What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-23 compared with 2024-07-31 · 180 added, 167 removed, 330 unchanged (51% of the section changed)

5 unchanged sentences

All 737-9 aircraft in production are undergoing this same enhanced inspection process prior to delivery.

The Alaska Airlines accident and the resulting actions we are taking, including slowing production, to improve compliance with our manufacturing quality control requirements have significantly impacted our financial position, results of operations and cash flows during the first half of 2024.

Additionally, the ongoing work stoppage initiated on September 13, 2024, by the International Association of Machinists and Aerospace Workers District 751 (IAM 751) has paused production of certain commercial aircraft models (737, 767, 777 and 777X aircraft) as well as production of commercial derivative aircraft for our Defense, Space & Security business (KC-46A Tanker and P-8A Poseidon).

The IAM 751 work stoppage is also significantly reducing aircraft deliveries and adversely impacting our financial position, results of operations and cash flows.

See Note 1 to our Condensed Consolidated Financial Statements.

Consolidated Results of Operations and Financial Condition

1 unchanged sentence

The following table summarizes key indicators of consolidated results of operations:

(Dollars in millions, except per share data) Six months ended June 30 Three months ended June 30

(Dollars in millions, except per share data) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

11 unchanged sentences

The following table summarizes Revenues:

(Dollars in millions) Six months ended June 30 Three months ended June 30

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

4 unchanged sentences

Total $51,275 $55,776 $17,840 $18,104

Revenues for the six months ended June 30, 2024, decreased by $4,237 million compared with the same period in 2023 driven by lower revenues at Commercial Airplanes (BCA), partially offset by higher revenues at Global Services (BGS) and Defense, Space & Security (BDS).

BCA revenues decreased by $4,888 million primarily driven by lower 737 and 787 deliveries and 737-9 customer considerations related to the January 2024 grounding.

Revenues for the nine months ended September 30, 2024, decreased by $4,501 million compared with the same period in 2023 driven by lower revenues at Commercial Airplanes (BCA), partially offset by higher revenues at Global Services (BGS) and Defense, Space & Security (BDS).

BCA revenues decreased by $5,321 million primarily driven by lower deliveries across all programs and 737-9 customer considerations related to the January 2024 grounding.

BGS revenues increased by $557 million primarily due to higher commercial services revenue, partially offset by lower government services revenue.

BDS revenues increased by $320 million primarily due to higher volume on weapons and proprietary programs, partially offset by higher net unfavorable cumulative catch-up adjustments on major fixed-price development programs.

Revenues for the three months ended June 30, 2024, decreased by $2,885 million compared with the same period in 2023 driven by lower revenues at BCA and BDS, partially offset by higher revenues at BGS.

BCA revenues decreased by $2,837 million primarily driven by lower 787 and 737 deliveries.

BDS revenues decreased by $146 million compared with the same period in 2023 primarily driven by higher unfavorable cumulative contract catch-up adjustments on certain major fixed-price development programs, partially offset by increased volume on weapons and proprietary programs.

BGS revenues increased by $143 million primarily due to higher commercial services revenue, partially offset by lower government services revenue.

Revenues for the three months ended September 30, 2024, decreased by $264 million compared with the same period in 2023 driven by lower revenues at BCA, partially offset by higher revenues at BGS and BDS.

BCA revenues decreased by $433 million primarily driven by lower 777 and 787 deliveries, partially offset by higher 737 deliveries.

BGS revenues increased by $89 million primarily due to higher commercial services revenue.

BDS revenues increased by $55 million compared with the same period in 2023 primarily driven by higher volume on weapons and proprietary programs, offset by higher net unfavorable cumulative contract catch-up adjustments on major fixed-price development programs.

Revenues will continue to be significantly impacted until the global supply chain stabilizes, labor instability diminishes, and deliveries ramp up.

1 unchanged sentence

The following table summarizes Loss from operations:

(Dollars in millions) Six months ended June 30 Three months ended June 30

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

11 unchanged sentences

($7,769) ($1,919) ($5,989) ($1,089)

* 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.

* 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.

** Core operating loss is a Non-GAAP measure that excludes the FAS/CAS service cost adjustment.

See pages 55-56.

Loss from operations for the six months ended June 30, 2024, increased by $928 million compared with the same period in 2023.

BCA loss from operations increased by $860 million reflecting lower deliveries, lower margins driven by production disruption, and 737-9 customer considerations related to the January 2024 grounding, partially offset by lower abnormal production costs.

BDS loss from operations increased by $23 million compared to the same period in 2023 primarily due to higher charges in 2024 on certain major fixed-price development programs, partially offset by volume growth in 2024 and lower unfavorable cumulative contract catch-up adjustments on other programs.

Loss from operations for the nine months ended September 30, 2024, increased by $5,881 million compared with the same period in 2023.

BCA loss from operations increased by $4,203 million reflecting reach-forward losses on 777X and 767, lower deliveries, lower margins driven by production disruption including the IAM 751 work stoppage, 737-9 customer considerations related to the January 2024 grounding and higher research and development expense, partially offset by lower abnormal production costs.

BDS loss from operations increased by $1,483 million compared to the same period in 2023 primarily due to higher charges in 2024 on certain major fixed-price development programs, partially offset by less unfavorable cumulative contract catch-up adjustments on satellite and fighter programs, higher revenues from weapons and proprietary programs, and lower period expenses.

BGS earnings from operations increased by $133 million primarily due to higher commercial services revenue, partially offset by lower government services revenue.

Loss from operations on Unallocated items, eliminations and other increased by $150 million compared with the same period in 2023 primarily due to an increase in eliminations and other unallocated items, partially offset by a decrease in share-based plans expense.

Loss from operations for the three months ended June 30, 2024, increased by $991 million compared with the same period in 2023.

Loss from operations on Unallocated items, eliminations and other increased by $297 million compared with the same period in 2023 primarily due to an increase in eliminations and other unallocated items and higher research and development expense, partially offset by a decrease in share-based plans expense.

Loss from operations for the three months ended September 30, 2024, increased by $4,953 million compared with the same period in 2023.

BCA loss from operations increased by $3,343 million reflecting reach-forward losses on 777X and 767, lower margins driven by production disruption including the IAM 751 work stoppage, and higher research and development expense, partially offset by lower abnormal production costs.

