What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-10-29 compared with 2025-07-29 · 181 added, 149 removed, 337 unchanged (49% of the section changed)

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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 half of 2025.

Production for all programs resumed in December 2024 and gradually ramped up during 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) Six months ended June 30 Three months ended June 30

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

2025 2024 2025 2024

Revenues $65,515 $51,275 $23,270 $17,840

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

Loss from operations ($4,496) ($6,937) ($4,781) ($5,761)

Operating margins (6.9) % (13.5) % (20.5) % (32.3) %

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The following table summarizes Revenues:

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

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

2025 2024 2025 2024

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Total $65,515 $51,275 $23,270 $17,840

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).

Revenues for the nine months ended September 30, 2025, increased by $14,240 million compared with the same period in 2024 primarily driven by higher revenues at Commercial Airplanes (BCA) and Defense, Space & Security (BDS).

BCA revenues increased by $12,016 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.

BDS revenues increased by $1,310 million primarily due to lower net unfavorable cumulative contract catch-up adjustments.

Revenues for the three months ended September 30, 2025, increased by $5,430 million compared with the same period in 2024 primarily driven by higher revenues at BCA and BDS.

BCA revenues increased by $3,651 million primarily due to higher deliveries.

Earnings/(loss) from Operations

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

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

BDS revenues increased by $1,366 million primarily due to lower net unfavorable cumulative contract catch-up adjustments and higher volume.

Loss from Operations

The following table summarizes Loss from operations:

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

2025 2024 2025 2024

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Global Services 2,930 2,620 938 834

Segment operating earnings/(loss) 1,163 (834) 602 (758)

Segment operating loss (3,138) (6,405) (4,301) (5,571)

Unallocated items, eliminations and other (2,145) (1,364) (748) (418)

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Postretirement FAS/CAS service cost adjustment 199 224 70 80

Earnings/(loss) from operations (GAAP)

Loss from operations (GAAP)

($4,496) ($6,937) ($4,781) ($5,761)

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See pages 53-54.

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.

Loss from operations for the nine months ended September 30, 2025, decreased by $2,441 million compared with the same period in 2024, primarily driven by BDS ($3,525 million), partially offset by an increase in Loss from operations on Unallocated items, eliminations and other ($781 million) and at BCA ($568 million).

Loss from operations for the three months ended September 30, 2025, decreased by $980 million compared with the same period in 2024, primarily driven by BDS ($2,498 million), partially offset by an increase in Loss from operations at BCA ($1,332 million).

Core operating loss for the nine and three months ended September 30, 2025, decreased by $2,486 million and $940 million compared with the same periods in 2024, primarily due to favorable changes in Segment operating loss as described above.

For information related to Postretirement Plans, see Note 14 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) Six months ended June 30 Three months ended June 30

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

2025 2024 2025 2024

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Unallocated items, eliminations and other ($2,145) ($1,364) ($748) ($418)

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.

Share-based plans expense for the nine months ended September 30, 2025, increased by $158 million compared with the same period in 2024.

Share-based plans income for the three months ended September 30, 2025, decreased by $54 million compared with the same period in 2024.

The decrease in share-based plans income for the nine and three months ended September 30, 2025, compared with the same periods in 2024 was primarily due to the timing of corporate allocations.

Deferred compensation expense for the nine and three months ended September 30, 2025, increased by $50 million and $19 million compared with the same periods in 2024 primarily driven by changes in our stock price.

Research and development expense was largely unchanged during the nine and three months ended September 30, 2025, compared with the same periods in 2024.

Eliminations and other unallocated items expense for the nine and three months ended September 30, 2025, increased by $587 million and $262 million compared with the same periods in 2024 primarily due to higher General and administrative expense.

General and administrative expense for the nine months ended September 30, 2025, and 2024, includes earnings charges of $445 million and $244 million related to agreements with the U.S.

Department of Justice.

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Other Earnings Items

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

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

2025 2024 2025 2024

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

Loss from operations ($4,496) ($6,937) ($4,781) ($5,761)

Other income, net 924 790 276 265

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Net loss attributable to Boeing shareholders ($5,985) ($7,952) ($5,337) ($6,170)

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.

Other income, net for the nine months ended September 30, 2025, increased by $134 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 lower non-operating pension income.

Other income, net for the three months ended September 30, 2025, remained largely unchanged compared with the same period in 2024.

For information on changes related to non-operating pension and postretirement expenses, see Note 14 to our Condensed Consolidated Financial Statements.

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.

Interest and debt expense for the nine months ended September 30, 2025, increased by $142 million compared with the same period in 2024 primarily as a result of higher average interest rates.

Interest and debt expense for the three months ended September 30, 2025, remained largely unchanged compared with the same period in 2024.

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

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The following table summarizes cost of sales:

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

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

2025 2024 Change 2025 2024 Change

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96.2 % 100.8 % (4.6) % 110.2 % 119.7 % (9.5) %

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.

Cost of sales for the nine months ended September 30, 2025, increased by $11,361 million, or 22%, compared with the same period in 2024, primarily due to higher revenues and an increase in reach-forward losses at BCA, partially offset by lower charges on BDS fixed-price development programs.

Cost of sales as a percentage of Revenues decreased during the nine months ended September 30, 2025,

compared with the same period in 2024 primarily due to lower charges on BDS fixed-price development programs, partially offset by higher reach-forward losses at BCA.

Cost of sales for the three months ended September 30, 2025, increased by $4,298 million, or 20%, compared with the same period in 2024, primarily due to higher revenues and an increase in reach-forward losses at BCA, partially offset by lower charges on BDS fixed-price development programs.

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

Research and Development

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

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

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

2025 2024 2025 2024

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Total $2,651 $2,976 $897 $1,154

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

Research and development expense decreased by $325 million and $257 million during the nine and three months ended September 30, 2025, compared to the same periods in 2024.

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

(Dollars in millions) September 30

2025 December 31

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government contract funding.

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.

The increase in contractual backlog of $99,749 million during the nine months ended September 30, 2025, was primarily due to a $99,438 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.

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.

The increase of $14,603 million in unobligated backlog during the nine months ended September 30, 2025 was due to an increase in BDS backlog.

Additional Considerations

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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).

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

As of October 1, 2025, funding for U.S.

government departments and agencies, including the Department of War (DoW), the National Aeronautics and Space Administration (NASA), and the Department of Transportation (DOT), including the FAA, has lapsed.

Elements of the federal government that have not been deemed to be “excepted” have ceased operations.

We rely on the U.S.

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

During a shutdown, requirements to furlough employees in the DoW, NASA, the DOT, 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 that could 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 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).

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

During 2025, the U.S.

reached bilateral trade agreements that recognize tariff-free trade of products within the scope of the World Trade Organization Agreement on Trade in Civil Aircraft with the United Kingdom, Japan, and the European Union.

As of September 30, 2025, the U.S.

applies a diverse range of reciprocal tariffs to imports originating from countries that have not concluded bilateral trade agreements with the U.S.

The updated reciprocal tariff rates originally announced during the second quarter of 2025 became effective on August 7, 2025.

On August 11, 2025, the U.S.

and China further extended the pause on the reciprocal tariffs on each other's imports until November 10, 2025, while trade negotiations continue.

However, the current state of U.S.-China trade relations remains an ongoing watch item.

In addition, as of September 30, 2025, the U.S.

maintains tariffs announced during the first quarter of 2025 on goods imported from China, as well as 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.

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.

As of September 30, 2025, the U.S.

also maintains new and modified tariffs on aluminum, steel, and copper imports implemented during 2025, and has announced reviews of additional sectors.

Collectively, these tariffs, and any retaliatory actions taken by countries in response to the U.S.

tariffs, could have a material impact on our financial position, results of operations and/or cash flows.

Our year-to-date and third quarter results reflect our best estimate of the impacts of the tariffs enacted as of September 30, 2025, and certain potential mitigating actions.

We seek to comply with all U.S.

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In addition, we recorded losses on the KC-46A Tanker and Commercial Crew programs during 2024 that were partially attributable to higher supplier costs.

We recorded a reach-forward loss on the 777X program during the third quarter of 2025 that was partially attributable to higher estimated supplier costs.

Segment Results of Operations and Financial Condition

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Results of Operations

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

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

2025 2024 2025 2024

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Operating margins (21.4)% (32.5)% (48.3) % (54.0) %

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.

BCA revenues increased by $12,016 million for the nine months ended September 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 $3,651 million for the three months ended September 30, 2025, compared with the same period in 2024 primarily due to higher deliveries.

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

737 * 767 * 777 787 Total

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

Deliveries during the first nine months of 2025 330 (5) 20 (10) 29 61 440

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

Deliveries during the third quarter of 2025 121 (2) 6 (3) 9 24 160

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

Cumulative deliveries as of 9/30/2025 9,123 1,341 1,770 1,222

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Loss From Operations

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.

BCA loss from operations was $6,447 million for the nine months ended September 30, 2025, compared with $5,879 million in the same period in 2024 reflecting a higher reach-forward loss on the 777X program and lower program margins, partially offset by higher deliveries, the absence of 737-9 customer considerations and lower abnormal costs.

BCA loss from operations was $5,353 million for the three months ended September 30, 2025, compared with $4,021 million in the same period in 2024 primarily reflecting the higher reach-forward loss on the 777X program, partially offset by higher deliveries 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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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 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.

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 $534,613 million at September 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 nine months ended September 30, 2025, totaled $3,037 million and primarily relate to 737 aircraft.

Net ASC 606 adjustments during the nine months ended September 30, 2025, totaled $9,951 million and primarily relate to 777X and 787 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 June 30, 2025 and December 31, 2024:

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

737-7 (7%, 7%), 737-8 (62%, 63%), 737-9 (4%, 5%) and 737-10 (27%, 25%).

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(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.

The FAA also communicated it will not support 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.

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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 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 increased the accounting quantity by 400 units during the nine months ended September 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.

In October 2025, after extensive reviews of the key performance indicators (KPIs), the FAA and Boeing jointly agreed the KPIs and rate readiness process guided by our Safety Management System supported an increase of the 737 production rate to 42 per month.

As of September 30, 2025, we had approximately five 737-8 aircraft in inventory for customers in China that were produced prior to 2023.

We are scheduled to deliver these aircraft in 2025.

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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.

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

This program has break-even gross margins.

During 2024, we recorded reach-forward losses of $580 million.

During the nine months ended September 30, 2025, we recorded further reach-forward losses of $241 million primarily driven by higher production costs.

See further discussion of the KC-46A Tanker program in Note 11 to our Condensed Consolidated Financial Statements.

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

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.

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.

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

Cumulative firm orders for the 777X increased from 358 units at December 31, 2024, to 473 units at September 30, 2025.

We increased the accounting quantity for the 777X program by 100 units to 600 units during the nine months ended September 30, 2025.

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

Flight testing was paused starting in August 2024 and resumed in January 2025.

During the first nine months of 2025, we obtained approval from the FAA to begin the second major phase of certification flight testing, and we had anticipated beginning the third major phase of certification flight testing in the third quarter of 2025.

It has taken longer than expected to complete the supporting analysis and obtain FAA approval to begin this phase of testing.

We anticipate obtaining FAA approval and starting the third phase of flight testing later this year or early next year.

We have also reassessed the anticipated timing to complete subsequent phases of FAA certification flight testing.

As a result, we now expect first delivery of the 777-9 to occur in 2027.

Due to these delays and to address continued production challenges, we slowed our production rate plans, which resulted in higher estimated production and change-incorporation costs, as well as associated customer and supply chain impacts.

The impact of these changes on estimated revenues and costs were partially offset by the 100-unit accounting quantity increase, resulting in an incremental reach-forward loss of $4,899 million during the third quarter of 2025.

We continue to anticipate first delivery of the 777-8 Freighter to occur approximately two years after the first delivery of the 777-9.

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

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 June 30, 2025.

We are continuing to follow 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 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 During the second quarter of 2025, the program began increasing the production rate to seven per month.

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

787 Program The 787 program began increasing the production rate to seven per month during the second quarter of 2025 and continues to work toward stabilizing production.

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

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.

As of September 30, 2025, and December 31, 2024, we had approximately 10 aircraft and 25 aircraft in inventory that were produced prior to 2023 and required rework.

In February 2025, we completed the rework of the last aircraft, and we expect to deliver the 10 aircraft in inventory in 2025 and 2026.

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

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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).

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

DoD and $25 billion for NASA.

government released the President's budget request for fiscal year 2026 (FY26), which requested $848 billion in funding for the DoW and $19 billion for NASA.

The corresponding FY25 appropriated levels are $856 billion for the DoW 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.

There is ongoing uncertainty with respect to final program-level spending for the DoW, 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.

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

At September 30, 2025, 20% of BDS backlog was attributable to non-U.S.

Results of Operations

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

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

2025 2024 2025 2024

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

Six months ended June 30 Three months ended June 30

Nine months ended September 30 Three months ended September 30

2025 2024 2025 2024

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F-15 Models 7 10 3 3

T-7A Red Hawk 1 1

CH-47 Chinook (New) 1 2

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Total 94 76 32 34

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.

BDS revenues for the nine months ended September 30, 2025, increased by $1,310 million compared with the same period in 2024.

The increase is primarily due to $1,438 million lower net unfavorable cumulative contract catch-up adjustments compared to the prior year comparable period.

The increase in revenue was partially offset by the absence of a favorable MQ-25 contract modification that was awarded during the first quarter of 2024.

BDS revenues for the three months ended September 30, 2025, increased by $1,366 million compared with the same period in 2024.

The increase reflects $830 million lower net unfavorable cumulative contract catch-up adjustments.

The increase also reflects higher volume of $525 million primarily on E-7, KC-46A, and weapons programs.

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.

BDS earnings from operations for the nine months ended September 30, 2025, was $379 million, compared with a loss from operations of $3,146 million in the same period in 2024.

The year-over-year improvement in earnings is primarily due to lower net unfavorable cumulative catch-up adjustments of $3,714 million compared to the prior year comparable period.

During the nine months ended September

30, 2024, losses incurred on the five major fixed-price development programs totaled $3,302 million.

Losses on the five major development programs were not significant in 2025.

In addition, the year over year earnings improvement reflects higher earnings from other programs including fighters, P-8, satellites and weapons.

BDS earnings from operations was $114 million for the three months ended September 30, 2025, compared with loss from operations of $2,384 million in the same period in 2024.

The year over year improvement in earnings reflects a decrease in net unfavorable cumulative contract catch-up adjustments which were $2,362 million lower than the comparable period in the prior year.

Higher volume also contributed to the comparative earnings increase.

During the third quarter of 2024, losses incurred on the five major fixed-price development programs totaled $2,036 million.

In addition, earnings in 2024 were adversely impacted by lower earnings on several programs including fighters, P-8 and E-7, reflecting production and engineering inefficiencies.

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

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.

BDS earnings/(loss) from operations includes our share of earnings from equity method investments of $30 million and $10 million for the nine and three months ended September 30, 2025, compared with $104 million and $9 million for the same periods in 2024.

BDS backlog was $76,084 million at September 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.

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Risk remains that we may be required to record additional reach-forward losses in future periods.

Approximately 3,200 International Association of Machinists and Aerospace Workers District 837 (IAM 837) represented employees at our St.

Louis area sites have been on strike since August 4, 2025.

This is disrupting our St.

Louis operations.

Programs impacted include F/A-18, F-15, T-7A, MQ-25 and Weapons.

If we are unable to successfully negotiate a new contract with IAM 837 and the strike continues for a prolonged period, our financial position, results of operations and cash flows could be materially impacted.

Global Services

Results of Operations

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

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

2025 2024 2025 2024

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Operating margins 18.6 % 17.7 % 17.5 % 17.0 %

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.

BGS revenues for the nine months ended September 30, 2025 increased by $879 million compared with the same period in 2024, primarily due to higher government and commercial services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments for the nine months ended September 30, 2025 was $93 million lower than the prior year comparable period.

BGS revenues for the three months ended September 30, 2025 increased by $469 million compared with the same period in 2024, primarily due to higher commercial and government services revenue.

The net favorable impact of cumulative contract catch-up adjustments for the three months ended September 30, 2025 was $42 million higher than the net unfavorable impact in the prior year comparable period.

Earnings From Operations

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.

BGS earnings from operations for the nine months ended September 30, 2025 increased by $310 million compared with the same period in 2024, due to higher commercial and government services revenue and a 2025 gain on asset disposition.

The net unfavorable impact of cumulative contract catch-up adjustments for the nine months ended September 30, 2025 was $71 million lower than the prior year comparable period.

BGS earnings from operations for the three months ended September 30, 2025 increased by $104 million compared with the same period in 2024, primarily due to higher commercial and government services revenue.

The net favorable impact of cumulative contract catch-up adjustments for the three months ended September 30, 2025 was $54 million higher than the net unfavorable impact in the prior year comparable period.

BGS total backlog increased from $21,403 million at December 31, 2024 to $24,634 million at September 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) Six months ended June 30

(Dollars in millions) Nine months ended September 30

Net loss ($5,982) ($7,968)

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Net cash used by operating activities (266) (8,630)

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

Net cash (used)/provided by investing activities (5,901) 653

Net cash (used)/provided by financing activities (812) 5,238

3 unchanged sentences

Cash & cash equivalents, including restricted, at end of period $6,882 $9,982

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.

Operating Activities Net cash used by operating activities was $0.3 billion during the nine months ended September 30, 2025, compared with $8.6 billion during the same period in 2024.

The $8.3 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 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.

Non-cash items for the nine months ended September 30, 2025, was $8.3 billion compared with $6.3 billion during the same period in 2024.

The change in Non-cash items was primarily due to higher 777X reach-forward losses recorded during the nine months ended September 30, 2025 compared with the same period in 2024.

Changes in assets and liabilities during the nine months ended September 30, 2025, improved by $4.4 billion compared with the same period in 2024, primarily driven by favorable changes in Inventories ($6.7 billion) and Accounts payable ($0.4 billion), partially offset by unfavorable changes in Advances and progress billings ($3.7 billion).

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

The change in Accounts payable during the nine months ended September 30, 2025, compared to the same period in 2024 reflects increased production primarily in our commercial airplanes business.

The change in Advances and progress billings during the nine months ended September 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 $0.8 billion for the nine months ended September 30, 2025 and 2024.

Payables to suppliers who elected to participate in supply chain financing programs decreased by $0.8 billion and $0.2 billion during the nine months ended September 30, 2025 and 2024.

Supply chain financing is not material to our overall liquidity.

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.

Investing Activities Net cash used by investing activities during the nine months ended September 30, 2025, was $5.9 billion, compared with net cash provided of $0.7 billion during the same period in 2024.

The increase in cash used was primarily due to net contributions to investments of $3.7 billion in 2025 compared with net proceeds from investments of $2.8 billion in 2024.

During the nine months ended September 30, 2025 and 2024, capital expenditures were $2.0 billion and $1.6 billion.

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

Financing Activities Net cash used by financing activities was $0.7 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.

Financing Activities Net cash used by financing activities was $0.8 billion during the nine months ended September 30, 2025, compared with net cash provided of $5.2 billion during the same period in 2024.

During the nine months ended September 30, 2025, net repayments were $0.6 billion compared with net

borrowings of $5.3 billion during the same period in 2024.

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

As of September 30, 2025, the total debt balance was $53.4 billion, down from $53.9 billion at December 31, 2024.

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

Capital Resources

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.

At September 30, 2025, we had $6.2 billion of cash, $16.8 billion of short-term investments, and $10.0 billion of unused borrowing capacity on revolving credit line agreements.

In August 2025, we entered into a $3.0 billion, 364-day revolving credit agreement expiring in August 2026.

This facility replaced the $3.0 billion, three-year revolving credit agreement which was scheduled to terminate in August 2025.

The 364-day credit facility has a one-year term out option which allows us to extend the maturity of any borrowings until August 2027.

Our legacy $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 each remain in effect.

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

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

At September 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.

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Legal contingencies are discussed in Note 19 to our Condensed Consolidated Financial Statements.

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

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $908 million at September 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 $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 Pension FAS/CAS service cost adjustments recognized in Loss from operations were benefits of $588 million and $198 million for the nine and three months ended September 30, 2025, compared with benefits of $608 million and $148 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 $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 non-operating pension income included in Other income, net was $127 million and $42 million for the nine and three months ended September 30, 2025, compared with $368 million and $123 million for the same periods in 2024 .

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

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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 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

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

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

2025 2024 2025 2024

Revenues $65,515 $51,275 $23,270 $17,840

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

Loss from operations, as reported

($4,496) ($6,937) ($4,781) ($5,761)

Operating margins (6.9) % (13.5) % (20.5) % (32.3) %

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis