What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-29 compared with 2025-04-23 · 186 added, 148 removed, 300 unchanged (53% of the section changed)

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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.

Production for all programs resumed in December 2024 and gradually ramped up during the first half 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) Three months ended March 31

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

2025 2024 2025 2024

Revenues $42,245 $33,435 $22,749 $16,866

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Diluted loss per share ($1.09) ($2.90) ($0.92) ($2.33)

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

Core operating loss ($234) ($1,780) ($433) ($1,392)

Core operating margins (0.6) % (5.3) % (1.9) % (8.3) %

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The following table summarizes Revenues:

(Dollars in millions) Three months ended March 31

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

2025 2024 2025 2024

Commercial Airplanes $19,021 $10,656 $10,874 $6,003

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Total $42,245 $33,435 $22,749 $16,866

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.

Revenues for the six months ended June 30, 2025, increased by $8,810 million compared with the same period in 2024 primarily driven by higher revenues at Commercial Airplanes (BCA).

BCA revenues increased by $8,365 million primarily due to higher deliveries.

Revenues for the three months ended June 30, 2025, increased by $5,883 million compared with the same period in 2024 primarily driven by higher revenues at BCA.

BCA revenues increased by $4,871 million primarily due to higher deliveries.

Earnings/(loss) from Operations

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

(Dollars in millions) Three months ended March 31

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

2025 2024 2025 2024

Commercial Airplanes ($1,094) ($1,858) ($557) ($715)

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Earnings/(loss) from operations (GAAP)

$285 ($1,176) ($176) ($1,090)

FAS/CAS service cost adjustment * (519) (604) (257) (302)

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

Core operating loss (Non-GAAP) **

($234) ($1,780) ($433) ($1,392)

* 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.

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See pages 53-54.

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.

Earnings from operations for the six months ended June 30, 2025, was $285 million compared to loss from operations of $1,176 million during the same period in 2024.

The $1,461 million increase in earnings is primarily driven by Defense, Space & Security (BDS) ($1,027 million) and BCA ($764 million), partially offset by an increase in Loss from operations on Unallocated items, eliminations and other ($451 million).

Loss from operations for the three months ended June 30, 2025, decreased by $914 million compared with the same period in 2024.

The decrease in loss is primarily driven by BDS ($1,023 million), partially offset by an increase in Loss from operations on Unallocated items, eliminations and other ($401 million).

Core operating loss for the six and three months ended June 30, 2025, decreased by $1,546 million and $959 million compared with the same periods in 2024, primarily due to favorable changes in Segment operating earnings/(loss) as described above.

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

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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

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

2025 2024 2025 2024

Share-based plans ($51) $53 ($21) $43

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Unallocated items, eliminations and other ($1,397) ($946) ($1,035) ($634)

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.

Share-based plans expense for the six and three months ended June 30, 2025, was $51 million and $21 million compared to share-based plans income of $53 million and $43 million for the same periods in 2024.

The increase in share-based plans expense for the six and three months ended June 30, 2025 compared with the same period in 2024 was primarily due to the timing of corporate allocations.

Deferred compensation expense for the six months ended June 30, 2025, increased by $31 million compared with the same period in 2024 primarily driven by changes in our stock price.

Deferred compensation expense for the three months ended June 30, 2025 increased by $66 million 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 six and three months ended June 30, 2025, compared with the same periods in 2024.

Eliminations and other unallocated items expense for the six and three months ended June 30, 2025 increased by $325 million and $271 million compared with the same periods in 2024.

Eliminations and other unallocated items expense for the six and three months ended June 30, 2025 and 2024, includes earnings charges of $445 million and $244 million related to agreements with the U.S.

Department of Justice.

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

Other Earnings Items

(Dollars in millions) Three months ended March 31

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

2025 2024 2025 2024

Earnings/(loss) from operations $285 ($1,176) ($176) ($1,090)

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Interest and debt expense (1,418) (1,242) (710) (673)

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

Loss before income taxes (485) (1,893) (561) (1,515)

Income tax (expense)/benefit (158) 99 (51) 76

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Net loss attributable to Boeing shareholders ($648) ($1,782) ($611) ($1,439)

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.

Other income, net for the six and three months ended June 30, 2025, increased by $123 million and $77 million compared with the same periods in 2024, primarily due to an increase in interest income on short-term investments and dividend income, partially offset by lower 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 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.

Interest and debt expense for the six and three months ended June 30, 2025, increased by $176 million and $37 million compared with the same periods in the prior year primarily as a result of higher average debt balances.

For a discussion related to Income Taxes, see Note 5 to our Condensed Consolidated Financial Statements.

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For long-term contracts, the amount reported as cost of sales is recognized as incurred.

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

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

government and other customers that generally extend over several years.

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The following table summarizes cost of sales:

(Dollars in millions) Three months ended March 31

2025 2024 Change

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

2025 2024 Change 2025 2024 Change

Cost of sales $37,393 $30,330 $7,063 $20,314 $15,637 $4,677

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88.5 % 90.7 % (2.2) % 89.3 % 92.7 % (3.4) %

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.

Cost of sales for the six months ended June 30, 2025, increased by $7,063 million, or 23%, compared with the same period in 2024, primarily due to higher revenues at BCA.

Cost of sales as a percentage of Revenues decreased during the six months ended June 30, 2025, compared with the same period in 2024, primarily due to lower charges on BDS fixed-price development programs and the absence of 737-9 customer considerations at BCA, partially offset by lower program margins at BCA.

Cost of sales for the three months ended June 30, 2025, increased by $4,677 million, or 30%, compared with the same period in 2024, primarily due to higher revenues at BCA.

Cost of sales as a percentage of Revenues decreased during the three months ended June 30, 2025, compared with the same period in 2024 primarily due to lower charges on BDS fixed-price development programs, partially offset by lower program margins at BCA.

Research and Development

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

(Dollars in millions) Three months ended March 31

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

2025 2024 2025 2024

Commercial Airplanes $1,092 $1,073 $558 $555

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Global Services 59 67 30 41

Other 183 188 101 99

Total $1,754 $1,822 $910 $954

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

Research and development expense decreased by $68 million and $44 million during the six and three months ended June 30, 2025, compared to the same periods in 2024.

The decrease in expense was primarily due to lower spending at BDS.

(Dollars in millions) June 30

2025 December 31

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government contract funding.

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.

The increase in contractual backlog of $84,945 million during the six months ended June 30, 2025, was primarily due to an $87,022 million increase 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.

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government definitive contracts for which funding has not been authorized.

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

The increase of $12,257 million in unobligated backlog during the six months ended June 30, 2025 was due to an increase in BDS backlog.

Additional Considerations

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.

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

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

In the first quarter of 2025, the United States imposed modified tariffs on aluminum and steel imports and 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.

During the second quarter of 2025, the United States adjusted various tariff rates, including on aluminum and steel imports, and announced broad reciprocal tariffs on imports from all countries.

In May 2025, the U.S.

and China reduced the reciprocal tariffs on each other's imports until August 12, 2025, while trade negotiations continue.

On May 8, 2025, the United States and the United Kingdom announced a bilateral trade agreement.

That agreement became effective June 30, 2025, in the United States and recognizes tariff-free trade of products within the scope of the World Trade Organization Agreement on Trade in Civil Aircraft.

As of June 30, 2025, a 10% baseline reciprocal tariff was in place for all countries.

In July 2025, the pause on previously announced reciprocal tariffs at rates higher than 10% for specific countries was extended until August 1, 2025, while bilateral trade negotiations take place with various United States trading partners.

The United States has asserted that reciprocal tariff rates for many trade partners could increase from the 10% baseline tariff on August 1, 2025, unless agreements are reached.

Collectively, these tariffs and any retaliatory actions taken by countries in response to the United States tariffs could have a material impact on our financial position, results of operations and/or cash flows.

Our second quarter results reflect our best estimate of the impacts of the tariffs enacted as of June 30, 2025, and certain potential mitigating actions.

We seek to comply with all U.S.

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

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 us 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.

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.

After pausing deliveries in April 2025, China resumed accepting deliveries in June 2025.

Overall, the U.S.-China trade relationship is challenged due to tariffs, export restrictions and related supply chain constraints, and other economic and national security concerns.

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.

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

Certain of our suppliers are also experiencing financial difficulties.

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Results of Operations

(Dollars in millions) Three months ended March 31

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

2025 2024 2025 2024

Revenues $19,021 $10,656 $10,874 $6,003

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Operating margins (5.8)% (17.4)% (5.1) % (11.9) %

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.

BCA revenues increased by $8,365 million for the six months ended June 30, 2025, compared with the same period in 2024 primarily due to higher deliveries across all programs and the absence of 737-9 customer considerations.

BCA revenues increased by $4,871 million for the three months ended June 30, 2025, compared with the same period in 2024 primarily due to higher deliveries across all programs.

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

737 * 767 * 777 787 Total

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

Deliveries during the first six months of 2025 209 (3) 14 (7) 20 37 280

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

Deliveries during the second quarter of 2025 104 (2) 9 (4) 13 24 150

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

Cumulative deliveries as of 6/30/2025 9,002 1,335 1,761 1,198

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Loss From Operations

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.

BCA loss from operations was $1,094 million for the six months ended June 30, 2025, compared with $1,858 million in the same period in 2024 reflecting higher deliveries, the absence of 737-9 customer considerations and lower abnormal costs partially offset by lower program margins.

BCA loss from operations was $557 million for the three months ended June 30, 2025, compared with $715 million in the same period in 2024 reflecting higher deliveries and lower period expenses, partially offset by lower program margins.

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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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 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.

BCA total backlog increased from $435,175 million as of December 31, 2024, to $522,197 million at June 30, 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, partially offset by cancellations.

Aircraft order cancellations during the six months ended June 30, 2025, totaled $2,649 million and primarily relate to 737 aircraft.

Net ASC 606 adjustments during the six months ended June 30, 2025, totaled $12,431 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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† Customer financing aircraft orders are identified in parentheses.

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

* Approximate undelivered orders by minor model for June 30, 2025 and December 31, 2024:

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

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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 increased the accounting quantity by 400 units during the six months ended June 30, 2025 due to the

program's normal progress of obtaining additional orders and delivering airplanes.

We gradually increased the production rate to 38 per month during the first half of 2025 operating within our safety and quality plan.

As of June 30, 2025, we had approximately 20 737-8 aircraft in inventory for customers in

China that were produced prior to 2023.

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.

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

and China will impact future 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 continue to work through the engineering solution for the engine anti-ice system.

We now expect certification to occur in 2026.

As of June 30, 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.

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

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

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

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

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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.

We increased the accounting quantity by three units during the six months ended June 30, 2025, because we now expect to produce an additional three units in that timeframe.

We are currently targeting a combined production rate of four 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.

The first phase of flight testing was paused starting in August 2024 and resumed in January 2025.

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

During the first six months of 2025, we obtained approval from the FAA to begin additional phases of certification flight testing.

We continue to anticipate first delivery of the 777-9 to occur in 2026 and the 777-8 Freighter to occur in 2028.

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

The 777X program had break-even gross margins at June 30, 2025.

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

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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.

787 Program During the second quarter of 2025, the program began increasing the production rate to seven 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.

As of June 30, 2025, we had approximately 15 aircraft in inventory, including three 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.

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

and China will impact future deliveries to China.

Additional Considerations

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Defense, Space & Security

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.

In May 2025, the U.S.

government released the President's budget request for fiscal year 2026 (FY26), which requested $848 billion in funding for the U.S.

Department of Defense (U.S.

DoD) and $19 billion for the National Aeronautics and Space Administration (NASA).

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

The corresponding FY25 appropriated levels are $856 billion for U.S.

DoD and $25 billion for NASA.

In July 2025, the One Big Beautiful Bill Act appropriated an additional $156 billion for national defense priorities and an additional $10 billion for NASA programs over the next several years.

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

DoD, NASA and other government agencies for FY26 and beyond.

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

Any of these impacts could have a material effect on our results of operations, financing position, and/or cash flows.

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

market continues to be driven by complex and evolving security challenges and the need to modernize aging equipment and inventories.

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

At June 30, 2025, 22% of BDS backlog was attributable to non-U.S.

Results of Operations

(Dollars in millions) Three months ended March 31

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

2025 2024 2025 2024

Revenues $12,915 $12,971 $6,617 $6,021

Earnings from operations

Earnings/(loss) from operations

$265 ($762) $110 ($913)

Operating margins 2.1 % (5.9) % 1.7 % (15.2) %

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

Three months ended March 31

Six months ended June 30 Three months ended June 30

2025 2024 2025 2024

F/A-18 Models 9 4 4 3

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KC-46 Tanker 5 5 5 2

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.

Commercial Satellites 2 2

Total 62 42 36 28

BDS revenues for the six months ended June 30, 2025, decreased by $56 million compared with the same period in 2024.

The decrease is primarily due to lower volume on certain programs including P-8, Ground-based Midcourse Defense and E-7, 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 largely offset by $608 million of lower net unfavorable cumulative contract catch-up adjustments compared to the prior year comparable period.

BDS revenues for the three months ended June 30, 2025, increased by $596 million compared with the same period in 2024.

The increase reflects lower net unfavorable cumulative contract catch-up adjustments on major fixed-price development programs.

Unfavorable cumulative contract catch-up adjustments were $538 million lower than the prior year comparable period.

Earnings/(Loss) From Operations

BDS earnings from operations for the six months ended June 30, 2025, was $265 million, compared with loss from operations of $762 million in the same period in 2024.

The increase in earnings is primarily due to lower net unfavorable cumulative catch-up adjustments of $1,352 million compared to the prior year comparable period.

The lower net unfavorable cumulative contract catch-up adjustments were partially offset by lower volume.

During the six months ended June 30, 2024, losses incurred on the five major fixed-price development programs totaled $1,266 million.

BDS earnings from operations was $110 million for the three months ended June 30, 2025, compared with loss from operations of $913 million in the same period in 2024.

The year over year increase in earnings reflects a decrease in net unfavorable cumulative contract catch-up adjustments which were $1,139 million lower 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.

See further discussion of fixed-price contracts in Note 11 to our Condensed Consolidated Financial Statements.

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.

BDS earnings/(loss) from operations includes our share of earnings from equity method investments of $20 million and $14 million for the six and three months ended June 30, 2025, compared with $95 million and $20 million for the same periods in 2024.

BDS backlog was $73,957 million at June 30, 2025 compared with $64,023 million as of December 31, 2024.

The increase reflects the timing of awards, partially offset by revenue recognized on contracts awarded in prior periods.

Additional Considerations

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Results of Operations

(Dollars in millions) Three months ended March 31

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

2025 2024 2025 2024

Revenues $10,344 $9,934 $5,281 $4,889

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Operating margins 19.3 % 18.0 % 19.9 % 17.8 %

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.

BGS revenues for the six months ended June 30, 2025 increased by $410 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 six months ended June 30, 2025 was $51 million lower than the prior year comparable period.

BGS revenues for the three months ended June 30, 2025 increased by $392 million compared with the same period in 2024, primarily due to higher government services revenue.

The net favorable impact of cumulative contract catch-up adjustments for the three months ended June 30, 2025 was $43 million higher than the net unfavorable impact in the prior year comparable period.

Earnings From Operations

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.

BGS earnings from operations for the six months ended June 30, 2025 increased by $206 million compared with the same period in 2024, due to higher government and commercial services revenue and a 2025 gain on asset disposition.

The net unfavorable impact of cumulative contract catch-up adjustments for the six months ended June 30, 2025 was $17 million lower than the prior year comparable period.

BGS earnings from operations for the three months ended June 30, 2025 increased by $179 million compared with the same period in 2024, primarily due to higher commercial services earnings including a 2025 gain on asset disposition.

The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended June 30, 2025 was $15 million lower than the prior year comparable period.

BGS total backlog increased from $21,403 million at December 31, 2024 to $21,939 million at June 30, 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) Three months ended March 31

(Dollars in millions) Six months ended June 30

Net loss ($643) ($1,794)

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Net cash used by operating activities (1,389) (7,285)

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

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

Net cash used by investing activities (3,946) (26)

Net cash (used)/provided by financing activities (725) 5,538

Effect of exchange rate changes on cash and cash equivalents 34 (25)

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Cash & cash equivalents, including restricted, at end of period $7,796 $10,915

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.

Operating Activities Net cash used by operating activities was $1.4 billion during the six months ended June 30, 2025, compared with $7.3 billion during the same period in 2024.

The $5.9 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.

Changes in assets and liabilities during the six months ended June 30, 2025, improved by $4.7 billion compared with the same period in 2024, primarily driven by favorable changes in Inventories ($5.6 billion) and Unbilled receivables ($0.4 billion), partially offset by unfavorable changes in Advances and progress billings ($2.5 billion).

The change in Inventories was primarily driven by higher deliveries on our commercial airplane programs during the six months ended June 30, 2025 as compared to the same period in 2024.

The change in Unbilled receivables during the six months ended June 30, 2025 was primarily driven by a decrease in revenue recognized in excess of billings at BDS compared to the same period in 2024.

The change in Advances and progress billings during the six months ended June 30, 2025 compared to the same period in 2024 was primarily driven by increased commercial airplane deliveries and revenue recognized at BDS, partially offset by higher advances on commercial airplane orders.

Concessions paid to 737 MAX customers totaled $0.1 billion and $0.7 billion for the six months ended June 30, 2025 and 2024.

Payables to suppliers who elected to participate in supply chain financing programs decreased by $1.1 billion and $0.2 billion during the six months ended June 30, 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.

Investing Activities Net cash used by investing activities during the six months ended June 30, 2025, was $3,946 million, compared with $26 million during the same period in 2024.

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

from investments of $1.6 billion in 2024.

During the six months ended June 30, 2025 and 2024, capital expenditures were $1.1 billion and $1.0 billion.

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

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.

Financing Activities Net cash used by financing activities was $0.7 billion during the six months ended June 30, 2025, compared with net cash provided of $5.5 billion during the same period in 2024.

During the six months ended June 30, 2025, net repayments were $0.6 billion compared with net borrowings of $5.6 billion during the same period in 2024.

Dividends paid on mandatory convertible preferred stock during the six months ended June 30, 2025, was $0.2 billion.

As of June 30, 2025, the total debt balance was $53.3 billion, down from $53.9 billion at December 31, 2024.

At June 30, 2025, $8.7 billion of debt was classified as short-term.

Capital Resources

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.

See Note 2 to our Condensed Consolidated Financial Statements.

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.

At June 30, 2025, we had $7.1 billion of cash, $15.9 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.

At June 30, 2025 we were in full compliance with all covenants contained in our debt and credit facility agreements.

For discussion related to the Spirit Acquisition and Digital Aviation Solutions Divestiture, see Note 2 and Note 3 to our Condensed Consolidated Financial Statements.

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

In June 2025, Fitch affirmed the BBB- credit rating and revised the outlook to stable from negative.

In April 2025, S&P affirmed the BBB- credit rating with a negative outlook and removed the credit watch negative.

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.

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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 $855 million at March 31, 2025.

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $848 million at June 30, 2025.

For additional information, see Note 11 to our Condensed Consolidated Financial Statements.

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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 Earnings/(loss) from operations were benefits of $193 million and $230 million for the three months ended March 31, 2025 and 2024 .

The Pension FAS/CAS service cost adjustments recognized in Earnings/(loss) from operations were benefits of $390 million and $197 million for the six and three months ended June 30, 2025, compared with benefits of $460 million and $230 million for the same periods in 2024 .

The lower benefits in 2025 were primarily due to reductions in allocated pension cost year over year.

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 non-operating pension income included in Other income, net was $85 million and $42 million for the six and three months ended June 30, 2025, compared with $245 million and $122 million for the same periods in 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.

For further discussion of pension and other postretirement costs see "Management’s Discussion and Analysis of Financial Condition and Results of Operations" on pages 28 and 29 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.

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Reconciliation of Non-GAAP Measures to GAAP Measures

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

The table below reconciles the non-GAAP financial measures of Core operating loss, Core operating margins and Core loss per share with the most directly comparable GAAP financial measures of Earnings/(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

2025 2024 2025 2024

Revenues $42,245 $33,435 $22,749 $16,866

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Postretirement FAS/CAS service cost adjustment (1)

(129) (144) (60) (72)

FAS/CAS service cost adjustment (1)

($519) ($604) ($257) ($302)

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

Core operating loss (non-GAAP)

($234) ($1,780) ($433) ($1,392)

Core operating margins (non-GAAP) (0.6) % (5.3) % (1.9) % (8.3) %

9 unchanged sentences

Provision for deferred income taxes on adjustments (3)

0.17 0.30 0.08 0.15

Core loss per share (non-GAAP) ($1.73) ($4.04) ($1.24) ($2.90)

1 unchanged sentence

(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 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).

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

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

This income is included in Other income, net and is excluded from Core operating 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