BDS loss from operations increased by $1,460 million compared to the same period in 2023 primarily due to an increase in unfavorable cumulative contract catch-up adjustments driven by higher charges in 2024 on certain major fixed-price development programs.

BCA loss from operations increased by $332 million reflecting lower deliveries and lower margins driven by production disruption, partially offset by lower abnormal production costs.

BGS earnings from operations increased by $14 million primarily due to higher commercial services revenue, partially offset by lower government services revenue.

BGS earnings from operations increased by $50 million primarily due to higher commercial services revenue.

Loss from operations on Unallocated items, eliminations and other increased by $147 million compared with the same period in 2023 primarily due to an increase in eliminations and other unallocated items.

Core operating loss for the six and three months ended June 30, 2024, increased by $950 million and $1,002 million compared with the same periods in 2023, primarily due to changes in Loss from operations as described above.

Core operating loss for the nine and three months ended September 30, 2024, increased by $5,850 million and $4,900 million compared with the same periods in 2023, primarily due to changes in Loss from operations as described above.

For information related to Postretirement Plans, see Note 13 to our Condensed Consolidated Financial Statements.

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) Six months ended June 30 Three months ended June 30

The most significant items included in Unallocated items, eliminations and other income/(expense) are shown in the following table:

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

5 unchanged sentences

Unallocated items, eliminations and other ($1,364) ($1,067) ($418) ($271)

Share-based plans income for the six and three months ended June 30, 2024, was $53 million and $43 million compared to share-based plans expense of $38 million and income of $14 million for the same periods in 2023.

The increase in share-based plans income for the six and three months ended June 30, 2024 compared with the same periods in 2023 was primarily due to fewer outstanding share-based awards in 2024.

Deferred compensation expense for the six months ended June 30, 2024, decreased by $47 million compared with the same period in 2023 primarily driven by changes in our stock price.

Deferred compensation expense for the three months ended June 30, 2024, decreased by $23 million compared with the same period in 2023 primarily driven by changes in broad stock market conditions.

Research and development expense for the six and three months ended June 30, 2024, increased by $39 million and $26 million compared with the same periods in 2023 due to higher spending on enterprise product development.

Eliminations and other unallocated items expense for the six and three months ended June 30, 2024, includes an earnings charge of $244 million that reflects a fine that would be paid if an agreement with the U.S.

Share-based plans income for the nine and three months ended September 30, 2024, was $118 million and $65 million compared to share-based plans expense of $33 million and income of $5 million for the same periods in 2023.

The increase in share-based plans income for the nine and three months ended September 30, 2024 compared with the same periods in 2023 was primarily due to fewer outstanding share-based awards in 2024.

Deferred compensation expense for the nine months ended September 30, 2024, increased by $29 million compared with the same period in 2023 driven by changes in broad stock market conditions, partially offset by changes in our stock price.

Deferred compensation expense for the three months ended September 30, 2024, decreased by $76 million compared with the same period in 2023 primarily driven by changes in broad stock market conditions.

Research and development expense for the nine and three months ended September 30, 2024, increased by $71 million and $32 million compared with the same periods in 2023 due to higher spending on enterprise product development.

Eliminations and other unallocated items expense for the nine and three months ended September 30, 2024, increased by $349 million and $99 million compared with the same periods in 2023.

The increase during the year includes a second quarter earnings charge of $244 million that reflects a fine that would be paid if an agreement with the U.S.

Department of Justice is approved by the federal district court.

1 unchanged sentence

Other Earnings Items

(Dollars in millions) Six months ended June 30 Three months ended June 30

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

3 unchanged sentences

Loss before income taxes (8,117) (1,996) (6,224) (1,100)

Income tax benefit 99 322 76 251

Income tax benefit/(expense) 149 (216) 50 (538)

Net loss from continuing operations (7,968) (2,212) (6,174) (1,638)

1 unchanged sentence

Net loss attributable to Boeing Shareholders ($7,952) ($2,199) ($6,170) ($1,636)

Other income, net for the six and three months ended June 30, 2024, decreased by $97 million and $72 million compared with the same periods in 2023 primarily due to a decrease in interest income on short-term investments and non-operating pension income.

Other income, net for the nine and three months ended September 30, 2024, decreased by $129 million and $32 million compared with the same periods in 2023, primarily due to a decrease in interest income on short-term investments and non-operating pension income.

For information on changes related to non-operating pension and postretirement expenses, see Note 13 to our Condensed Consolidated Financial Statements.

Interest and debt expense for the six and three months ended June 30, 2024, decreased by $28 million and increased by $52 million compared with the same periods in the prior year.

For additional discussion related to Income Taxes, see Note 4 to our Condensed Consolidated Financial Statements.

Interest and debt expense for the nine and three months ended September 30, 2024, increased by $111 million and $139 million compared with the same periods in the prior year primarily as a result of higher debt balances.

For a discussion related to Income Taxes, see Note 4 to our Condensed Consolidated Financial Statements.

Total Costs and Expenses (“Cost of Sales”)

8 unchanged sentences

The following table summarizes cost of sales:

(Dollars in millions) Six months ended June 30 Three months ended June 30

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2024 2023 Change 2024 2023 Change

2 unchanged sentences

100.8 % 91.0 % 9.8 % 119.7 % 93.6 % 26.1 %

Cost of sales for the six months ended June 30, 2024, decreased by $3,480 million, or 10%, compared with the same period in 2023, primarily due to lower revenues at BCA.

Cost of sales as a percentage of Revenues remained largely unchanged during the six months ended June 30, 2024, compared with the same period in 2023.

Cost of sales for the three months ended June 30, 2024, decreased by $2,175 million, or 12%, compared with the same period in 2023, primarily due to lower revenues at BCA.

Cost of sales as a percentage of Revenues increased during the three months ended June 30, 2024, compared with the same period in 2023 primarily due to higher charges on BDS fixed-price development programs and lower margins at BCA.

Cost of sales for the nine months ended September 30, 2024, increased by $928 million, or 2%, compared with the same period in 2023, primarily due to the reach-forward losses on the 777X and 767 programs and higher charges on the BDS fixed-price development programs, partially offset by lower revenues at BCA.

Cost of sales as a percentage of Revenues increased during the nine months ended September 30, 2024, compared with the same period in 2023, primarily due to the reach-forward losses on the 777X and 767 programs, lower margins at BCA, and higher charges on BDS fixed-price development programs.

Cost of sales for the three months ended September 30, 2024, increased by $4,408 million, or 26%, compared with the same period in 2023, primarily due to the reach-forward losses on the 777X and 767 programs and higher charges on the BDS fixed-price development programs, partially offset by lower revenues at BCA.

Cost of sales as a percentage of Revenues increased during the three months ended September 30, 2024, compared with the same period in 2023 primarily due to the reach-forward losses on the 777X and 767 program, lower margins at BCA, and higher charges on BDS fixed-price development programs.

Research and Development

Research and development expense, net is summarized in the following table:

(Dollars in millions) Six months ended June 30 Three months ended June 30

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

4 unchanged sentences

Total $2,976 $2,496 $1,154 $958

Research and development expense increased by $284 million and $157 million during the six and three months ended June 30, 2024, compared to the same periods in 2023.

The increase in expense was primarily due to higher spending on the 777X program at BCA.

(Dollars in millions) June 30

Research and development expense increased by $480 million and $196 million during the nine and three months ended September 30, 2024, compared to the same periods in 2023.

The increase in expense was primarily due to the 777X program at BCA.

(Dollars in millions) September 30

2024 December 31

9 unchanged sentences

government contract funding.

The decrease in contractual backlog during the six months ended June 30, 2024, was primarily due to a decrease in BCA backlog.

We may experience reductions to backlog and/or significant order cancellations due to production disruptions and/or further delays to entry into service of the 777X, 737-7 and/or 737-10.

The decrease in contractual backlog during the nine months ended September 30, 2024, was primarily due to a decrease in BCA backlog.

We may experience reductions to backlog and/or significant order cancellations due to various factors including delivery delays, production disruptions and delays to entry into service of the 777X, 737-7 and/or 737-10.

Unobligated backlog includes U.S.

government definitive contracts for which funding has not been authorized.

Unobligated backlog was largely unchanged during the six months ended June 30, 2024.

The decrease in unobligated backlog during the nine months ended September 30, 2024, was primarily due to reclassifications to contractual backlog at BDS.

Additional Considerations

Government Funding The Continuing Resolution (CR) passed on September 25, 2024, continues federal funding at fiscal year 2024 appropriated levels through December 20, 2024.

Congress and the President must enact either full-year fiscal year 2025 (FY25) appropriations bills or an additional CR to fund government departments and agencies after December 20, 2024, or a government shutdown could result.

We rely on the U.S.

government in various aspects of our defense, commercial, and services businesses.

In the event of a shutdown, requirements to furlough employees in the U.S.

Department of Defense (U.S.

DoD), the Department of Transportation, including the FAA, or other government agencies could result in payment delays, impair our ability to perform work on existing contracts or otherwise impact our operations, negatively impact future orders, and/or cause other disruptions or delays.

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.

The current state of U.S.-China relations remains an ongoing watch item.

Since 2018, the U.S.

and China have imposed tariffs on each other’s imports.

Certain aircraft parts and components that Boeing procures are subject to these tariffs.

We are mitigating import costs through Duty Drawback Customs procedures.

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 .

Beginning in June 2018, the U.S.

Government imposed tariffs on steel and aluminum imports.

In response to these tariffs, several major U.S.

trading partners have imposed, or announced their intention to impose, tariffs on U.S.

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.

We are complying with all U.S.

and other government export control restrictions and sanctions imposed on certain businesses and individuals in Russia.

and other government export control restrictions and sanctions.

We continue to monitor and evaluate additional sanctions and export restrictions that may be imposed by the U.S.

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.

Supply Chain We and our suppliers are experiencing supply chain disruptions as a result of global supply chain constraints and labor instability.

We and our suppliers are also experiencing inflationary pressures.

Government or other governments, as well as any responses that could affect our supply chain, business partners or customers, for any additional impacts to our business.

Supply Chain We and our suppliers are experiencing inflationary pressures, as well as supply chain disruptions as a result of global supply chain constraints and labor instability.

Certain of our suppliers are also experiencing financial difficulties.

We continue to monitor quality and safety as well as 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.

These factors have reduced overall productivity, disrupted our operations and adversely impacted our financial position, results of operations and cash flows.

During the third quarter of 2024, we recorded a reach-forward loss of $ 908 million on the T-7A Red Hawk program that was primarily driven by projected increases in supplier cost estimates.

In addition, we recorded losses on the KC-46A Tanker and Commercial Crew programs that were partially attributable to higher supplier costs.

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.

3 unchanged sentences

Results of Operations

(Dollars in millions) Six months ended June 30 Three months ended June 30

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

2 unchanged sentences

Operating margins (32.5)% (7.2)% (54.0) % (8.6) %

BCA revenues decreased by $4,888 million for the six months ended June 30, 2024, compared with the same period in 2023 driven by lower 737 and 787 deliveries and 737-9 customer considerations related to the January 2024 grounding.

BCA revenues decreased by $2,837 million for the three months ended June 30, 2024, compared with the same period in 2023 driven by lower 787 and 737 deliveries.

BCA revenues decreased by $5,321 million for the nine months ended September 30, 2024, compared with the same period in 2023 driven by lower deliveries across all programs and 737-9 customer considerations related to the January 2024 grounding.

BCA revenues decreased by $433 million for the three months ended September 30, 2024, compared with the same period in 2023 driven by lower 777 and 787 deliveries, partially offset by higher 737 deliveries.

Commercial airplane deliveries, including intercompany deliveries, were as follows:

737 * 747 767 * 777 787 Total

Deliveries during the first six months of 2024 137 (2) 9 (5) 7 22 175

Deliveries during the first six months of 2023 216 (5) 1 9 (1) 9 31 266

Deliveries during the second quarter of 2024 70 (1) 6 (3) 7 9 92

Deliveries during the second quarter of 2023 103 (3) 8 (1) 5 20 136

Deliveries during the first nine months of 2024 229 (4) 15 (7) 11 36 291

Deliveries during the first nine months of 2023 286 (6) 1 17 (6) 17 50 371

Deliveries during the third quarter of 2024 92 (2) 6 (2) 4 14 116

Deliveries during the third quarter of 2023 70 (1) 8 (5) 8 19 105

Cumulative deliveries as of 9/30/2024 8,757 1,573 1,318 1,738 1,146

2 unchanged sentences

Loss From Operations

BCA loss from operations was $ 1,858 million for the six months ended June 30, 2024, compared with $ 998 million in the same period in 2023 reflecting lower deliveries, lower margins driven by production disruption, and 737-9 customer considerations related to the January 2024 grounding, partially offset by lower abnormal production costs.

BCA loss from operations was $ 715 million for the three months ended June 30, 2024, compared with $ 383 million in the same period in 2023 reflecting lower deliveries and lower margins driven by production disruption, partially offset by lower abnormal production costs.

BCA loss from operations was $ 5,879 million for the nine months ended September 30, 2024, compared with $ 1,676 million in the same period in 2023 reflecting reach-forward losses on 777X and 767, lower deliveries, lower margins driven by production disruption including the IAM 751 work stoppage, 737-9 customer considerations related to the January 2024 grounding and higher research and development expense, partially offset by lower abnormal production costs.

BCA loss from operations was $ 4,021 million for the three months ended September 30, 2024, compared with $ 678 million in the same period in 2023 reflecting reach-forward losses on 777X and 767, lower margins driven by production disruption including the IAM 751 work stoppage, and higher research and development expense, partially offset by lower abnormal production costs.

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.

2 unchanged sentences

Backlog excludes options and 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.

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.

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.

BCA total backlog decreased from $440,507 million as of December 31, 2023, to $436,574 million at June 30, 2024 reflecting 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 and cancellations, partially offset by new orders in excess of deliveries.

Aircraft order cancellations during the six months ended June 30, 2024 totaled $2,400 million and primarily relate to 737 aircraft.

Net ASC 606 adjustments during the six months ended June 30, 2024 totaled $4,784 million and primarily related to 737 aircraft.

BCA total backlog decreased from $440,507 million as of December 31, 2023, to $427,733 million at September 30, 2024, reflecting 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 and cancellations, partially offset by new orders in excess of deliveries.

Aircraft order cancellations during the nine months ended September 30, 2024, totaled $2,692 million and primarily relate to 737 aircraft.

Net ASC 606 adjustments during the nine months ended September 30, 2024, totaled $15,642 million and primarily related to 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.

We may experience reductions to backlog and/or significant order cancellations due to production disruptions and/or further delays to entry into service of the 777X, 737-7 and/or 737-10.

Accounting Quantity

23 unchanged sentences

(Spirit) on February 28, 2024.

The FAA found multiple instances where the companies

failed to comply with manufacturing quality control requirements and provided 90 days from March 1, 2024, to submit a corrective action plan.

The FAA found multiple instances where the companies failed to comply with manufacturing quality control requirements and provided 90 days from March 1, 2024, to submit a corrective action plan.

On May 30, 2024, we submitted our safety and quality plan to address the issues identified by the FAA.

1 unchanged sentence

Prior to the Alaska Airlines accident, we were operating at a production rate of 38 per month.

During the first half of 2024, as part of our plan to address the issues identified, we slowed production rates and delayed planned production rate increases to reduce traveled work in our factory, as well as at our suppliers.

During the nine months ended September 30, 2024, as part of our plan to address the issues identified, we slowed production rates and delayed planned production rate increases to reduce traveled work in our factory, as well as at our suppliers.

During the first quarter of 2024, we began conducting fuselage inspections at Spirit to improve quality prior to shipment to Boeing.

In the second quarter of 2024, production rates gradually increased as we implemented new processes as part of our safety and quality plan.

We are working to return to 38 per month by the end of 2024.

As of June 30, 2024, we had approximately 90 737-8 aircraft in inventory that were produced prior to 2023, including approximately 65 aircraft for customers in China.

We expect to deliver most of the aircraft in inventory by the end of 2024.

In the third quarter of 2024, we continued to gradually increase production aligned with our safety and quality plan.

However, production has been paused since September 13, 2024, as a result of the ongoing work stoppage initiated by IAM 751.

Prior to the work stoppage, we were working toward a production rate of 38 per month by the end of 2024, which we now expect to be delayed by the work stoppage.

As of September 30, 2024, we had approximately 60 737-8 aircraft in inventory that were produced prior to 2023, including approximately 45 aircraft for customers in China.

Deliveries are being impacted by the work stoppage.

We are following the lead of the FAA as we work through the certification process of the 737-7 and 737-10 models.

During the first quarter of 2024, the program completed the first phase of FAA certification flight testing for the 737-10.

As of June 30, 2024, we had approximately 35 737-7 and 737-10 aircraft in inventory.

We are planning to incorporate engineering solutions to the de-icing systems on the 737-7 and 737-10 prior to certification, which has delayed certification and first deliveries.

The production slow-down and certification delays had an adverse impact on our financial position, results of operations and cash flows during the first half of 2024.

This is expected to continue until production rates recover.

In the event that we are unable to deliver aircraft and/or increase future production rates consistent with our assumptions, our financial position, results of operations and cash flows will continue to be adversely affected.

As of September 30, 2024, we had approximately 35 737-7 and 737-10 aircraft in inventory.

We are planning to incorporate engineering solutions to the anti-icing systems on the 737-7 and 737-10 prior to certification, which has delayed certification and first deliveries.

See further discussion of the 737 MAX in Note 10 and Note 18 to our Condensed Consolidated Financial Statements .

767 Program The 767 assembly line includes the commercial program and a derivative to support the KC-46A Tanker program.

The commercial program has near break-even gross margins.

We are currently at a production rate of approximately 3 aircraft per month.

1 unchanged sentence

We have slowed production in 2024 to reduce traveled work in our factory and enable supply chain recovery, resulting in higher near-term production costs.

We expect to end production of the 767 freighter program in 2027.

As a result of this decision, the accounting quantity for the 767 program was decreased by 9 units during the three months ended September 30, 2024.

Impacts of this decision, as well as the ongoing IAM 751 work stoppage and contract negotiations, and higher costs driven by ongoing factory disruption resulted in a $0.4 billion reach-forward loss on the 767 freighter program in the third quarter of 2024.

See further discussion of the KC-46A Tanker program in Note 10 to our Condensed Consolidated Financial Statements.

777 and 777X Programs We are currently at a combined production rate of 4 per month for the 777/777X programs.

In the fourth quarter of 2023, the 777X program resumed production.

The programs are experiencing factory disruption including supply chain delays and challenges associated with the resumption of 777X production.

We are following the lead of the FAA as we work through the certification process.

777 and 777X Programs The accounting quantity for the 777 program increased by 20 units during the three months ended September 30, 2024, due to the program's normal progress of obtaining additional orders and delivering airplanes.

While production is currently paused, prior to the work stoppage, we were at a combined production rate of 4 per month for the 777/777X programs.

Prior to the work stoppage, the programs experienced factory disruption including 777 supply chain delays and quality issues, and challenges associated with 777X production.

In July 2024, we obtained approval from the FAA to begin the first phase of FAA certification flight testing.

We expect the first delivery of the 777-9 to occur in 2025 and the 777-8 freighter to occur in 2027.

Flight testing was paused in August when a cracked engine thrust link was discovered in a flight test aircraft and remained paused as of September 30, 2024.

The flight test aircraft were subsequently approved for flight;

however, the resumption of flight activities will be impacted by the work stoppage.

Based on flight test delays and our latest assessment of certification timelines, we now anticipate the first delivery of the 777-9 to occur in 2026 and the 777-8 freighter to occur in 2028.

First delivery of the 777-8 passenger aircraft is not expected to occur before 2030.

The 777X program had near break-even gross margins at June 30, 2024.

In addition, we are slowing the rate ramp of 777X to address production challenges, which is leading to higher production costs and further customer delivery delays.

As a result of these changes, as well as higher estimated labor and supplier costs, we recorded a $2.6 billion reach-forward loss on the 777X program in the third quarter of 2024.

We are following the lead of the FAA as we work through the certification process and the ultimate timing will be determined by the regulators.

The level of profitability on the 777X program will be subject to a number of factors.

These factors include aircraft certification requirements and timing, change incorporation on completed aircraft, production disruption due to labor instability and supply chain disruption, customer delivery timing and negotiations, further production rate adjustments for the 777X or other commercial aircraft programs, and contraction of the accounting quantity.

One or more of these factors could result in reach-forward losses in future periods.

787 Program In the first half of 2024, we slowed production to below 5 per month primarily reflecting supply chain constraints and production issues.

These factors include aircraft certification requirements and timing, change incorporation on completed aircraft, production disruption due to labor instability (including the ongoing work stoppage) and supply chain disruption, customer delivery timing and negotiations, further production rate adjustments for the 777X or other commercial aircraft programs, and contraction of the accounting quantity.

One or more of these factors could result in additional reach-forward losses in future periods.

787 Program During the first quarter of 2024, we disclosed that we were slowing near-term production to below 5 per month due to supply chain constraints.

The program continues to experience supply chain constraints and production issues.

Delays associated with business class seats are also adversely impacting 2024 deliveries.

As of June 30, 2024, we had approximately 35 aircraft in inventory that were produced prior to 2023 and required rework which we expect to complete by the end of 2024.

The inspections and rework costs on inventoried aircraft are accounted for as abnormal production costs, and we expensed $157 million in the six months ended June 30, 2024.

As of September 30, 2024, we had approximately 30 aircraft in inventory that were produced prior to 2023 and required rework.

This required rework is currently paused as a result of the IAM 751 work stoppage.

The inspections and rework costs on inventoried aircraft are accounted for as abnormal production costs, and we expensed $209 million in the nine months ended September 30, 2024.

Additional Considerations

1 unchanged sentence

See Note 2 to our Condensed Consolidated Financial Statements.

We are currently in contract negotiations with the International Association of Machinists and Aerospace Workers District 751 (IAM 751).

IAM 751 represents over 30,000 Boeing manufacturing employees primarily located in Washington state.

The current contract will expire on September 12, 2024.

If we are unable to successfully negotiate a new contract with IAM 751 and/or experience work stoppages or other disruptions, our financial position, results of operations and cash flows could be adversely impacted.

Defense, Space & Security

The Consolidated Appropriations Act, 2024, and the Further Consolidated Appropriations Act, 2024, enacted in March 2024, provided fiscal year 2024 appropriations for government departments and agencies, including $844 billion for the U.S.

Department of Defense (U.S.

DoD and $25 billion for the National Aeronautics and Space Administration (NASA).

1 unchanged sentence

In March 2024, the U.S.

government released the President's budget request for fiscal year 2025 (FY25), which requested $850 billion in funding for the U.S.

government released the President's budget request for FY25, which requested $850 billion in funding for the U.S.

DoD and $25 billion for NASA.

5 unchanged sentences

BDS expects that it will continue to have a wide range of opportunities across Asia, Europe and the Middle East given the diverse regional threats.

At June 30, 2024, 31% of BDS backlog was attributable to non-U.S.

At September 30, 2024, 28% of BDS backlog was attributable to non-U.S.

Results of Operations

(Dollars in millions) Six months ended June 30 Three months ended June 30

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

8 unchanged sentences

Deliveries of new-build production units, including remanufactures and modifications, were as follows:

Six months ended June 30 Three months ended June 30

Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

1 unchanged sentence

F-15 Models 10 6 3

T-7A Red Hawk 1 1 1 1

CH-47 Chinook (New) 2 8 1

CH-47 Chinook (Remanufactured) 5 4 4 3

CH-47 Chinook (Renewed) 7 7 2 3

AH-64 Apache (New) 10 17 7 5

AH-64 Apache (Remanufactured) 24 38 11 9

MH-139 Grey Wolf 3 1 3 1

P-8 Models 4 7 1 2

2 unchanged sentences

Total 76 108 34 28

BDS revenues for the six months ended June 30, 2024 increased by $265 million compared with the same period in 2023.

BDS revenues for the nine months ended September 30, 2024 increased by $320 million compared with the same period in 2023.

The increase reflects higher volume on weapons and proprietary programs, partially offset by higher net unfavorable cumulative catch-up adjustments on major fixed-price development programs.

Net unfavorable cumulative contract catch-up adjustments for the six months ended June 30, 2024 were $118 million higher than the prior year comparable period.

BDS revenues for the three months ended June 30, 2024 decreased by $146 million compared with the same period in 2023.

Net unfavorable cumulative contract catch-up adjustments for the nine months ended September 30, 2024 were $258 million higher than the prior year comparable period.

BDS revenues for the three months ended September 30, 2024 increased by $55 million compared with the same period in 2023.

The increase reflects higher volume on weapons and proprietary programs, offset by higher net unfavorable cumulative contract catch-up adjustments on major fixed-price development programs.

Unfavorable cumulative contract catch-up adjustments were $140 million higher than the comparable period in the prior year largely due to charges on certain major fixed-price development programs.

This was partially offset by increased volume on weapons and proprietary programs.

Loss From Operations

BDS loss from operations was $762 million for the six months ended June 30, 2024, compared with $739 million in the same period in 2023.

BDS loss from operations was $3,146 million for the nine months ended September 30, 2024, compared with $1,663 million in the same period in 2023.

Net unfavorable cumulative contract catch-up adjustments were $1,630 million higher than the comparable period in the prior year.

Higher charges in 2024 on major fixed-price development programs of $438 million were partially offset by volume growth in 2024 and lower unfavorable cumulative contract catch-up adjustments on other programs.

During the first half of 2024, losses incurred on the five major fixed-price development programs totaled $1,266 million, including

KC-46A Tanker $519 million, T-7A Red Hawk $372 million, VC-25B $250 million, and Commercial Crew $125 million.

During the first half of 2023, losses incurred on development programs totaled $828 million, including Commercial Crew $288 million, KC-46A Tanker $245 million, T-7A Red Hawk $189 million and MQ-25 $106 million.

These higher charges were offset by less unfavorable cumulative contract catch-up adjustments on fighter and satellite programs and higher volume from weapons and proprietary programs.

During the nine months ended September 30, 2024, losses incurred on the five major fixed-price development programs totaled $3,302 million, including T-7A Red Hawk $1,280 million, KC-46A Tanker $1,180 million, Commercial Crew $375 million, VC-25B $250 million, and MQ-25 $217 million.

During the nine months ended September 30, 2023, losses incurred on development programs totaled $1,446 million, including VC-25B $482 million.

Commercial Crew $288 million, KC-46A Tanker $258 million, T-7A Red Hawk $241 million and MQ-25 $177 million.

These unfavorable adjustments were partially offset by less unfavorable cumulative contract catch-up adjustments on satellite and fighter programs, higher revenues from weapons and proprietary programs, and lower period expenses.

See further discussion of fixed-price contracts in Note 10 to our Condensed Consolidated Financial Statements.

BDS loss from operations was $913 million for the three months ended June 30, 2024, compared with loss from operations of $527 million in the same period in 2023.

BDS loss from operations was $2,384 million for the three months ended September 30, 2024, compared with loss from operations of $924 million in the same period in 2023.

The year over year increase in losses reflects an increase in unfavorable cumulative contract catch-up adjustments which were $1,348 million higher than the comparable period in the prior year.

During the second quarter of 2024, losses incurred on the five major fixed-price development programs totaled $1,044 million compared with $514 million in the same period in 2023.

Earnings in 2023 were adversely impacted by lower margins on several programs including fighters and satellite programs reflecting labor instability, development technical challenges and supply chain disruption.

During the third quarter of 2024, losses incurred on the five major fixed-price development programs totaled $2,036 million compared with $618 million in the same period in 2023.

In addition to the higher charges on the major fixed-price development programs, earnings in 2024 were adversely impacted by lower earnings on several programs including fighters, P-8 and E-7 reflecting production and engineering inefficiencies.

See further discussion of fixed-price contracts in Note 10 to our Condensed Consolidated Financial Statements.

BDS loss from operations includes our share of earnings from equity method investments of $95 million and $20 million for the six and three months ended June 30, 2024, compared with $10 million and $24 million for the same periods in 2023.

BDS backlog of $59,055 million at June 30, 2024 compared with $59,012 million as of December 31, 2023, reflects the timing of awards, partially offset by revenue recognized on contracts awarded in prior periods.

BDS loss from operations includes our share of earnings from equity method investments of $104 million and $9 million for the nine and three months ended September 30, 2024, compared with $34 million and $24 million for the same periods in 2023.

BDS backlog of $61,621 million at September 30, 2024 compared with $59,012 million as of December 31, 2023, reflects the timing of awards, partially offset by revenue recognized on contracts awarded in prior periods.

Additional Considerations

8 unchanged sentences

Many development programs have highly complex designs.

As technical or quality issues arise during development, we may experience schedule delays and cost impacts, which could increase our estimated cost to perform the work or reduce our estimated price, either of which could result in a material charge or otherwise adversely affect our financial condition.

As technical or quality issues arise during development, we may experience schedule

delays and cost impacts, which could increase our estimated cost to perform the work or reduce our estimated price, either of which could result in a material charge or otherwise adversely affect our financial condition.

These programs are ongoing, and while we believe the cost and fee estimates incorporated in the financial statements are appropriate, the technical complexity of these programs creates financial risk as additional completion costs may become necessary or scheduled delivery dates could be extended, which could trigger termination provisions or other financially significant exposure.

2 unchanged sentences

Results of Operations

(Dollars in millions) Six months ended June 30 Three months ended June 30

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

2 unchanged sentences

Operating margins 17.7 % 17.4 % 17.0 % 16.3 %

BGS revenues for the six months ended June 30, 2024 increased by $468 million compared with the same period in 2023, primarily due to higher commercial services revenue, partially offset by lower government services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the six months ended June 30, 2024 was $65 million higher than the prior year comparable period.

BGS revenues for the three months ended June 30, 2024 increased by $143 million compared with the same period in 2023, primarily due to higher commercial services revenue, partially offset by lower government services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended June 30, 2024 was $55 million worse than the net favorable impact in the prior year comparable period.

BGS revenues for the nine months ended September 30, 2024 increased by $557 million compared with the same period in 2023, primarily due to higher commercial services revenue, partially offset by lower government services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the nine months ended September 30, 2024 was $88 million higher than the prior year comparable period.

BGS revenues for the three months ended September 30, 2024 increased by $89 million compared with the same period in 2023, primarily due to higher commercial services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended September 30, 2024 was $23 million higher than the prior year comparable period.

Earnings From Operations

BGS earnings from operations for the six months ended June 30, 2024 increased by $83 million compared with the same period in 2023, primarily due to higher commercial services revenue, partially offset by lower government services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the six months ended June 30, 2024 was $70 million higher than the prior year comparable period.

