What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-23 compared with 2024-10-23 · 216 added, 278 removed, 232 unchanged (68% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

On January 5, 2024, an Alaska Airlines 737-9 flight made an emergency landing after a mid-exit door plug detached in flight.

On January 5, 2024, a 737-9 flight made an emergency landing after a mid-exit door plug detached in flight.

Following the accident, the Federal Aviation Administration (FAA) grounded and required inspections of all 737-9 aircraft with a mid-exit door plug, which constituted the large majority of the approximately 220 737-9 aircraft in the in-service fleet.

On January 24, 2024, the FAA approved an enhanced maintenance and inspection process that was required to be performed on each of the grounded 737-9 aircraft.

Our 737-9 operators returned their fleets to service in the first quarter.

Our 737-9 operators returned their fleets to service in the first quarter of 2024.

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 nine months ended September 30, 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.

As a result of the accident, the FAA performed an investigation into the 737 quality control system.

In the second quarter of 2024, we submitted a comprehensive safety and quality plan to the FAA to address the issues identified.

As part of our plan to improve quality and safety and 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.

We also began taking additional actions to improve safety and quality, which include investing in workforce training, simplifying plans and processes, eliminating defects, and enhancing our safety and quality culture.

The 737-9 door plug accident and the resulting actions to improve compliance with our manufacturing quality control requirements have significantly impacted our financial position, results of operations and cash flows.

On November 4, 2024, the International Association of Machinists and Aerospace Workers District 751 (IAM 751) voted to ratify a new contract, thereby ending the work stoppage initiated on September 13, 2024, which 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).

Production for all programs resumed in December 2024 and gradually ramped up during the first quarter of 2025.

Consolidated Results of Operations and Financial Condition

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

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

2024 2023 2024 2023

(Dollars in millions, except per share data) Three months ended March 31

Revenues $19,496 $16,569

Loss from operations ($6,937) ($1,056) ($5,761) ($808)

Earnings/(loss) from operations $461 ($86)

Operating margins 2.4 % (0.5) %

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Diluted loss per share ($0.16) ($0.56)

Core operating loss ($7,769) ($1,919) ($5,989) ($1,089)

Core operating earnings/(loss) $199 ($388)

Core operating margins 1.0 % (2.3) %

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The following table summarizes Revenues:

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

2024 2023 2024 2023

(Dollars in millions) Three months ended March 31

Commercial Airplanes $8,147 $4,653

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Total $19,496 $16,569

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 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.

Loss from Operations

The following table summarizes Loss from operations:

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

2024 2023 2024 2023

Revenues for the three months ended March 31, 2025, increased by $2,927 million compared with the same period in 2024 driven by higher revenues at Commercial Airplanes (BCA) and Global Services (BGS), partially offset by lower revenues at Defense, Space & Security (BDS).

BCA revenues increased by $3,494 million primarily due to higher deliveries and the absence of 737-9 customer considerations.

BGS revenues increased by $18 million primarily due to higher government services revenue, partially offset by lower commercial services revenue.

BDS revenues decreased by $652 million primarily driven by lower volume and the absence of a favorable MQ-25 contract modification that was awarded in the first quarter of 2024, partially offset by lower net unfavorable cumulative catch-up adjustments compared to the comparable period in the prior year.

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

Earnings/(loss) from Operations

The following table summarizes Earnings/(loss) from operations:

(Dollars in millions) Three months ended March 31

Commercial Airplanes ($537) ($1,143)

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Global Services 943 916

Segment operating loss (6,405) (852) (5,571) (818)

Segment operating earnings/(loss) 561 (76)

Unallocated items, eliminations and other (362) (312)

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Postretirement FAS/CAS service cost adjustment 69 72

Loss from operations (GAAP)

($6,937) ($1,056) ($5,761) ($808)

Earnings/(loss) from operations (GAAP)

FAS/CAS service cost adjustment * (262) (302)

Core operating loss (Non-GAAP) **

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

Core operating earnings/(loss) (Non-GAAP) **

* 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.

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

See pages 47-48.

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 $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.

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 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.

Earnings from operations for the three months ended March 31, 2025, was $461 million compared to loss from operations of $86 million during the same period in 2024.

BCA loss from operations decreased by $606 million reflecting higher deliveries, the absence of 737-9 customer considerations and lower period expenses.

BGS earnings from operations increased by $27 million primarily due to higher government

services revenue.

BDS earnings from operations increased by $4 million compared to the same period in 2024 primarily due to lower net unfavorable cumulative contract catch-up adjustments, largely offset by lower earnings from equity method investments and lower volume.

Loss from operations on Unallocated items, eliminations and other increased by $50 million compared with the same period in 2024 primarily due to an increase in eliminations and other unallocated items expense.

Core operating earnings for the three months ended March 31, 2025, increased by $587 million compared with the same period in 2024, primarily due to an increase in Segment operating earnings as described above.

For information related to Postretirement Plans, see Note 12 to our Condensed Consolidated Financial Statements.

Unallocated Items, Eliminations and Other

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

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

(Dollars in millions) Three months ended March 31

Share-based plans ($30) $10

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Unallocated items, eliminations and other ($362) ($312)

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.

For additional discussion, see Note 18 to our Condensed Consolidated Financial Statements.

Share-based plans expense increased by $40 million for the three months ended March 31, 2025 compared with the same period in 2024 primarily due to the timing of corporate allocations.

Deferred compensation expense decreased by $35 million for the three months ended March 31, 2025, compared with the same period in 2024 primarily driven by changes in broad stock market conditions.

Research and development expense was largely unchanged during the three months ended March 31, 2025, compared with the same period in 2024.

Eliminations and other unallocated items expense for the three months ended March 31, 2025, increased by $54 million compared with the same period in 2024 primarily due to the timing of allocations.

Other Earnings Items

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

2024 2023 2024 2023

Loss from operations ($6,937) ($1,056) ($5,761) ($808)

(Dollars in millions) Three months ended March 31

Earnings/(loss) from operations $461 ($86)

Other income, net 323 277

Interest and debt expense (708) (569)

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

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

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

net loss attributable to noncontrolling interest (16) (13) (4) (2)

Earnings/(loss) before income taxes 76 (378)

Income tax (expense)/benefit (107) 23

Net loss (31) (355)

net earnings/(loss) attributable to noncontrolling interest 6 (12)

Net loss attributable to Boeing shareholders ($37) ($343)

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.

Other income, net for the three months ended March 31, 2025, increased by $46 million compared with the same period in 2024, primarily due to an increase in interest income on short-term investments and dividend income, partially offset by non-operating pension income.

For information on changes related to non-operating pension and postretirement expenses, see Note 12 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.

Interest and debt expense for the three months ended March 31, 2025, increased by $139 million compared with the same period in the prior year primarily as a result of higher average debt balances.

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

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Substantially all contracts at our BDS segment and certain contracts at our BGS segment are long-term contracts with the U.S.

government and other

customers that generally extend over several years.

government and other customers that generally extend over several years.

Cost of sales for commercial spare parts is recorded at average cost.

The following table summarizes cost of sales:

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

2024 2023 Change 2024 2023 Change

(Dollars in millions) Three months ended March 31

2025 2024 Change

Cost of sales $17,079 $14,693 $2,386

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87.6 % 88.7 % (1.1) %

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.

Cost of sales for the three months ended March 31, 2025, increased by $2,386 million, or 16%, compared with the same period in 2024, primarily due to higher revenues at BCA, partially offset by lower volume and the absence of fixed-price development program charges at BDS.

Cost of sales as a percentage of Revenues decreased during the three months ended March 31, 2025, compared with the same period in 2024, primarily due to the absence of 737-9 customer considerations at BCA and the absence of charges on BDS fixed-price development programs, partially offset by higher revenues at BCA.

Research and Development

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

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

2024 2023 2024 2023

(Dollars in millions) Three months ended March 31

Commercial Airplanes $534 $518

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Global Services 29 26

Other 293 222 105 73

Total $844 $868

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

Research and development expense was largely unchanged during the three months ended March 31, 2025, compared to the same period in 2024.

(Dollars in millions) March 31

2025 December 31

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government contract funding.

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

The increase in contractual backlog during the three months ended March 31, 2025, was primarily due to an increase in BCA and BGS backlog that was partially offset by a decrease in BDS 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.

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government definitive contracts for which funding has not been authorized.

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

Unobligated backlog during the three months ended March 31, 2025 was largely unchanged.

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.

Government Funding Considerable uncertainty exists regarding how future U.S.

government budget and program decisions will unfold, including the spending priorities of the new Administration and Congress.

The Full-Year Continuing Appropriations and Extensions Act, 2025, enacted on March 15, 2025, largely continues federal funding at fiscal year 2024 appropriated levels through September 30, 2025.

This bill has been deemed to be a full-year appropriations bill in respect to satisfying the requirements of the Fiscal Responsibility Act, avoiding a sequester of defense and non-defense spending in fiscal year 2025 (FY25).

government could experience a disruption to its operations and/or payments in 2025 if the debt limit is not addressed before the U.S.

Treasury exhausts extraordinary measures.

These potential disruptions, and any broader macroeconomic impacts, could affect our current programs and contracts and have a material effect on our financial position, results of operations and/or cash flows.

Global Trade The global trade landscape is currently highly volatile.

Various countries have announced plans for and/or have already implemented new or modified tariffs.

For example, in the first quarter of 2025, the United States imposed modified tariffs on aluminum and steel imports, as well as additional tariffs on goods from China.

In addition, the United States imposed tariffs on goods imported from Canada and Mexico that are not compliant with the United States-Mexico-Canada Agreement (USMCA).

We believe that the majority of our imports from Canada and Mexico are compliant with the provisions of the USMCA.

Our first quarter results reflect our best estimate of the impacts of the tariffs enacted as of March 31, 2025, and certain potential mitigations.

On April 2, 2025, the United States announced broad reciprocal tariffs on imports from all countries, comprising a 10% baseline tariff and higher country-specific tariffs.

Other countries, including China, announced retaliatory actions or plans for retaliatory actions.

On April 9, 2025, the United States implemented a 90-day pause on the country-specific reciprocal tariffs for all countries except China,

leaving the 10% baseline tariff in place.

These tariffs and any retaliatory actions from other countries could have a material impact on our financial position, results of operations and/or cash flows.

In April 2025, certain customers in China informed us that they will not accept deliveries.

We continually monitor the global trade environment for new and/or changing tariffs, retaliatory actions, trade agreements, export restrictions, sanctions or other restrictions that may impact the Company or our supply chain or customers, and work to mitigate impacts to our business.

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

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 .

We are complying with all U.S.

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.

China is a significant market for commercial aircraft and we have long-standing relationships with our Chinese customers.

Overall, the U.S.-China trade relationship is challenged due to tariffs and other economic and national security concerns .

We seek to comply with all U.S.

and other government import requirements, export control restrictions and sanctions.

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

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.

Our supply chain is also being impacted by the tariffs discussed above.

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, 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.

We are closely monitoring developments, supporting our employees and customers, and will take mitigating actions as appropriate.

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.

During 2024, we recorded a reach-forward loss of $1,770 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 during 2024 that were partially attributable to higher supplier costs.

Segment Results of Operations and Financial Condition

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Results of Operations

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

2024 2023 2024 2023

(Dollars in millions) Three months ended March 31

Revenues $8,147 $4,653

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Operating margins (6.6)% (24.6)%

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.

BCA revenues increased by $3,494 million for the three months ended March 31, 2025, compared with the same period in 2024 primarily due to higher deliveries and the absence of 737-9 customer considerations.

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

737 * 767 * 777 787 Total

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

Deliveries during the first three months of 2025 105 (1) 5 (3) 7 13 130

Deliveries during the first three months of 2024 67 (1) 3 (2) 13 83

Cumulative deliveries as of 3/31/2025 8,898 1,326 1,748 1,174

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Loss From Operations

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.

BCA loss from operations was $537 million for the three months ended March 31, 2025, compared with $1,143 million in the same period in 2024 reflecting higher deliveries, the absence of 737-9 customer considerations and lower period expenses.

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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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 $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.

BCA total backlog increased from $435,175 million as of December 31, 2024, to $460,447 million at March 31, 2025, 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 and cancellations.

Aircraft order cancellations during the three months ended March 31, 2025, totaled $2,312 million and primarily relate to 737 aircraft.

Net ASC 606 adjustments during the three

months ended March 31, 2025, totaled $6,017 million and primarily relate to 777X 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.

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Undelivered units under firm orders 4,303 *

109 68 358 719 (8)

Cumulative firm orders 13,096 1,430 1,809 358 1,880

† Customer financing aircraft orders are identified in parentheses.

* Approximate undelivered orders by minor model:

* Approximate undelivered orders by minor model for March 31, 2025 and December 31, 2024:

737-7 (7%), 737-8 (63%), 737-9 (5%) and 737-10 (25%).

Program Highlights

737 Program On January 10, 2024, the FAA notified Boeing that it had initiated an investigation into the 737 quality control system (737-9 Production Audit).

This was followed by the FAA announcing actions to increase its oversight of Boeing, including conducting:

An audit involving the 737-9 production line and its suppliers to evaluate Boeing’s compliance with approved quality procedures,

Increased monitoring of Boeing’s 737-9 in-service events, and

An assessment of safety risks around delegated authority and quality oversight, and examination of options to move these functions under independent third parties.

On January 24, 2024, the FAA stated 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.

The FAA communicated its findings from the 737-9 Production Audit of Boeing and Spirit AeroSystems Holdings, Inc.

(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.

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

Our planned production rates are dependent on our suppliers' ability to support our operations and our ability to meet heightened quality control requirements.

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

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.

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 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.

737 Program In January 2024, a 737-9 flight made an emergency landing after a mid-exit door plug detached in flight.

As a result of the accident, the FAA investigated the 737 quality control system, including Spirit AeroSystems Holdings, Inc.

(Spirit), and increased its oversight of Boeing’s production and quality and safety management systems.

The FAA also communicated it will not approve production rate increases beyond 38 per month or additional production lines until Boeing has complied with required quality and safety standards.

In 2024, we submitted a comprehensive safety and quality plan to the FAA to address the issues identified in connection with the FAA's investigation.

We also took additional actions to improve safety and quality, which include investing in workforce training, simplifying plans and processes, eliminating defects, and enhancing our safety and quality culture.

In 2025, we are continuing to implement these improvements and align our production plans consistent with the comprehensive safety and quality plan.

We are gradually increasing to a production rate of 38 per month aligned with our safety and quality plan.

As of March 31, 2025, we had approximately 35 737-8 aircraft in inventory that were produced prior to 2023, including approximately 25 aircraft for customers in China.

We are scheduled to deliver these aircraft in 2025.

It is currently unclear how the trade tensions between the U.S.

and China will impact deliveries to China.

We are continuing to work through the certification process of the 737-7 and 737-10 models, which have been delayed, while we work through the engineering solution for the engine anti-ice system.

As of March 31, 2025, we had approximately 35 737-7 and 737-10 aircraft in inventory.

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.

If we are unable to deliver aircraft and/or increase future production rates, or certify the 737-7 and 737-10 models consistent with our assumptions, our financial position, results of operations and cash flows will be adversely affected.

See further discussion of the 737 MAX in Note 6 and Note 10 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.

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

We are continuing to experience factory disruption, including supply chain delays and quality issues.

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.

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

We expect to complete production of the 767 commercial program by 2027.

This program has break-even gross margins.

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

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.

777 and 777X Programs The accounting quantity for the 777 program extends through year-end 2027.

We increased the accounting quantity by 3 units during the three months ended March 31, 2025, because we now expect to produce an additional 3 units in that timeframe.

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

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

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.

The first phase of flight testing was paused starting in August and resumed in January.

We obtained approval from the FAA to begin the next phase of certification flight testing, and we began these activities in March 2025.

We continue to anticipate 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.

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 (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 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.

The 777X program had break-even gross margins at March 31, 2025.

The level of profitability on the 777X program will be subject to several 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 considerations, delivery timing and negotiations, further production rate adjustments for the 777X or other commercial aircraft programs, and any change in the accounting quantity.

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

787 Program We are currently at a production rate of approximately 5 aircraft per month.

We are continuing to monitor supply chain health and factory performance as we work to increase production rates.

As of March 31, 2025, we had approximately 20 aircraft in inventory, including 4 aircraft for customers in China, that were produced prior to 2023 and required rework.

In February 2025, we completed the rework of the last aircraft and expect to deliver the majority of these aircraft in 2025.

It is currently unclear how trade tensions between the U.S.

and China will impact deliveries to China.

Additional Considerations

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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.

The Full-Year Continuing Appropriations and Extensions Act, 2025, enacted on March 15, 2025, provided FY25 appropriations for government departments and agencies, including $856 billion for the U.S.

Department of Defense (U.S.

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

They included funding for Boeing’s major programs, including P-8, CH-47 Chinook, F-15, KC-46A Tanker, AH-64 Apache, V-22 Osprey, and Space Launch System.

In March 2024, 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.

There is ongoing uncertainty with respect to program-level appropriations for the U.S.

There is ongoing uncertainty with respect to program-level spending for the U.S.

DoD, NASA and other government agencies for FY25 and beyond.

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

At March 31, 2025, 29% of BDS backlog was attributable to non-U.S.

Results of Operations

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

2024 2023 2024 2023

(Dollars in millions) Three months ended March 31

Revenues $6,298 $6,950

Loss from operations

($3,146) ($1,663) ($2,384) ($924)

Earnings from operations

Operating margins 2.5 % 2.2 %

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

Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

Three months ended March 31

F/A-18 Models 5 1

F-15 Models 1 1

T-7A Red Hawk 1 1 1 1

CH-47 Chinook (New) 1 1

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KC-46 Tanker 3

Commercial Satellites 3

Total 76 108 34 28

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 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.

Loss From Operations

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.

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 $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 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.

BDS revenues for the three months ended March 31, 2025, decreased by $652 million compared with the same period in 2024.

The decrease is primarily due to lower volume on P-8, KC-46 Tanker, ground-based missile defense, proprietary, and E-7 programs, as well as the absence of a favorable MQ-25 contract modification that was awarded during the first quarter of 2024.

The decrease in revenue was partially offset by $70 million lower net unfavorable cumulative catch-up adjustments compared to the prior year comparable period.

Earnings From Operations

BDS earnings from operations for the three months ended March 31, 2025, was $155 million, compared with $151 million in the same period in 2024.

The increase in earnings is primarily due to lower net unfavorable cumulative catch-up adjustments of $213 million compared to the comparable period in the prior year.

The lower net unfavorable cumulative catch-up adjustments were largely offset by lower earnings from equity method investments and lower volume and mix on P-8, F-15, E-7, and ground-based missile defense programs.

During the three months ended March 31, 2025, losses incurred on the five major fixed-price development programs totaled $0 million compared to $222 million in the same period in 2024.

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 $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.

BDS earnings from operations includes our share of earnings from equity method investments of $6 million for the three months ended March 31, 2025, compared with $75 million for the three months ended March 31, 2024.

BDS backlog of $61,567 million at March 31, 2025 compared with $64,023 million as of December 31, 2024, reflects revenue recognized on contracts awarded in prior periods and the timing of awards.

In March 2025, the U.S.

Air Force announced that Boeing has been awarded a contract to design, build and deliver the F-47, its next-generation fighter aircraft.

This order is not included in backlog at March 31, 2025, pending completion of the source selection and evaluation review process.

Additional Considerations

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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.

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Results of Operations

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

2024 2023 2024 2023

(Dollars in millions) Three months ended March 31

Revenues $5,063 $5,045

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Operating margins 18.6 % 18.2 %

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.

BGS revenues for the three months ended March 31, 2025 increased by $18 million compared with the same period in 2024, primarily due to higher government services revenue, partially offset by lower commercial services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended March 31, 2025 was $8 million lower than the prior year comparable period.

Earnings From Operations

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.

BGS earnings from operations for the three months ended March 31, 2025 increased by $27 million compared with the same period in 2024, primarily due to higher government services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended March 31, 2025 was $2 million lower than the prior year comparable period.

BGS total backlog increased from $21,403 million at December 31, 2024 to $22,036 million at March 31, 2025, 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) Nine months ended September 30

(Dollars in millions) Three months ended March 31

Net loss ($31) ($355)

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Changes in assets and liabilities (2,713) (4,205)

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

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

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

Net cash used by operating activities (1,616) (3,362)

Net cash (used)/provided by investing activities (1,717) 2,074

Net cash used by financing activities (338) (4,462)

Effect of exchange rate changes on cash and cash equivalents 12 (28)

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Cash & cash equivalents, including restricted, at end of period $10,163 $6,935

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 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.

Operating Activities Net cash used by operating activities was $1.6 billion during the three months ended March 31, 2025, compared with $3.4 billion during the same period in 2024.

The $1.8 billion decrease in net cash used by operating activities was primarily driven by higher commercial airplane deliveries, lower customer considerations and working capital improvements.

Changes in assets and liabilities during the three months ended March 31, 2025, improved by $1.5 billion compared with the same period in 2024, primarily driven by favorable changes in Inventories ($2.3 billion), Unbilled receivables ($0.7 billion) and Accrued liabilities ($0.3 billion), partially offset by changes in Advances and progress billings ($1.9 billion).

The change in Inventories was primarily driven by higher deliveries on our commercial airplane programs during the three months ended March 31, 2025 as compared to the same period in 2024.

The change in Unbilled receivables during the three months ended March 31, 2025 was primarily driven by a decrease in revenue recognized in excess of billings at BDS compared to the same period in 2024.

Changes in Accrued liabilities during the three months ended March 31, 2025 was $0.4 billion compared to $0.7 billion during the same period in 2024.

Concessions paid to 737 MAX customers totaled $38 million and $553 million for the three months ended March 31, 2025 and 2024.

Changes in Advances and progress billings during three months ended March 31, 2025 was $0.8 billion compared to $2.7 billion during the same period in 2024 primarily driven by increased commercial airplane deliveries and lower advances on commercial airplane orders.

Payables to suppliers who elected to participate in supply chain financing programs decreased by $0.6 billion and $0.4 billion during the three months ended March 31, 2025 and 2024.

Supply chain financing is not material to our overall liquidity.

Investing Activities Net cash used by investing activities during the three months ended March 31, 2025, was $1.7 billion, compared with net cash provided by investing activities of $2.1 billion during the same period in 2024.

The increase in cash used was primarily due to net contributions to investments of $1.0 billion in 2025 compared with net proceeds from investments of $2.7 billion in 2024.

During the three months ended March 31, 2025 and 2024, capital expenditures were $0.7 billion and $0.6 billion.

We continue to expect capital expenditures in 2025 to be higher than in 2024.

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.

Financing Activities Net cash used by financing activities was $0.3 billion during the three months ended March 31, 2025, compared with $4.5 billion during the same period in 2024.

During the three months ended March 31, 2025, net repayments were $0.3 billion compared with $4.4 billion during the same period in 2024.

As of March 31, 2025, the total debt balance was $53.6 billion, down from $53.9 billion at December 31, 2024.

At March 31, 2025, $7.9 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.

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See Note 2 to our Condensed Consolidated Financial Statements.

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 $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.

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.

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

At March 31, 2025, we had $10.1 billion of cash, $13.5 billion of short-term investments, and $10.0 billion of unused borrowing capacity on revolving credit line agreements.

Our $3.0 billion three-year revolving credit agreement expiring in August 2025, $3.0 billion five-year revolving credit agreement expiring in August 2028, and $4.0 billion five-year revolving credit agreement expiring in May 2029 remain in effect.

We anticipate that these credit lines will primarily serve as back-up liquidity to support our general corporate borrowing needs.

At March 31, 2025 we were in full compliance with all covenants contained in our debt and credit facility agreements.

We currently maintain investment grade credit ratings across all three credit rating agencies.

At Moody's we are rated Baa3 with a negative outlook.

At Fitch, we are rated BBB- with a negative outlook.

At S&P, we are rated BBB- with a credit watch negative.

We expect to be able to access capital markets when we require additional funding to support our operations, pay off existing debt, address impacts to our business related to market developments, fund outstanding financing commitments or meet other business requirements;

however, a number of factors could increase the cost of borrowing, jeopardize our ability to incur debt on terms acceptable to us, and negatively impact our access to the capital and financial markets and our ability to fund our operations

and commitments.

These factors include further downgrades in our credit ratings, disruptions or declines in the global capital markets, a decline in our financial performance or outlook, a delay in our ability to ramp up production and deliveries, and changes in demand for our products and services.

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

See “Risks Related to Financing and Liquidity” under “Item 1A.

Risk Factors” of our 2024 Annual Report on Form 10-K.

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

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Legal contingencies are discussed in Note 17 to our Condensed Consolidated Financial Statements.

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

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $855 million at March 31, 2025.

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

Non-GAAP Measures

Core Operating Earnings/(Loss), Core Operating Margin and Core Earnings/(Loss) Per Share

Core Operating Earnings/(Loss), Core Operating Margins and Core Earnings/(Loss) Per Share

Our unaudited condensed consolidated interim financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) which we supplement with certain non-GAAP financial information.

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We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Core operating earnings/(loss), Core operating margin and Core earnings/(loss) per share exclude the FAS/CAS service cost adjustment.

Core operating earnings/(loss), Core operating margins and Core earnings/(loss) per share exclude the FAS/CAS service cost adjustment.

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 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.

Core earnings/(loss) per share excludes both the FAS/CAS service cost adjustment and non-operating pension and postretirement income.

Non-operating pension and postretirement income represents the components of net periodic benefit costs other than service cost.

Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to BCA and certain BGS businesses supporting commercial customers.

Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S.

2 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 $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 Pension FAS/CAS service cost adjustments recognized in Earnings/(loss) from operations were benefits of $193 million and $230 million for the three months ended March 31, 2025 and 2024 .

The lower benefits in 2025 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.

The non-operating pension income included in Other income, net was $43 million and $123 million for the three

months ended March 31, 2025 and 2024 .

The lower benefits in 2025 were primarily due to lower expected return on plan assets.

For further discussion of pension and other postretirement costs see "Management’s Discussion and Analysis of Financial Condition and Results of Operations" on page 28 of our 2024 Annual Report on Form 10-K.

Management uses Core operating earnings/(loss), Core operating margins 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.

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Reconciliation of Non-GAAP Measures to GAAP Measures

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) Nine months ended September 30 Three months ended September 30

2024 2023 2024 2023

The table below reconciles the non-GAAP financial measures of Core operating earnings/(loss), Core operating margins and Core loss per share with the most directly comparable GAAP financial measures of Earnings/(loss) from operations, Operating margins and Diluted loss per share.

(Dollars in millions, except per share data) Three months ended March 31

Revenues $19,496 $16,569

Loss from operations, as reported

($6,937) ($1,056) ($5,761) ($808)

Earnings/(loss) from operations, as reported

Operating margins 2.4 % (0.5) %

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Postretirement FAS/CAS service cost adjustment (1)

(224) (200) (80) (63)

FAS/CAS service cost adjustment (1)

($262) ($302)

Core operating loss (non-GAAP)

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

Core operating earnings/(loss) (non-GAAP)

Core operating margins (non-GAAP) 1.0 % (2.3) %

Diluted loss per share, as reported ($0.16) ($0.56)

($12.91) ($3.64) ($9.97) ($2.70)

Pension FAS/CAS service cost adjustment (1)

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Provision for deferred income taxes on adjustments (3)

0.43 0.45 0.13 0.15

Core loss per share (non-GAAP) ($0.49) ($1.13)

Weighted average diluted shares (in millions) 616.1 605.0 618.8 607.2

Diluted weighted average common shares outstanding (in millions)

(1) 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.

This adjustment is excluded from Core operating loss (non-GAAP).

(2) Non-operating pension and postretirement expense/(income) represents the components of net periodic benefit cost/(income) other than service cost/(income).

This expense/(income) is included in Other income, net and is excluded from Core loss per share (non-GAAP).

This adjustment is excluded from Core operating earnings/(loss) (non-GAAP).

(2) Non-operating pension and postretirement income represents the components of net periodic benefit costs/(income) other than service cost/(income).

This income is included in Other income, net and is excluded from Core operating earnings/(loss) (non-GAAP).

(3) The income tax impact is calculated using the U.S.

3 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