized on contracts awarded in prior years.
−Removed: Boeing Capital
−Removed: Business Environment and Trends
−Removed: BCC’s gross customer financing and investment portfolio at December 31, 2022 totaled $1,549 million.
−Removed: A substantial portion of BCC’s portfolio is composed of customers that have less than investment-grade credit.
−Removed: BCC’s portfolio is also concentrated by varying degrees across Boeing aircraft product types, most notably 717 and 747-8 aircraft.
−Removed: BCC provided customer financing of $96 million during 2022 and none during 2021.
−Removed: While we may be required to fund a number of new aircraft deliveries in 2023 and/or provide refinancing for existing bridge debt, we expect alternative financing will be available at reasonable prices from broad and globally diverse sources.
−Removed: Aircraft values and lease rates are impacted by the number and type of aircraft that are currently out of service.
−Removed: Approximately 4,950 western-built commercial jet aircraft (18.3% of current world fleet) were parked at the end of 2022, including both in-production and out-of-production aircraft types.
−Removed: Of these parked aircraft, a larger portion are expected to be retired compared to the pre-COVID-19 period, which directly impacts the Company in terms of number of new aircraft deliveries and financing opportunities, the ability of existing customers to meet current payment obligations and the value of aircraft in its portfolio.
−Removed: We continue to work closely with our customers to mitigate the risk.
−Removed: At the end of 2021 and 2020, 20.5% and 29.4% of the western-built commercial jet aircraft were parked.
−Removed: Aircraft valuations could decline if significant numbers of additional aircraft, particularly types with relatively few operators, are placed out of service.
−Removed: See Overview to Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the airline industry environment.
−Removed: Results of Operations
−Removed: (Dollars in millions)
−Removed: Years ended December 31, 2022 2021 2020
−Removed: Revenues $199 $272 $261
−Removed: Earnings from operations $29 $106 $63
−Removed: Operating margins 15 % 39 % 24 %
−Removed: BCC segment revenues consist principally of lease income from equipment under operating lease, interest income from financing receivables and notes, and other income.
−Removed: BCC’s revenues in 2022 decreased by $73 million compared with 2021 primarily due to lower gains on re-lease of assets.
−Removed: Earnings From Operations
−Removed: BCC’s earnings from operations is presented net of interest expense, provision for (recovery of) losses, asset impairment expense, depreciation on leased equipment and other operating expenses.
−Removed: In 2022, earnings from operations decreased by $77 million compared with 2021, primarily due to an increase in the allowance for losses on receivables as a result of the war in Ukraine and lower revenues.
−Removed: Earnings from operations in 2021 increased by $43 million compared with 2020 primarily due to higher revenues, lower provision for losses, and lower interest and asset impairment expenses.
−Removed: Financial Position
−Removed: The following table presents selected financial data for BCC as of December 31:
−Removed: (Dollars in millions) 2022 2021
−Removed: Customer financing and investment portfolio, net $1,494 $1,720
−Removed: Other assets, primarily cash and short-term investments 460 462
−Removed: Total assets $1,954 $2,182
−Removed: Other liabilities, primarily income taxes
−Removed: Debt, including intercompany loans 1,425 1,525
−Removed: Equity 290 310
−Removed: Total liabilities and equity $1,954 $2,182
−Removed: Debt-to-equity ratio 4.9-to-1 4.9-to-1
−Removed: BCC’s customer financing and investment portfolio at December 31, 2022 decreased $226 million from December 31, 2021, primarily due to portfolio run-off, partially offset by new volume.
−Removed: BCC enters into certain intercompany transactions, reflected in Unallocated items, eliminations and other, in the form of intercompany guarantees and other subsidies that mitigate the effects of certain credit quality or asset impairment issues on the BCC segment.
+Added: BGS total backlog of $19,869 million at December 31, 2023 increased by 3% from $19,338 million at December 31, 2022, primarily due to the timing of awards, partially offset by revenue recognized on contracts awarded in prior years.
Liquidity and Capital Resources
6 unchanged sentences
Net cash provided/(used) by operating activities 5,960 3,512 (3,416)
−Removed: Net cash provided/(used) by investing activities 4,370 9,324 (18,366)
−Removed: Net cash (used)/provided by financing activities (1,266) (5,600) 34,955
+Added: Net cash (used)/provided by investing activities (2,437) 4,370 9,324
+Added: Net cash used by financing activities (5,487) (1,266) (5,600)
Effect of exchange rate changes on cash and cash equivalents 30 (73) (39)
−Removed: Net increase/(decrease) in cash & cash equivalents, including restricted 6,543 269 (1,736)
+Added: Net (decrease)/increase in cash & cash equivalents, including restricted (1,934) 6,543 269
Cash & cash equivalents, including restricted, at beginning of year 14,647 8,104 7,835
Cash & cash equivalents, including restricted, at end of year $12,713 $14,647 $8,104
−Removed: Operating Activities Net cash provided by operating activities was $3.5 billion during 2022, compared with net cash used by operating activities of $3.4 billion during 2021.
−Removed: The $6.9 billion improvement in cash provided by operating activities in 2022 is primarily driven by improved changes in assets and liabilities of $11.1 billion, partially offset by lower non-cash items of $3.4 billion and higher net loss of $0.8 billion.
+Added: Operating Activities Net cash provided by operating activities was $6.0 billion during 2023 compared with $3.5 billion during 2022.
+Added: Net cash provided by operating activities in 2022 included a $1.5 billion income tax refund.
+Added: The year-over-year improvement in cash provided by operating activities reflects increases in revenues at BCA and BGS, higher Advances and progress billings ($3.3 billion) and lower payments to 737 MAX customers ($0.6 billion), partially offset by increased Inventories ($2.1 billion).
+Added: Increases in Accrued liabilities in both years primarily reflects accrued reach-forward losses on BDS programs.
+Added: Changes in assets and liabilities for 2023 decreased by $0.1 billion compared to 2022 primarily driven by unfavorable changes in Inventories ($2.1 billion) and Accrued liabilities ($2.2 billion), partially offset by increases in Advances and progress billings ($3.3 billion).
+Added: The change in Inventories was primarily driven by increased production on the 737 and 777X programs, partially offset by increased deliveries for the 787 program in 2023.
+Added: The change in Accrued liabilities was primarily driven by higher accrued losses on BDS fixed-price development programs recorded in the prior year.
+Added: Cash provided by Advances and progress billings was $3.4 billion in 2023 as compared with $0.1 billion in 2022.
+Added: Concessions paid to 737 MAX customers totaled $0.4 billion in 2023 and $1.0 billion in 2022.
+Added: The $6.9 billion improvement in cash provided by operating activities in 2022 was primarily driven by improved changes in assets and liabilities of $11.1 billion, partially offset by lower non-cash items of $3.4 billion and higher net loss of $0.8 billion.
Changes in assets and liabilities for 2022 improved by $11.1 billion compared with 2021 primarily driven by favorable changes in Accrued liabilities ($6.6 billion), Accounts payable ($4.6 billion) and Inventories ($1.5 billion), partially offset by a decrease in Advances and progress billings ($2.4 billion) in 2022.
−Removed: The increase in Accrued liabilities is primarily driven by the accrued losses on BDS fixed-price development programs, lower payments to 737 MAX customers in 2022, and a $0.7 billion
−Removed: payment in 2021 consistent with the terms of the Deferred Prosecution Agreement between Boeing and the U.S.
+Added: The increase in Accrued liabilities was primarily driven by the accrued losses on BDS fixed-price development programs, lower payments to 737 MAX customers in 2022, and a $0.7 billion payment in 2021 consistent with the terms of the Deferred Prosecution Agreement between Boeing and the U.S.
Department of Justice.
Concessions paid to 737 MAX customers totaled $1.0 billion and $2.5 billion during 2022 and 2021.
−Removed: Growth in Accounts Payable in 2022 is a source of cash while reductions in Accounts Payable in 2021 were a use of cash generally reflecting increases in production rates.
+Added: Growth in Accounts payable in 2022 was a source of cash while reductions in Accounts payable in 2021 was a use of cash,
+Added: generally reflecting increases in production rates.
Inventory improvements were driven by higher 737 MAX deliveries and resumption of 787 deliveries in 2022.
Additionally, in 2022 and 2021 we received income tax refunds of $1.5 billion and $1.7 billion.
−Removed: Cash provided by Advances and progress billings was $0.1 billion in 2022, as compared with $2.5 billion of cash provided in 2021.
−Removed: The $3.4 billion reduction in non-cash items in 2022 is primarily driven by the $3.5 billion reach-forward loss on the 787 program that was recorded in 2021.
+Added: Cash provided by Advances and progress billings was $0.1 billion in 2022 as compared with $2.5 billion in 2021.
+Added: The $3.4 billion reduction in non-cash items in 2022 was primarily driven by the $3.5 billion reach-forward loss on the 787 program that was recorded in 2021.
Net loss for 2022 was $5.1 billion compared with net loss of $4.3 billion in 2021.
−Removed: The $0.8 billion year-over-year increase in the net loss is primarily driven by the absence of an income tax benefit in 2022.
−Removed: The reduction in cash used by operating activities in 2021 compared with 2020 is primarily driven by lower net loss and improved changes in assets and liabilities.
−Removed: Non-cash items in 2021 include the $3.5 billion reach-forward loss on the 787 program which was recorded as a reduction to inventory, as well as $1.2 billion of treasury shares issued to fund Company contributions to the 401(k) plan and $0.8 billion of share-based plans expense reflecting a one-time stock grant to most employees in lieu of 2021 salary increases.
−Removed: The changes in assets and liabilities reflect the significant increase in commercial aircraft inventory in 2020 driven by lower deliveries due to the COVID-19 pandemic and the 737 MAX grounding.
−Removed: In 2021, inventory growth slowed as the continued buildup of 787 aircraft caused by production issues and 777X inventory growth was partially offset by a decrease in 737 MAX inventory following the resumption of deliveries.
−Removed: Compensation payments to 737 MAX customers totaled $2.5 billion in 2021 and $2.2 billion in 2020.
−Removed: In the first quarter of 2021, we paid $0.7 billion consistent with the terms of the Deferred Prosecution Agreement between Boeing and the U.S.
−Removed: Department of Justice.
−Removed: Additionally, in 2021, we received income tax refunds of $1.7 billion.
−Removed: Cash provided by Advances and progress billings was $2.5 billion in 2021, as compared with Cash used by Advances and progress billings of $1.1 billion in 2020.
−Removed: At December 31, 2022 and 2021, Accounts payable included $2.5 billion and $2.3 billion payable to suppliers who have elected to participate in supply chain financing programs.
−Removed: Payables to suppliers who elected to participate in supply chain financing programs increased by $0.2 billion in 2022 and declined by $1.5 billion and $1.9 billion in 2021 and 2020.
+Added: The $0.8 billion year-over-year increase in the net loss was primarily driven by the absence of an income tax benefit in 2022.
+Added: Payables to suppliers who elected to participate in supply chain financing programs increased by $0.4 billion in 2023, increased by $0.2 billion in 2022, and decreased by $1.5 billion in 2021.
Supply chain financing is not material to our overall liquidity.
−Removed: The declines in 2021 and 2020 were primarily due to reductions in commercial purchases from suppliers.
−Removed: Investing Activities Cash provided by investing activities during 2022 was $4.4 billion, compared with cash provided by investing activities of $9.3 billion during 2021 and cash used by investing activities of $18.4 billion during 2020.
−Removed: The decrease in cash inflows in 2022 compared to 2021 is primarily due to $5.6 billion of net proceeds from investments compared to $9.8 billion in 2021.
−Removed: The increase in cash inflows in 2021 compared to 2020 is primarily due to $27.1 billion of higher net proceeds from investments.
+Added: The decrease in 2021 was primarily due to reductions in commercial purchases from suppliers.
+Added: Investing Activities Cash used by investing activities during 2023 was $2.4 billion, compared with cash provided of $4.4 billion during 2022 and $9.3 billion during 2021.
+Added: The increase in use of cash in 2023 compared to 2022 was primarily due to net contributions to investments of $0.7 billion in 2023 compared to net proceeds from investments of $5.6 billion in 2022.
+Added: The decrease in cash inflows in 2022 compared to 2021 was primarily due to $4.2 billion of higher net proceeds from investments in 2021.
Capital expenditures totaled $1.5 billion in 2023, compared with $1.2 billion in 2022 and $1.0 billion in 2021.
−Removed: We expect capital expenditures in 2023 to be higher than in 2022.
−Removed: Financing Activities Cash used by financing activities was $1.3 billion during 2022, compared with $5.6 billion during 2021 and cash provided of $35.0 billion in 2020.
−Removed: The decrease of $4.3 billion compared with 2021 primarily reflects higher net debt repayments in 2021.
−Removed: During 2021, debt repayments net of new borrowings were $5.6 billion, primarily due to $13.8 billion of repayments of our two-year delayed draw term loan credit agreement, partially offset by $9.8 billion of fixed rate senior notes issued in the first quarter of 2021.
−Removed: During the year ended December 31, 2020, new borrowings net of repayments were $36.3 billion, primarily due to $29.9 billion of fixed rate senior notes issued in 2020 and $13.8 billion of new borrowings under a two-year delayed draw term loan agreement entered into in the first quarter of 2020.
−Removed: At December 31, 2022 and 2021 debt balances totaled $57.0 billion and $58.1 billion, of which $5.2 billion and $1.3 billion were classified as short-term.
−Removed: This included $1.4 billion and $1.5 billion of debt attributable to BCC at December 31, 2022 and 2021, of which $0.2 billion and $0.3 billion were classified as short-term.
−Removed: During the years ended December 31, 2022, 2021 and 2020, we did not repurchase any shares through our open market share repurchase program.
−Removed: Share repurchases under this program have been suspended since April 2019.
−Removed: In March 2020, the Board of Directors terminated its prior authorization to repurchase shares of the Company's outstanding common stock in the open market.
+Added: We expect capital expenditures to grow in 2024 compared with 2023.
+Added: Financing Activities Cash used by financing activities was $5.5 billion during 2023, compared with $1.3 billion during 2022, and $5.6 billion in 2021.
+Added: The increase of $4.2 billion compared with 2022 primarily reflects higher net debt repayments in 2023.
+Added: During 2023, debt repayments net of new borrowings were $5.1 billion compared with $1.3 billion in 2022 and $5.6 billion in 2021.
+Added: At December 31, 2023 and 2022 debt balances totaled $52.3 billion and $57.0 billion, of which $5.2 billion were classified as short-term for both periods.
We had 1.7 million, 0.2 million and 0.3 million shares transferred to us from employee tax withholdings in 2023, 2022 and 2021, respectively.
−Removed: In March 2020, we announced the suspension of our dividend until further notice.
−Removed: As a result, we did not pay any dividends in 2022 and 2021 compared with $1.2 billion paid in 2020.
+Added: The increase in 2023 was primarily due to the vesting of a one-time RSU grant awarded to most employees in December 2020.
+Added: In 2020, we announced the suspension of our dividend until further notice.
+Added: As a result, we did not pay any dividends in 2023, 2022 and 2021.
Capital Resources
6 unchanged sentences
Purchase obligations 61,963 79,159 141,122
−Removed: 737 MAX customer concessions and consideration (1)
−Removed: (1) For further discussion, see Note 13 to our Consolidated Financial Statements.
We expect to be able to fund our cash requirements through cash and short-term investments and cash provided by operations, as well as continued access to capital markets.
At December 31, 2023, we had $12.7 billion of cash, $3.3 billion of short-term investments, and $10.0 billion of unused borrowing capacity on revolving credit line agreements.
−Removed: In the third quarter of 2022, we entered into a $5.8 billion 364-day revolving credit agreement expiring in August 2023, a $3 billion three-year revolving credit agreement expiring in August 2025, and amended our $3.2 billion five-year revolving credit agreement, which expires in October 2024, primarily to incorporate a LIBOR successor rate.
−Removed: The 364-day credit facility has a one-year term out option which allows us to extend the maturity of any borrowings one year beyond the aforementioned expiration date.
+Added: In the third quarter of 2023, we entered into a $3.0 billion five-year revolving credit agreement expiring in August 2028 and a $0.8 billion 364-day revolving credit agreement expiring in August 2024.
+Added: The 364-day credit facility has a one-year term out option which allows us to extend the maturity of any borrowings until August 2025.
+Added: The legacy three-year revolving credit agreement expiring in August 2025, which consists of $3.0 billion of total commitments, and the legacy five-year revolving credit agreement expiring in October 2024, as amended, which consists of $3.2 billion of total commitments, each remain in effect.
We anticipate that these credit lines will remain undrawn and primarily serve as back-up liquidity to support our general corporate borrowing needs.
−Removed: Our increased debt balance resulted in downgrades to our credit ratings in 2020, and our ratings remained unchanged in 2022 and 2021.
+Added: Our credit ratings were downgraded in 2020 and remained unchanged as of December 31, 2023.
+Added: During the fourth quarter of 2023, Fitch upgraded our credit rating outlook from stable to positive driven by declining inventory levels, improving production and delivery profile, growing backlog, and forecasted positive free cash flow.
+Added: During the third quarter of 2023, S&P upgraded the outlook on our credit rating from negative to stable primarily driven by improving deliveries and expected increases in production.
+Added: During the first quarter of 2023, Moody's upgraded the outlook on our credit rating from negative to stable primarily driven by an improvement in operating cash flow and a reduction of 737 and 787 aircraft in inventory.
We expect to be able to access capital markets when we require additional funding in order to pay off existing debt, address further impacts to our business related to market developments, fund outstanding financing commitments or meet other business requirements.
1 unchanged sentence
These factors include disruptions or declines in the global capital markets and/or a decline in our financial performance, outlook or credit ratings, and/or associated changes in demand for our products and services.
−Removed: These risks will be particularly acute if we are subject to further credit rating downgrades.
+Added: These risks will be particularly acute if we are subject to further credit rating downgrades such as those we experienced in 2020.
The occurrence of any or all of these events may adversely affect our ability to fund our operations and financing or contractual commitments.
5 unchanged sentences
Estimates of other postretirement benefits are based on both our estimated future benefit payments and the estimated contributions to plans that are funded through trusts.
−Removed: At December 31, 2022 and 2021, our pension plans were $5.3 billion and $7.8 billion underfunded as measured under Generally Accepted Accounting Principles in the United States of America (GAAP).
+Added: At December 31, 2023 and 2022, our pension plans were $5.4 billion and $5.3 billion underfunded as measured under U.S.
+Added: generally accepted accounting principles (GAAP).
On an ERISA basis, our plans are more than 100% funded at December 31, 2023.
1 unchanged sentence
We may be required to make higher contributions to our pension plans in future years.
−Removed: In the fourth quarter of 2020, we contributed $3 billion of our common stock to our pension fund.
−Removed: In the fourth quarter of 2020, we also began using our common stock in lieu of cash to fund Company contributions to our 401(k) plans for the foreseeable future.
−Removed: Under this approach, common stock is contributed to our 401(k) plans following each pay period.
−Removed: This further enables the Company to conserve cash.
−Removed: We have retained an independent fiduciary to manage and liquidate stock contributed to these plans at its discretion.
+Added: For the foreseeable future, we are using common stock in lieu of cash to fund Company contributions to our 401(k) plans.
Purchase Obligations Purchase obligations represent contractual agreements to purchase goods or services that are legally binding;
3 unchanged sentences
Purchase obligations include amounts recorded as well as amounts that are not recorded on the Consolidated Statements of Financial Position.
−Removed: Purchase obligations not recorded on the Consolidated Statements of Financial Position include agreements for inventory procurement, tooling costs, electricity and natural gas contracts, property, plant and equipment, customer financing equipment and other miscellaneous production related obligations.
+Added: Purchase obligations not recorded on the Consolidated Statements of Financial Position include agreements for inventory procurement, tooling costs, electricity and natural gas contracts, property, plant and equipment, information technology software and hardware, and other miscellaneous production related obligations.
The most significant obligation relates to inventory procurement contracts.
11 unchanged sentences
These commitments may be satisfied by our local operations there, placement of direct work or vendor orders for supplies, opportunities to bid on supply contracts, transfer of technology or other forms of assistance.
−Removed: However, in certain cases, our commitments may be satisfied through other parties (such as our vendors) who purchase supplies from our non-U.S.
+Added: However, in some instances, our commitments may be satisfied through other parties (such as our vendors) who purchase supplies from our non-U.S.
In certain cases, penalties could be imposed if we do not meet our industrial participation commitments.
During 2023, we incurred no such penalties.
−Removed: As of December 31, 2022, we had outstanding industrial participation agreements
−Removed: totaling $24.8 billion that extend through 2034.
+Added: As of December 31, 2023, we had outstanding industrial participation agreements totaling $24.5 billion that extend through 2034.
Purchase order commitments associated with industrial participation agreements are included in purchase obligations.
26 unchanged sentences
Non-GAAP Measures
−Removed: Core Operating Loss, Core Operating Margin and Core Loss Per Share
+Added: Core Operating Earnings/(Loss), Core Operating Margin and Core Earnings/(Loss) Per Share
Our Consolidated Financial Statements are prepared in accordance with GAAP which we supplement with certain non-GAAP financial information.
1 unchanged sentence
We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
−Removed: Core operating earnings, core operating margin and core earnings per share exclude the FAS/CAS service cost adjustment.
−Removed: CAS service cost adjustment represents the difference between the Financial Accounting Standards (FAS) pension and postretirement service costs calculated under GAAP and costs allocated to the business segments.
−Removed: Core earnings per share excludes both the FAS/CAS service cost adjustment and non-operating pension and postretirement expenses.
+Added: Core operating earnings/(loss), core operating margin and core earnings/(loss) per share exclude the FAS/CAS service cost adjustment.
+Added: The FAS/CAS service cost adjustment represents the difference between the Financial Accounting Standards (FAS) pension and postretirement service costs calculated under GAAP and costs allocated to the business segments.
+Added: Core earnings/(loss) per share excludes both the FAS/CAS service cost adjustment and non-operating pension and postretirement expenses.
Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost.
1 unchanged sentence
Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S.
−Removed: Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP.
+Added: Government Cost Accounting Standards (CAS), which employ different actuarial
+Added: assumptions and accounting conventions than GAAP.
CAS costs are allocable to government contracts.
3 unchanged sentences
The non-operating pension expense included in Other income, net was a benefit of $529 million in 2023, $881 million in 2022 and $528 million in 2021.
+Added: The lower benefits in 2023 were primarily due to higher interest cost and lower expected return on plan assets, offset by lower amortization of net actuarial losses.
The higher benefits in 2022 were primarily due to lower amortization of net actuarial losses and a settlement loss that was recorded in 2021.
For further discussion of pension and other postretirement costs, see the Management’s Discussion and Analysis on page 26 of this Form 10-K and see Note 22 to our Consolidated Financial Statements.
−Removed: Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance.
+Added: Management uses core operating earnings/(loss), core operating margin and core earnings/(loss) per share for purposes of evaluating and forecasting underlying business performance.
Management believes these core earnings measures provide investors additional insights into operational performance as unallocated pension and other postretirement benefit cost primarily represent costs driven by market factors and costs not allocable to U.S.
1 unchanged sentence
Reconciliation of Non-GAAP Measures to GAAP Measures
−Removed: The table below reconciles the non-GAAP financial measures of core operating loss, core operating margins and core loss per share with the most directly comparable GAAP financial measures of loss from operations, operating margins and diluted loss per share.
+Added: The table below reconciles the non-GAAP financial measures of core operating earnings/(loss), core operating margins and core earnings/(loss) per share with the most directly comparable GAAP financial measures of Earnings/(loss) from operations, operating margins and Diluted earnings/(loss) per share.
(Dollars in millions, except per share data)
20 unchanged sentences
Non-operating postretirement expense (2)
+Added: (0.10) (0.10)
Provision for deferred income taxes on adjustments (3)
8 unchanged sentences
corporate statutory tax rate.
−Removed: Critical Accounting Policies & Estimates
+Added: Critical Accounting Estimates
Accounting for Long-term Contracts
1 unchanged sentence
Our long-term contracts typically represent a single distinct performance obligation due to the highly interdependent and interrelated nature of the underlying goods and/or services and the significant service of integration that we provide.
−Removed: Accounting for long-term contracts involves a judgmental process of estimating the total sales, costs, and profit for each performance obligation.
+Added: Accounting for long-term contracts involves a judgmental process of estimating the total revenue, costs, and profit for each performance obligation.
Cost of sales is recognized as incurred, and revenue is determined by adding a proportionate amount of the estimated profit to the amount reported as cost of sales.
−Removed: Due to the size, duration and nature of many of our long-term contracts, the estimation of total sales and costs through completion is complicated and subject to many variables.
−Removed: Total sales estimates are based on negotiated contract prices and quantities, modified by our assumptions regarding contract options, change orders, incentive and award provisions associated with technical performance, and price adjustment clauses (such as inflation or index-based clauses).
+Added: Due to the size, duration and nature of many of our long-term contracts, the estimation of total revenues and costs through completion is complicated and subject to many variables.
+Added: Total revenue estimates are based on negotiated contract prices and quantities, modified by our assumptions regarding contract options, change orders, incentive and award fee provisions associated with technical performance, and price adjustment clauses (such as inflation or index-based clauses).
The majority of these long-term contracts are with the U.S.
−Removed: government where the price is generally based on estimated cost to produce the product or service plus profit.
+Added: government where the price is generally based on the estimated cost to produce the product or service plus profit.
Federal Acquisition Regulations provide guidance on the types of cost that will be reimbursed in establishing contract price.
Total cost estimates are largely based on negotiated or estimated purchase contract terms, historical performance trends, business base and other economic projections.
−Removed: Factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, asset utilization, anticipated labor agreements, and lingering impacts of COVID-19.
+Added: Factors that influence these estimates include inflationary trends, technical and schedule risk, internal and supplier performance trends, production quality, labor instability, global supply chain constraints, business volume assumptions, asset utilization, and anticipated labor agreements.
Revenue and cost estimates for all significant long-term contract performance obligations are reviewed and reassessed quarterly.
−Removed: Changes in these estimates could result in recognition of cumulative catch-up adjustments to the performance obligation’s inception to date revenues, cost of sales and profit in the period in which such changes are made.
+Added: Changes in these estimates could result in recognition of cumulative catch-up adjustments to the contract’s inception to date revenues, cost of sales and profit in the period in which such changes are made.
Changes in revenue and cost estimates could also result in a reach-forward loss or an adjustment to a reach-forward loss which would be recorded immediately in earnings.
−Removed: Net cumulative catch-up adjustments for changes in estimated revenues and costs at completion across all long-term contracts, including the impact of increases in estimated losses on unexercised options, increased Loss from operations by $5,253 million, $880 million and $942 million in 2022, 2021 and 2020, respectively.
−Removed: The cumulative catch-up adjustments in 2022 were primarily due to losses recognized on the VC-25B, KC-46A Tanker, MQ-25, Commercial Crew and T-7A Red Hawk programs.
+Added: Net cumulative catch-up adjustments for changes in estimated revenues and costs at completion across all long-term contracts, including the impact of estimated losses on unexercised options, increased Loss from operations by $2,943 million, $5,253 million and $880 million in 2023, 2022 and 2021, respectively, and were primarily due to losses recognized on the VC-25B, KC-46A Tanker, Commercial Crew, T-7A Red Hawk and MQ-25 programs.
These are all fixed-price development programs, and there is ongoing risk that similar losses may have to be recognized in future periods on these and/or other programs.
7 unchanged sentences
The determination of the accounting quantity is limited by the ability to make reasonably dependable estimates.
−Removed: Factors that must be estimated include program accounting quantity, sales price, labor and employee benefit costs, material costs, procured part costs, major component costs, overhead costs, program tooling and other non-recurring costs, and warranty costs.
+Added: Factors that must be estimated include program accounting quantity, sales price, production rates, labor and employee benefit costs, material costs, procured part costs, major component costs, overhead costs, program tooling and other non-recurring costs, and warranty costs.
Estimation of the accounting quantity for each program takes into account several factors that are indicative of the demand for the particular program, such as firm orders, letters of intent from prospective customers and market studies.
2 unchanged sentences
Cost estimates are based largely on negotiated and anticipated contracts with suppliers, historical performance trends, and business base and other economic projections.
−Removed: Factors that influence these estimates include production rates, internal and subcontractor performance trends, learning curve, change incorporation, regulatory requirements in connection with certification, flight test and certification schedules, performance or reliability issues involving completed aircraft, customer and/or supplier claims or assertions, asset utilization, anticipated labor agreements, inflationary or deflationary trends, and lingering impacts of COVID-19.
+Added: Factors that influence these estimates include production rates, internal and supplier performance trends, production quality, labor instability, global supply chain constraints, learning curve, change incorporation, rework or safety enhancements, regulatory requirements, flight test and certification requirements and schedules, performance or reliability issues involving completed aircraft, customer and/or supplier claims or assertions, asset utilization, anticipated labor agreements, and inflationary or deflationary trends.
+Added: The introduction of new aircraft and derivatives, such as the 777X, 737-7 and 737-10, involves increased risks associated with meeting development, certification, and production schedules.
+Added: These challenges include significant global regulatory scrutiny of all development aircraft.
+Added: As a result, our ability to deliver aircraft on time, satisfy performance and reliability standards and achieve or maintain, as applicable, program profitability is subject to significant risks.
To ensure reliability in our estimates, we employ a rigorous estimating process that is reviewed and updated on a quarterly basis.
5 unchanged sentences
Adverse changes to the revenue and/or cost estimates for these programs could result in earnings charges in future periods.
−Removed: 777X Program The 777X program had near break-even gross margins at December 31, 2022.
−Removed: The level of profitability on the 777X program will be subject to a number of factors.
−Removed: These factors include continued production disruption due to labor instability and supply chain disruption, customer negotiations, further production rate adjustments for the 777X or other commercial aircraft programs, contraction of the accounting quantity and potential risks associated with the testing program and the timing of aircraft certification.
−Removed: One or more of these factors could result in additional reach-forward losses on the 777X program in future periods, which may be material.
−Removed: 787 Program During the fourth quarter of 2021, we recorded a loss of $3.5 billion on the 787 program primarily due to rework driving longer delivery delays than were previously expected and associated customer considerations.
−Removed: During the fourth quarter of 2022, we increased the 787 program accounting quantity by 100 units due to the program’s normal progress of obtaining additional orders and delivering aircraft.
−Removed: The increase in the accounting quantity improved the program’s profit margin.
−Removed: Our program revenue and cost assumptions reflect our current best estimate.
−Removed: However, if we are required to reduce the accounting quantity and/or production rates, experience further delivery delays, incur additional customer considerations, or experience other factors that result in lower margins, the 787 program could record additional losses in future periods, which may be material.
+Added: Due to the significance of judgment in the estimation process described above, it is reasonably possible that changes in underlying circumstances or assumptions could have a material effect on program gross margins.
+Added: If the combined gross margin percentages for our commercial airplane programs had been estimated to be 1% higher or lower it would have an approximately $330 million impact on operating earnings for the year ended December 31, 2023.
Pension Plans
2 unchanged sentences
Accounting rules require an annual measurement of our projected obligation and plan assets.
−Removed: These measurements are based upon several assumptions, including the discount rate and the expected long-term rate of asset return.
+Added: These measurements are based upon several assumptions.
Future changes in assumptions or differences between actual and expected outcomes can significantly affect our future annual expense, projected benefit obligation and Shareholders’ equity.
19 unchanged sentences
Deferred tax assets include amounts related to pension and other postretirement benefits that are assumed to generate significant deductible amounts beyond five years.
−Removed: The Company’s valuation allowance of $3,162 million at December 31, 2022 primarily relates to pension and other postretirement benefit obligation deferred tax assets, tax credits and other carryforwards that are assumed to reverse beyond the period in which reversals of deferred tax liabilities are assumed to occur.
−Removed: During 2022, the Company increased the valuation allowance by $739 million primarily due to tax credits and other carryforwards generated in 2022 that
−Removed: cannot be realized in 2022, partially offset by favorable pension remeasurement.
+Added: The Company’s valuation allowance of $4,550 million at December 31, 2023 primarily relates to pension and other postretirement benefit obligation deferred tax assets, tax net operating losses, tax credits and interest carryforwards that are assumed to reverse beyond the period in which reversals of deferred tax liabilities are assumed to occur.
+Added: During 2023, the Company increased the valuation allowance by $1,388 million primarily due to tax credits and other carryforwards generated in 2023 that cannot be realized in 2023.
Until the Company generates sustained levels of profitability, additional valuation allowances may have to be recorded with corresponding adverse impacts on earnings and/or other comprehensive income.
1 unchanged sentence
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.