BGS earnings from operations for the three months ended June 30, 2024 increased by $14 million compared with the same period in 2023, primarily due to higher commercial services revenue, partially offset by lower government services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended June 30, 2024 was $64 million worse than the net favorable impact in the prior year comparable period.

BGS total backlog decreased from $19,869 million at December 31, 2023 to $19,487 million at June 30, 2024, primarily due to revenue recognized on contracts awarded in prior years, partially offset by timing of awards.

BGS earnings from operations for the nine months ended September 30, 2024 increased by $133 million compared with the same period in 2023, primarily due to higher commercial services revenue, partially offset by lower government services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the nine months ended September 30, 2024 was $92 million higher than the prior year comparable period.

BGS earnings from operations for the three months ended September 30, 2024 increased by $50 million compared with the same period in 2023, primarily due to higher commercial services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended September 30, 2024 was $22 million higher than the prior year comparable period.

BGS total backlog increased from $19,869 million at December 31, 2023 to $20,449 million at September 30, 2024, primarily due to the timing of awards, partially offset by revenue recognized on contracts awarded in prior years.

Liquidity and Capital Resources

Cash Flow Summary

(Dollars in millions) Six months ended June 30

(Dollars in millions) Nine months ended September 30

Net loss ($7,968) ($2,212)

2 unchanged sentences

Net cash (used)/provided by operating activities (8,630) 2,579

Net cash used by investing activities (26) (4,838)

Net cash provided/(used) by investing activities 653 (5,241)

Net cash provided/(used) by financing activities 5,238 (5,131)

3 unchanged sentences

Cash & cash equivalents, including restricted, at end of period $9,982 $6,832

Operating Activities Net cash used by operating activities was $7.3 billion during the six months ended June 30, 2024, compared with cash provided of $2.6 billion during the same period in 2023.

The $9.9 billion increase in cash used by operating activities was primarily driven by changes in commercial airplane program inventory.

Changes in assets and liabilities for the six months ended June 30, 2024, decreased by $8.5 billion compared with the same period in 2023 primarily driven by unfavorable changes in Inventories ($5.7 billion), Accounts payable ($1.1 billion), and Unbilled receivables ($0.6 billion).

The growth in Inventories was primarily driven by lower deliveries on our commercial airplane programs in the first half of 2024 as compared to the same period in 2023.

Concessions paid to 737 MAX customers totaled $681 million and $273 million for the six months ended June 30, 2024 and 2023.

Reductions in Accounts payable in 2024 were a use of cash while growth in Accounts payable in 2023 was a source of cash.

Operating Activities Net cash used by operating activities was $8.6 billion during the nine months ended September 30, 2024, compared with net cash provided of $2.6 billion during the same period in 2023.

The $11.2 billion increase in cash used by operating activities was primarily driven by our commercial airplanes business.

Commercial airplane cash outflows reflect slowed and/or paused production and lower deliveries as a result of ongoing safety and quality improvement actions the Company is taking following the Alaska Airlines accident on January 5, 2024, supply chain constraints, and the ongoing work stoppage initiated on September 13, 2024, by IAM 751.

The higher net loss of $8.0 billion during the nine months ended September 30, 2024, compared to $2.2 billion during the same period in 2023 primarily reflects higher losses from operations at BCA and BDS.

The change in Non-cash items is primarily due to the 777X and 767 reach-forward losses of $3.0 billion recorded in the third quarter of 2024.

Changes in assets and liabilities during the nine months ended September 30, 2024, decreased by $8.6 billion compared with the same period in 2023, primarily driven by unfavorable changes in Inventories ($5.9 billion), Advances and progress billings ($1.3 billion), Accounts payable ($0.9 billion) and Unbilled receivables ($0.5 billion).

The growth in Inventories was primarily driven by lower deliveries on our commercial airplane programs during the nine months ended September 30, 2024 as compared to the same period in 2023.

Concessions paid to 737 MAX customers totaled $0.8 billion and $0.3 billion for the nine months ended September 30, 2024 and 2023.

Cash provided by Advances and progress billings during the nine months ended September 30, 2024, was $1.7 billion compared to cash provided of $3.0 billion during the same period in 2023.

Changes in Accounts payable during the nine months ended September 30, 2024 compared to the same period in 2023 reflects slowed/paused production primarily in our commercial airplanes business.

The increase in Unbilled receivables was primarily driven by revenue recognized at BDS in excess of billings.

Payables to suppliers who elected to participate in supply chain financing programs decreased by $0.2 billion during the six months ended June 30, 2024 and increased by $0.1 billion during the six months ended June 30, 2023.

Investing Activities Cash used by investing activities was $26 million during the six months ended June 30, 2024, compared with $4.8 billion during the same period in 2023.

The decrease in cash outflows during the six months ended June 30, 2024, compared to the same period in 2023 was primarily due to net proceeds from investments of $1.6 billion in 2024 compared with net contributions to investments of $3.9 billion in 2023.

During the six months ended June 30, 2024 and 2023, capital expenditures were $1.0 billion and $0.8 billion.

Payables to suppliers who elected to participate in supply chain financing programs decreased by $0.2 billion during the nine months ended September 30, 2024, and increased by $0.4 billion during the nine months ended September 30, 2023.

Investing Activities Net cash provided by investing activities was $0.7 billion during the nine months ended September 30, 2024, compared with net cash used of $5.2 billion during the same period in 2023.

The increase in cash provided by investing activities was primarily due to net proceeds from investments of $2.8 billion in 2024 compared with net contributions to investments of $4.0 billion in 2023.

During the nine months ended September 30, 2024 and 2023, capital expenditures were $1.6 billion and $1.1 billion.

We continue to expect capital expenditures in 2024 to be higher than in 2023.

Financing Activities Cash provided by financing activities was $5.5 billion during the six months ended June 30, 2024, compared with cash used of $5.1 billion during the same period in 2023.

During the six months ended June 30, 2024, net borrowings were $5.6 billion compared with net repayments of $5.1 billion during the same period in 2023, primarily due to the $10.0 billion of fixed-rate senior notes issued in the second quarter of 2024.

As of June 30, 2024, the total debt balance was $57.9 billion, up from $52.3 billion at December 31, 2023.

At June 30, 2024, $4.8 billion of debt was classified as short-term.

Financing Activities Net cash provided by financing activities was $5.2 billion during the nine months ended September 30, 2024, compared with net cash used of $5.1 billion during the same period in 2023.

During the nine months ended September 30, 2024, net borrowings were $5.3 billion compared with net repayments of $5.1 billion during the same period in 2023, primarily due to $10.0 billion of fixed-rate senior notes issued in the second quarter of 2024.

As of September 30, 2024, the total debt balance was $57.7 billion, up from $52.3 billion at December 31, 2023.

At September 30, 2024, $4.5 billion of debt was classified as short-term.

Capital Resources

During the nine months ended September 30, 2024, net cash used by operating activities was $8.6 billion.

The cash outflow was primarily driven by our commercial airplane business.

Commercial airplane cash outflows reflect slowed production and deliveries as a result of ongoing safety and quality improvement actions the Company is taking following the Alaska Airlines accident on January 5, 2024, as well as supply chain constraints.

Additionally, the ongoing work stoppage initiated on September 13, 2024, by IAM 751 has paused production of certain commercial aircraft models (737, 767, 777 and 777X aircraft) as well as production of commercial derivative aircraft for our Defense, Space & Security business (KC-46A Tanker and P-8A Poseidon).

The IAM 751 work stoppage is also significantly reducing aircraft deliveries and adversely impacting our financial position, results of operations and cash flows.

On June 30, 2024, we entered into an agreement to acquire Spirit in an all-stock transaction at an equity value of approximately $4.7 billion, or $37.25 per share of Spirit Class A Common Stock.

The transaction

will include the assumption of Spirit's net debt at closing.

The transaction will include the assumption of Spirit's net debt at closing.

See Note 2 to our Condensed 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 June 30, 2024, we had $10.9 billion of cash, $1.7 billion of short-term investments, and $10.0 billion of unused borrowing capacity on revolving credit line agreements.

At September 30, 2024, we had $10.0 billion of cash, $0.5 billion of short-term investments, and $10.0 billion of unused borrowing capacity on revolving credit line agreements.

In the second quarter of 2024, we entered into a $4.0 billion five-year revolving credit agreement expiring in May 2029.

Effective May 15, 2024, we terminated the $0.8 billion 364-day revolving credit agreement expiring in August 2024, and the $3.2 billion five-year revolving credit agreement expiring in October 2024, as amended.

Our legacy $3.0 billion three-year revolving credit agreement expiring in August 2025 and legacy $3.0 billion five-year revolving credit agreement expiring in August 2028 each remain in effect.

We continue to be in full compliance with all covenants contained in our debt and credit facility agreements.

Our $3.0 billion three-year revolving credit agreement expiring in August 2025 and $3.0 billion five-year revolving credit agreement expiring in August 2028 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.

On October 14, 2024, we entered into a $10.0 billion 364-day supplemental credit agreement (see Note 12 to our Condensed Consolidated Financial Statements for additional information).

We continue to be in full compliance with all covenants contained in our debt and credit facility agreements.

We continue to maintain investment grade credit ratings.

During the second quarter of 2024, Moody’s downgraded our long-term and short-term credit ratings to Baa3/P-3 with negative outlook from Baa2/P-2 with negative watch.

Our S&P and Fitch credit ratings remained unchanged;

however, S&P and Fitch revised our credit outlook to negative from stable.

The revisions to our credit ratings and outlook were primarily driven by concern that we will be unable to deliver commercial aircraft at the volumes required to materially expand free cash flow and retire debt in a reasonable timeframe.

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.

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

Moody’s downgraded our short term and long term credit ratings to Baa3/P-3 in April 2024.

Moody's and S&P placed our ratings on review for downgrade in September 2024 and October 2024, respectively.

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 the strike by IAM 751, a delay in our ability to resume production and ramp up production and deliveries, or market developments, fund outstanding financing commitments or meet other business requirements.

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

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.

2 unchanged sentences

Any future borrowings may affect our credit ratings and are subject to various debt covenants.

At June 30, 2024, we were in compliance with the covenants for our debt and credit facilities.

The most restrictive covenants include a limitation on mortgage debt and sale and leaseback transactions as a percentage of consolidated net tangible assets (as defined in the credit agreements), and a limitation on consolidated debt as a percentage of total capital (as defined in the credit agreements).

7 unchanged sentences

Legal contingencies are discussed in Note 18 to our Condensed Consolidated Financial Statements.

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $831 million at June 30, 2024.

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $875 million at September 30, 2024.

For additional information, see Note 10 to our Condensed Consolidated Financial Statements.

12 unchanged sentences

Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid.

The Pension FAS/CAS service cost adjustments recognized in Loss from operations were benefits of $460 million and $230 million for the six and three months ended June 30, 2024, compared with benefits of $445 million and $222 million for the same periods in 2023.

The higher benefits in 2024 were primarily due to increases in allocated pension cost year over year.

The non-operating pension expenses included in Other income, net were benefits of $245 million and $122 million for the six and three months ended June 30, 2024, compared with benefits of $268 million and $134 million for the same periods in 2023.

The Pension FAS/CAS service cost adjustments recognized in Loss from operations were benefits of $608 million and $148 million for the nine and three months ended September 30, 2024, compared with benefits of $663 million and $218 million for the same periods in 2023.

The lower benefits in 2024 were primarily due to reductions in allocated pension cost year over year.

The non-operating pension expenses included in Other income, net were benefits of $368 million and $123 million for the nine and three months ended September 30, 2024, compared with benefits of $402 million and $134 million for the same periods in 2023.

The lower benefits in 2024 were primarily due to lower expected return on plan assets and higher amortization of actuarial losses, partially offset by lower interest cost.

For further discussion of pension and other postretirement costs see the Management’s Discussion and Analysis on page 26 of our 2023 Annual Report on Form 10-K.

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 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 costs primarily represent costs driven by market factors and costs not allocable to U.S.

2 unchanged sentences

The table below reconciles the non-GAAP financial measures of Core operating loss, Core operating margin and Core loss per share with the most directly comparable GAAP financial measures of Loss from operations, operating margins and Diluted loss per share.

(Dollars in millions, except per share data) Six months ended June 30 Three months ended June 30

(Dollars in millions, except per share data) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

35 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis