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Item 1A. Risk Factors

2026-01-30 compared with 2025-02-03 · 104 added, 123 removed, 240 unchanged (49% of the section changed)

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In addition, fleet decisions, airline consolidations or financial challenges involving any of our major commercial airline customers could significantly reduce our revenues and limit our opportunity to generate profits from those customers.

Airlines also are experiencing increased fuel and other costs, and the global economy has experienced and may continue to experience high inflation.

Our Commercial Airplanes business depends on our ability to maintain a healthy production system, ensure every airplane in our production system conforms to exacting specifications,

achieve planned production rate targets, successfully develop and certify new aircraft or new derivative aircraft, and meet or exceed stringent performance and reliability standards.

The commercial aircraft business is extremely complex, involving extensive coordination and integration with suppliers, highly-skilled labor performed by thousands of employees of ours and other partners, and stringent and evolving regulatory requirements and performance and reliability standards.

We have experienced and may continue to experience production quality issues, including in our supply chain.

For example, as a result of the Alaska Airlines 737-9 accident in January 2024, the FAA investigated the 737 quality control system, including Spirit, and increased its oversight of our production and quality and safety management systems.

The FAA identified multiple instances where we and Spirit failed to comply with manufacturing quality control requirements.

As part of our plan to improve safety and quality and to address the issues identified by the FAA, we slowed 737 production rates and delayed planned production rate increases to reduce traveled work in our factory and at our suppliers.

These actions significantly impacted our financial position, results of operations and cash flows during the year ended December 31, 2024, and are expected to continue to impact our financial position, results of operations and cash flows as we work to increase production and improve factory performance.

The introduction of new aircraft programs and/or derivatives, such as the 777X, 737-7 and 737-10, involves risks associated with meeting development, testing, certification and production schedules.

We are following the lead of the FAA as we work through the certification process, and the FAA will ultimately determine the timing of certification and entry into service.

There have been delays on each of these development programs and if we experience additional delays in achieving certification, our financial position, results of operations and cash flows would be adversely impacted.

Our customers’ fleet decisions and financial position are also impacted by fuel and other costs, as well as inflationary pressures.

Our Commercial Airplanes business depends on our ability to maintain a healthy production system, ensure every airplane in our production system conforms to exacting specifications, achieve planned production rate targets, successfully develop and certify new aircraft or new derivative aircraft, and meet or exceed stringent performance and reliability standards.

The commercial aircraft business is extremely complex, involving extensive coordination and integration with suppliers, highly-skilled labor performed by thousands of employees, and stringent and evolving regulatory requirements and performance and reliability standards.

As a result, our ability to deliver aircraft on time, satisfy regulatory and customer requirements, and achieve or maintain, as applicable, program profitability is subject to significant risks.

The introduction of new aircraft programs and/or derivatives, such as the 777X, 737-7 and 737-10, takes years and involves significant risks associated with meeting development, testing, certification, and production schedules.

We follow the lead of the FAA as we work through the certification process, and the FAA ultimately determines the timing of certification and entry into service.

There have been significant delays on each of these development programs and if we experience additional delays in achieving certification or meeting customer commitments, or if we or our suppliers are unable to timely and effectively address issues discovered during certification and testing and/or efficiently and cost-effectively incorporate required design changes into production aircraft, our financial position, results of operations and cash flows would be adversely impacted.

For example, the 777X program, which launched in 2013 and is currently expecting first delivery in 2027, recognized additional reach-forward losses of $4.9 billion and $3.5 billion in 2025 and 2024, primarily due to production challenges, certification and delivery delays, and higher estimated labor and supplier costs.

A number of our customers have contractual remedies, including compensation for late deliveries or rights to reject individual airplane deliveries based on delivery delays.

Delays on the 737, 777X and 787 programs have resulted in, and may continue to result in, customers having the right to terminate orders, be compensated for late deliveries and/or substitute orders for other Boeing aircraft.

We must minimize disruption caused by production changes, achieve operational stability and implement productivity improvements in order to meet customer demand and maintain our profitability.

We have previously announced plans to adjust production rates on several of our commercial aircraft programs.

In addition, we continue to seek opportunities to reduce the costs of building our aircraft, including working with our suppliers to reduce supplier costs, identifying and implementing productivity improvements and optimizing how we manage inventory.

If production rate changes at any of our commercial aircraft assembly facilities are delayed or create significant disruption to our production system, or if our suppliers cannot timely deliver components that comply with design specifications to us at the cost and rates necessary to achieve our targets, we may be unable to meet delivery schedules and/or the financial performance of one or more of our programs may suffer.

We must minimize disruption caused by production changes, achieve and maintain operational stability and implement productivity improvements to meet customer demand and maintain our profitability.

We have plans to increase production rates on several of our commercial aircraft programs, while continuing ongoing development and production of new or derivative aircraft.

These plans include increasing the 737 production rate to 47 per month in 2026, as well as further production rate increases that will require a new production line.

There is risk that planned production rate increases may be delayed or not occur at all if our production health key performance indicators and rate readiness process guided by our Safety Management System do not support increasing production rates or we are unable to obtain FAA concurrence.

Similarly, there is risk that planned 787 production rate increases may be delayed or not occur at all.

We also continue to seek opportunities to reduce the costs of building our aircraft, including working with our suppliers to reduce supplier costs, identifying and implementing productivity improvements and optimizing how we manage inventory.

If production rate changes on any of our programs are delayed or create significant disruption to our production system, or if our suppliers cannot timely deliver components that comply with design specifications to us at the cost and rates necessary to achieve our targets, we may be unable to meet delivery schedules and/or the financial performance of one or more of our programs may suffer.

Operational challenges impacting the production system for one or more of our commercial aircraft programs could result in additional production delays and/or failure to meet customer demand for new aircraft, either of which would negatively impact our revenues and operating margins.

Our commercial aircraft production system is extremely complex.

Operational issues, including delivery and/or certification delays or defects in supplier components, failure to meet internal performance plans, or delays or failures to achieve required regulatory approval, results in additional out-of-sequence work and increased production costs, as well as delayed deliveries to customers, impacts to aircraft performance and/or increased warranty or fleet support costs.

We and our suppliers are experiencing supply chain disruptions and constraints, labor instability and inflationary pressures.

We continue to monitor the health and stability of the supply chain.

Operational issues, including certification and/or delivery delays, quality issues, labor instability, supply chain constraints, defects in supplier components, failure to meet internal performance plans, or delays or failures to achieve required regulatory approval, result in additional out-of-sequence work and increased production costs, as well as delayed deliveries to customers, impacts to aircraft performance and/or increased warranty or fleet

support costs.

For example, as part of our plan to improve safety and quality and to address the issues identified by the FAA following the 737-9 door plug accident in January 2024, we slowed 737 production rates and delayed planned production rate increases to reduce traveled work in our factory and at our suppliers.

These actions, as well as our recent acquisition of Spirit (Spirit Acquisition), significantly impacted our financial position, results of operations and cash flows.

We and our suppliers have experienced supply chain disruptions and constraints, labor instability and inflationary pressures.

These factors have and may continue to reduce overall productivity and adversely impact our financial position, results of operations and cash flows.

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government defense spending or acquisition priorities, as well as significant delays in U.S.

government appropriations, could negatively impact our business, financial position and results of operations.

government appropriations, could negatively impact our business, financial position, results of operations and cash flows.

We derive a substantial portion of our revenue from the U.S.

government, primarily from defense related programs with the United States Department of Defense (U.S.

DoD) and contracts with other government agencies, including NASA.

government, primarily from defense related programs with the United States Department of War (DoW) and contracts with other government agencies, including NASA.

Levels of U.S.

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A lapse in appropriations for government departments or agencies would result in a full or partial government shutdown, which could impact our operations.

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

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

In the event of a prolonged shutdown, requirements to furlough employees in the DoW, the Department of Transportation, including the FAA, or other government agencies could result in payment delays, impair our ability to deliver commercial airplanes or perform work on existing contracts, delays in the certification of new aircraft or otherwise impact our operations, negatively impact future orders, and/or cause other disruptions or delays.

There is uncertainty regarding which government functions would shut down or continue operations during a lapse in appropriations, and corresponding uncertainty regarding the extent or magnitude of potential impacts to our operations.

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Government Funding” on page 31 of this Form 10-K.

In addition, there continues to be uncertainty with respect to future acquisition priorities and program-level appropriations for the U.S.

DoD and other government agencies (including NASA), including changes to national security and defense priorities, and tension between modernization investments, sustainment investments, and investments in new technologies or emergent capabilities.

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

In addition, there continues to be uncertainty with respect to future acquisition priorities and program-level appropriations for the DoW, NASA and other government agencies, including changes to national security and defense priorities, and tension between modernization investments, sustainment investments, and investments in new technologies or emergent capabilities.

future program opportunities.

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

As a result of the significant ongoing uncertainty with respect to both U.S.

defense spending and the evolving nature of the national security threat environment, we also expect the U.S.

DoD to continue to emphasize affordability, innovation, cybersecurity and delivery of technical data and software in its procurement processes, including the implementation of cybersecurity compliance requirements on the Defense Industrial Base, for which the supply chain may not be fully prepared.

defense spending and the evolving nature of the national security threat environment, we also expect the DoW to continue to emphasize affordability, innovation, cybersecurity and delivery of technical data and software in its procurement processes, including the implementation of cybersecurity compliance requirements on the Defense Industrial Base, for which the supply chain may not be fully prepared.

If we and our suppliers are unable to adjust to these changing acquisition priorities and policies, our revenues and market share could be impacted.

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Future work stoppages by our or our suppliers’ employees could also adversely impact our business.

Approximately 58,000 employees, which constitute 34% of our total workforce, were union represented as of December 31, 2024 under collective bargaining agreements with varying durations and expiration dates.

As of December 31, 2024, we had 9 unions in the U.S.

with 27 independent agreements and 18 employee representative bodies internationally, and we cannot predict how stable our union relationships will be or whether we will be able to meet the unions’ requirements.

On September 12, 2024, our contract with IAM 751, which represents over 30,000 Boeing manufacturing employees primarily located in Washington state, expired and 96% of IAM 751 members voted to initiate a strike.

On November 4, 2024, members of IAM 751 voted to ratify a new contract, thereby ending the strike.

As a result of the strike, production of our commercial aircraft, other than the 787 production in Charleston, and certain of our Defense, Space & Security products halted, adversely impacting our business and financial position.

Net cash used by operating activities for the year ended December 31, 2024, was $12.1 billion and we expect further negative operating cash flows to continue in future quarters as we work to ramp up production and deliveries.

The new contract with IAM 751 and pay enhancements for certain non-union employees is adversely impacting our financial position, results of operations and cash flows.

We may experience additional work stoppages in the future, which could adversely affect our business.

Approximately 72,000 employees, or 40% of our total workforce, were union represented as of December 31, 2025, under collective bargaining agreements with varying durations and expiration dates.

As of December 31, 2025, we had 32 independent agreements with nine different unions in the U.S., and we had agreements with 18 employee representative bodies internationally.

We cannot predict how stable our union relationships will be or whether we will be able to meet the unions’ requirements.

During 2024, employees represented by International Association of Machinists and Aerospace Workers (IAM) District 751, which represents over 30,000 Boeing manufacturing employees primarily located in Washington state, went out on strike for 53 days, halting production of most of our commercial aircraft and certain of our Defense, Space & Security products, and materially adversely impacting our business and financial position.

During 2025, employees represented by IAM District 837, which represents approximately 3,200 employees at our St.

Louis area sites, went out on strike for 101 days, disrupting our St.

Louis operations and impacting programs including F/A-18, F-15, T-7A, MQ-25 and Weapons.

Both the IAM District 751 and the IAM District 837 strikes occurred despite having in each case reached a tentative agreement with union leadership on the terms of the proposed contract and union leadership having recommended its members vote to ratify the proposed contract.

If we are unable to successfully negotiate successor agreements with our unions that our employees will ratify

(including with Society of Professional Engineering Employees in Aerospace who have two contracts expiring in October 2026), we may experience additional work stoppages in the future, which could materially adversely affect our business, financial position, results of operations and cash flows and result in the diversion of management’s attention from other ongoing business concerns.

New union contracts have in the past and could in the future adversely impact our financial position, results of operations and cash flows.

The unions may also limit our flexibility in managing our workforce and operations.

Union actions at suppliers also affect us.

Work stoppages and instability in our union relationships delay the production and/or development of our products, which could strain relationships with customers and result in lower revenues.

Work stoppages and instability in our and our suppliers’ union relationships have in the past and could in the future delay the production and/or development of our products, which could strain relationships with customers and result in lower revenues.

Competition within our markets and with respect to our products and services may reduce our future contracts and sales.

The markets in which we operate are highly competitive and one or more of our competitors may have more extensive or more specialized engineering, manufacturing and marketing capabilities than we do

in some areas.

The markets in which we operate are highly competitive and one or more of our competitors may have more extensive or more specialized engineering, manufacturing and marketing capabilities than we do in some areas.

In our BCA business, we face aggressive international competition intent on increasing market share.

In our BDS business, we anticipate that the effects of defense industry consolidation, shifting acquisition and budget priorities, and continued cost pressure at our U.S.

DoD and non-U.S.

In our BDS business, we anticipate that the effects of defense industry consolidation, shifting acquisition and budget priorities, the entry and growth of private capital-backed and other non-traditional defense companies, and continued cost pressure at our DoW and non-U.S.

customers will intensify competition for many of our BDS products.

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We derive a significant portion of our revenues from non-U.S.

sales and are subject to the risks of doing business in other countries.

sales and are subject to the risks of doing business in other countries, including those related to tariffs, trade restrictions and government actions.

In 2025, non-U.S.

customers, which include foreign military sales (FMS), accounted for approximately 46% of our revenues.

We expect that non-U.S.

customers, which include Foreign Military Sales through the U.S.

government (FMS), accounted for 46% of our total revenues and 60% of Commercial Airplanes revenue from customer contracts.

We expect non-U.S.

sales will continue to account for a significant portion of our revenues for the foreseeable future.

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jurisdictions, including international trade authorities;

• tariffs, duties or penalties attributable to the importation of raw materials, parts, products and services, which could impact sales and/or delivery of products and services outside the U.S.

and/or impose costs on us, our suppliers or our customers;

• imposition of domestic and international taxes, export controls, tariffs, duties, embargoes, sanctions and other trade restrictions;

• tariffs, duties or other costs attributable to the importation of raw materials, parts, products and services, which could impact sales and/or delivery of products and services outside the U.S.

and/or impose increased costs on us, our supply chain or our customers;

• changes to U.S.

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• uncertainties and restrictions concerning the availability of funding credit or guarantees;

• imposition of domestic and international taxes, export controls, tariffs, embargoes, sanctions and other trade restrictions;

• the difficulty of management and operation of an enterprise spread over many countries;

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• unforeseen developments and conditions, including terrorism, war, epidemics and international tensions and conflicts.

While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our operations in the future.

For example, since 2018, the U.S.

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

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

We are mitigating import costs through Duty Drawback Customs procedures.

Overall, the U.S.-China trade relationship remains stalled as economic and national security concerns continue to be a challenge.

China is a significant market for commercial aircraft and we have long-standing relationships with our Chinese customers, who represent a key component of our commercial aircraft backlog.

If we are unable to deliver aircraft to customers in China consistent with our assumptions and/or obtain additional orders from China in the future, we may experience reduced deliveries and/or lower market share.

Impacts from future potential deterioration in geopolitical or trade relations between the U.S.

and one or more other countries could have a material adverse impact on our financial position, results of operations and/or cash flows.

While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our operations.

The global trade environment remains highly dynamic and continues to evolve.

trade policy includes the imposition of baseline, sectoral or country-specific tariffs on imports.

Other countries have announced retaliatory actions or plans for retaliatory actions.

Tariffs and any retaliatory actions could significantly increase the cost of our products and, particularly with respect to our commercial aircraft, result in lower demand for our products, delivery delays, and terminations of orders by customers.

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, sanctions, and export restrictions, as well as other economic and national security concerns.

For example, in the second quarter of 2025, certain customers in China paused accepting our deliveries in response to ongoing tariff negotiations between the U.S.

Although deliveries to those customers have since resumed, if we are unable to deliver aircraft to customers in China consistent with our assumptions and/or obtain additional orders from China in the future, we may experience reduced deliveries and/or lower market share.

Impacts from potential deterioration in geopolitical or trade relationships between the U.S.

and other countries, particularly China and European Union member states, including as a result of the risks described above, could have a material adverse impact on our financial position, results of operations and/or cash flows.

We use estimates and make assumptions in accounting for contracts and programs.

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Estimates of future award fees are also included in revenues and profit rates.

With respect to each of our commercial aircraft programs, inventoriable production costs (including overhead), program tooling and other non-recurring costs and routine warranty costs are accumulated and charged as cost of sales by program instead of by individual units or contracts.

With respect to each of our commercial aircraft programs, inventoriable production costs (including

overhead), program tooling and other non-recurring costs and routine warranty costs are accumulated and charged as cost of sales by program instead of by individual units or contracts.

A program consists of the estimated number of units (accounting quantity) of a product to be produced in a continuing, long-term production effort for delivery under existing and anticipated contracts limited by the ability to make reasonably dependable estimates.

To establish the relationship of sales to cost of sales, program accounting requires estimates of (a) the number of units to be produced and sold in a program, (b) the period over which the units can reasonably be expected to be produced and (c) the units’ expected sales prices, production costs, program tooling and other non-recurring costs, and routine warranty costs for the total program.

Changes to customer or model mix, production costs and rates, learning curve, changes to price escalation indices, costs of derivative aircraft, supplier performance, customer and supplier negotiations/settlements, supplier claims and/or certification issues can impact these estimates.

Changes to customer or model mix, production costs and rates, learning curve, price escalation indices, costs of derivative aircraft, supplier performance, customer and supplier negotiations/settlements, supplier claims and/or certification issues can impact these estimates.

Estimation of the accounting quantity for a program takes into account several factors including firm orders, letters of intent from prospective customers and market studies.

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Changes in underlying assumptions, circumstances or estimates may adversely affect future period financial performance.

Accounting Estimates – Accounting for Long-term Contracts/Program Accounting” on pages 49 - 51 and Note 1 to our Consolidated Financial Statements on pages 60 - 70 of this Form 10-K.

Our pending acquisition of Spirit AeroSystems Holdings, Inc.

(Spirit) subjects us to various risks and uncertainties, including risks that we may not complete the acquisition or realize the anticipated benefits in the expected timeframe or at all.

On June 30, 2024, we entered into an Agreement and Plan of Merger (Merger Agreement) to acquire Spirit in an all-stock transaction that will include the assumption of Spirit's net debt at closing.

Completion of our acquisition of Spirit is subject to a number of conditions set forth in the Merger Agreement.

On January 31, 2025, Spirit’s stockholders approved the Merger Agreement and the related transactions.

Some of the remaining conditions, such as certain regulatory approvals and the ability of Spirit to enter into definitive agreements relating to the disposition of Spirit operations related to certain Airbus commercial work packages and consummate the related transactions, are beyond our control, which make the completion of our acquisition of Spirit (and the timing thereof) uncertain.

In addition, if Spirit or Boeing exercise certain termination rights included in the Merger Agreement, the acquisition will not be consummated.

Furthermore, the governmental authorities from which regulatory approvals related to the acquisition are required may impose burdensome or unacceptable conditions on the completion of the acquisition, require changes to the terms of the Merger Agreement, or prevent or delay the consummation of the acquisition.

If the acquisition is not completed, our ongoing business may be adversely affected and we will be subject to a number of risks, including expenditure of time and resources, negative reactions from stakeholders, and potential stock price fluctuations.

If we are successful in completing the acquisition, we will be subject to other risks, including those related to the assumption of Spirit's net debt and other obligations at closing, which could adversely impact our financial position, results of operations and cash flows.

Difficulties in integrating Spirit may result in the failure to realize anticipated benefits of the acquisition (including anticipated synergies and quality improvements) in the expected timeframe or at all, as well as operational challenges, the diversion of management’s attention from other ongoing business concerns, and unforeseen expenses, which may have an adverse impact on our operations and our financial position, results of operations, and cash flows.

For additional information on the acquisition, see Note 2 to our Consolidated Financial Statements.

For additional information on our accounting policies for recognizing sales and profits, see our discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates – Accounting for Long-term Contracts/Program Accounting” on pages 49 - 50 and Note 1 to our Consolidated Financial Statements on pages 60 - 70 of this Form 10-K.

We may not realize the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures.

As part of our business strategy, we may merge with or acquire businesses and/or form joint ventures and strategic alliances.

Whether we realize the anticipated benefits from these acquisitions, including our acquisition of Spirit, and related activities depends, in part, upon our ability to integrate the operations of the acquired business, the performance of the underlying product and service portfolio, and the performance of the management team and other personnel of the acquired operations.

Accordingly, our financial results could be adversely affected by unanticipated performance issues, legacy liabilities, cybersecurity issues or vulnerabilities, transaction-related charges, amortization of expenses related to intangibles, charges for impairment of long-term assets, credit guarantees, partner performance and indemnifications.

Whether we realize the anticipated benefits from these acquisitions, and related activities depends, in part, upon our ability to integrate the operations of the acquired business, the performance of the underlying product and service portfolio, and the performance of the management team and other personnel of the acquired operations.

The Spirit Acquisition closed in December 2025, and difficulties in integrating Spirit may result in the failure to realize anticipated benefits of the acquisition (including anticipated synergies and safety and quality improvements) in the expected timeframe or at all, as well as operational challenges, the diversion of management’s attention from other ongoing business concerns, and unforeseen expenses, which may have an adverse impact on our operations and our financial position, results of operations and cash flows.

Consolidations of joint ventures could also impact our reported results of operations or financial position.

We also may make strategic divestitures from time to time.

These transactions may result in continued financial involvement in the divested businesses, such as through guarantees or other financial arrangements, following the transaction.

Nonperformance by those divested businesses could affect our future financial results through additional payment obligations, higher costs or asset write-downs.

As part of our portfolio management, we also may make strategic divestitures from time to time, such as our recent divestiture of portions of our Digital Aviation Solutions business.

In connection with acquisitions or divestitures, we may have obligations to, or rely on the performance of, unrelated third parties, including pursuant to transitional or longer-term services agreements and/or guarantees or other financial arrangements, and nonperformance or underperformance of such agreements could affect our future financial results.

For example, in connection with the Spirit Acquisition, we are required to provide services to buyers of divested Spirit businesses, including

Airbus, and if we are unable to satisfy our obligations to these third parties or if they assert claims against us, our business and financial condition could be adversely affected.

Risks Related to Our Contracts

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In 2025, 35% of our revenues were earned pursuant to U.S.

government contracts, which include Foreign Military Sales (FMS) through the U.S.

government contracts, which include FMS.

Business conducted pursuant to such contracts is subject to extensive procurement regulations and other unique risks.

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Furthermore, if any audit, inquiry or investigation uncovers improper or illegal activities, we could be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or debarment from doing business with the U.S.

We also could suffer reputational harm if allegations of impropriety were made against us, even if such allegations are later determined to be false.

We enter into fixed-price contracts, which could subject us to losses if we have cost overruns.

Our BDS and BGS defense businesses generated approximately 54% and 63% of their 2024 revenues from fixed-price contracts.

Fixed-price development contracts subject us to the risk of reduced margins or incurring losses if we are unable to achieve estimated costs and revenues.

If our estimated costs exceed our estimated price, we recognize reach-forward losses which can significantly affect our reported results.

For example, during the year ended December 31, 2024, BDS recorded $5.0 billion of

additional losses on its five most significant fixed-price development programs (KC-46A Tanker, T-7A Red Hawk, Commercial Crew, VC-25B Presidential Aircraft, and MQ-25).

We continue to experience production disruptions and inefficiencies due to technical challenges, supplier disruption and factory performance.

These factors have contributed to significant earnings charges on a number of fixed-price development programs which are expected to adversely affect cash flows in future periods, and may result in future earnings charges and adverse cash flow effects.

Higher supplier pricing, the IAM 751 work stoppage, higher labor costs and an inexperienced workforce also contributed to earnings charges and lower earnings in 2024.

We also could suffer reputational harm if allegations of impropriety are made against us, even if such allegations are later determined to be false.

Our fixed-price contracts subject us to losses when we have cost overruns.

Our BDS and BGS defense businesses each generated approximately 60% of their 2025 revenues from fixed-price contracts.

Fixed-price contracts subject us to the risk of reduced margins or incurring

losses if we are unable to achieve estimated costs and revenues.

When our estimated costs exceed our estimated price, we recognize reach-forward losses which can significantly affect our reported results.

For example, during 2024, BDS recorded $5.0 billion of additional losses on its five most significant fixed-price development programs (KC-46A Tanker, T-7A Red Hawk, Commercial Crew, VC-25B Presidential Aircraft, and MQ-25), which also affect cash flows in future periods.

New programs could also have risk for reach-forward loss upon contract award and during the period of contract performance.

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In addition, some of our contracts have specific provisions relating to cost, schedule and performance.

Estimating costs to complete fixed-price development contracts is generally subject to more uncertainty than fixed-price production contracts.

Many of these development programs have highly complex designs and technical challenges.

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

Estimating the costs, including labor costs, and time for us and our suppliers to complete fixed-price development and follow-on production contracts is inherently uncertain and subject to significant variability as a result of highly complex designs and technical requirements as well as extended periods of performance.

This uncertainty requires us to make significant judgments and assumptions about future operational and technical performance.

The outcome of customer and/or supplier contractual negotiations could increase costs and lower margins.

Similarly, complex technical requirements can often change over time or may not be well understood at the outset of the contract.

Actual performance and/or contractual outcomes could be different than previously assumed, creating financial risk that could trigger additional material earnings charges, termination provisions, order cancellations or other significant financial exposures.

Technical, quality and production issues have in the past and could in the future result in schedule delays and cost impacts, which could increase our estimated cost to perform the work or reduce our estimated price, either of which could result in a material charge or otherwise adversely affect our financial condition.

We enter into cost-type contracts, which also carry risks.

Our BDS and BGS defense businesses generated approximately 46% and 37% of their 2024 revenues from cost-type contracting arrangements.

Our BDS and BGS defense businesses each generated approximately 40% of their 2025 revenues from cost-type contracting arrangements.

Some of these are development programs that have complex design and technical challenges.

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The net present value of in-orbit incentive fees we ultimately expect to realize is recognized as revenue in the construction period.

If the satellite fails to meet contractual performance criteria, customers will not be obligated to continue making in-orbit payments and/or we may be required to provide refunds to the customer and incur significant charges.

If the satellite fails to meet contractual performance criteria, customers may not be obligated to continue making in-orbit payments and/or we may be required to provide refunds to the customer and incur significant charges.

Risks Related to Technology, Security and Business Disruptions

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Our company runs on a complex global technology infrastructure consisting of millions of physical and digital systems dispersed around the world and managed by different parts of the business.

This decentralized model exposes us to a variety of risks.

decentralized model exposes us to a variety of risks.

For example, integrating and maintaining interoperability across numerous, geographically dispersed systems may result in inefficiencies, increased costs, and operational disruptions.

Further, ineffective monitoring or inconsistent policies across systems may result in errors, fraud, or noncompliance with regulatory requirements.

Decentralized systems also may increase the risk of unauthorized access, data breaches, or

noncompliance with data privacy laws and other regulatory requirements governing the handling and control of sensitive data.

Decentralized systems also may increase the risk of unauthorized access, data breaches, or noncompliance with data privacy laws and other regulatory requirements governing the handling and control of sensitive data.

Compromised or unauthorized access of our, our customers’ and/or our suppliers’ systems or data could negatively impact our business.

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and/or result in reputational harm.

There is no guarantee that our controls, policy enforcement mechanisms, monitoring systems or contractual arrangements will be sufficient to prevent or mitigate the risk of cyber-related attack or incident, or allow us to detect, report or respond adequately in a timely manner.

We have experienced, and may in the future experience, whether directly or through our supply chain, third-party service providers or other channels, cyber-related incidents.

While prior cyber-related attacks and incidents (including those at our wholly-owned subsidiaries Boeing Distribution, Inc.

in 2023 and Jeppesen, Inc.

in 2022) have not materially affected our business strategy, results of operations or financial condition, there is no guarantee that a future cyber-related attack or incident would not result in significant operational, regulatory, or financial impacts that could materially affect our business strategy, results of operations or financial condition.

There is no guarantee that our controls, policy enforcement mechanisms, monitoring systems or contractual arrangements will be sufficient to prevent or mitigate the risk of cyber-related attacks or incidents, or allow us to detect, report or respond adequately or in a timely manner.

We have experienced, and may in the future experience, whether directly or through our subsidiaries or our supply chain, third-party service providers or other channels, cyber-related incidents.

There is no guarantee that a future cyber-related attack or incident would not result in significant operational, regulatory, or financial impacts that could materially affect our business strategy, results of operations or financial condition.

In addition, we manage information and information technology systems for certain customers and suppliers.

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Business disruptions could seriously affect our future sales and financial condition or increase our costs and expenses.

Our business may be impacted by disruptions including threats to physical security or our information technology systems, extreme weather (including effects of climate change) or other acts of nature, and pandemics or other public health crises.

Our business may be impacted by disruptions including threats to physical security or our information technology systems, extreme weather or other acts of nature, and pandemics or other public health crises.

Any of these disruptions could affect our internal operations or our suppliers’ operations and delay delivery of products and services to our customers.

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Risks Related to Legal and Regulatory Matters

The outcome of litigation and of government inquiries and investigations involving our business is unpredictable, and an adverse decision in any such matter could have a material effect on our financial position and results of operations.

We are involved in a number of litigation matters.

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No assurances can be given that the results of these matters will be favorable to us.

An adverse resolution of any of these lawsuits, or future lawsuits, could have a material impact on our financial position and results of operations.

An adverse resolution of any of these lawsuits, or future lawsuits, could have a material impact on our financial position, results of operations and cash flows, or cause reputational harm.

In addition, we are subject to extensive regulation under the laws of the United States and its various states, as well as other jurisdictions in which we operate and/or market our products.

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government, the heavily regulated nature of our industry, accidents involving our products and in the case of environmental proceedings, our current or past ownership of certain property.

Any such inquiry or investigation could result in an adverse ruling against us, which could have a material impact on our financial position, results of operations and/or cash flows.

Any such inquiry or investigation could result in an adverse ruling against us, which could have a material impact on our financial position, results of operations and/or cash flows, or cause reputational harm.

For additional information about legal proceedings, investigations and inquiries, see Note 23 to our Consolidated Financial Statements.

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We may be adversely affected by global climate change or by legal, regulatory or market responses to such change.

Increasing stakeholder environmental, social and governance (ESG) expectations, physical and transition risks associated with climate change, emerging ESG regulation, contractual requirements, and policy requirements may pose risk to our market outlook, brand and reputation, financial outlook, cost of capital, global supply chain and production continuity, which may impact our ability to achieve long-term business objectives.

Increasing stakeholder expectations, physical and transition risks associated with climate change, emerging sustainability regulation, contractual requirements, and policy requirements may pose risk to our market outlook, brand and reputation, financial outlook, cost of capital, global supply chain and production continuity, which may impact our ability to achieve long-term business objectives.

Changes in environmental and climate change laws or regulations could lead to additional operational restrictions and compliance requirements upon us or our products, require new or additional investments in production systems or product designs, result in additional carbon offset investments or otherwise negatively impact our business and/or competitive position.

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For example, certain jurisdictions including the State of California and the European Union have enacted legislation which require more stringent greenhouse gas emissions and climate risk reporting.

Physical impacts of climate change, increasing global chemical restrictions and bans, and water and

waste requirements may drive increased costs to us and our suppliers and impact our production continuity and data facilities.

Physical impacts of

climate change, increasing global chemical restrictions and bans, and water and waste requirements may drive increased costs to us and our suppliers and impact our production continuity and data facilities.

From time to time, in alignment with our sustainability priorities, we establish and publicly announce goals and commitments to improve our environmental performance, within our products and/or operations.

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We depend, in part, on our ability to successfully access the capital and financial markets to fund our operations and contractual commitments.

Net cash used by operating activities for the year ended December 31, 2024 was $12.1 billion and we expect negative operating cash flows to continue in future quarters as we work to ramp up commercial airplanes production.

As of December 31, 2025, our debt totaled $54.1 billion, of which approximately $15.5 billion of principal payments on outstanding debt are scheduled to become due over the next three years, and our airplane financing commitments totaled $15.2 billion.

In addition, we will assume Spirit’s net debt upon the closing of our acquisition of Spirit, which is expected to occur later this year.

We also expect to require up to $345 million of cash per year for the payment of dividends on the outstanding shares of our 6.00% Series A Mandatory Convertible Preferred Stock (Mandatory convertible preferred stock), through the mandatory conversion date of October 15, 2027.

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If we are unable to access the capital or financial markets at competitive rates, on terms acceptable to us or in sufficient amounts, or if we experience an increase in our borrowing costs or otherwise fail to manage our liquidity effectively, our business, financial position and results of operations would be adversely affected.

We have in the past experienced and could in the future experience further downgrades in our credit ratings.

We have in the past experienced and could in the future experience downgrades in our credit ratings.

Any such downgrades, as well as other factors including 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, 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.

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government contracts, we allocate pension costs to individual contracts based on U.S.

Cost Accounting Standards (CAS), which can also affect contract profitability.

Cost Accounting Standards, which can also affect contract profitability.

We also provide other postretirement benefits to certain of our employees, consisting principally of health care coverage for eligible retirees and qualifying dependents.

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The amount of insurance coverage we maintain may be inadequate to cover these or other claims or liabilities.

A significant portion of our customer financing portfolio is concentrated among certain customers and in certain types of Boeing aircraft, which exposes us to concentration risks.

A significant portion of our customer financing portfolio, which is comprised of financing receivables and operating lease equipment, is concentrated among certain customers and in distinct geographic regions.

Our portfolio is also concentrated by varying degrees across Boeing aircraft product types, most notably 717 aircraft, and among customers that we believe have less than investment-grade credit.

If one or more customers holding a significant portion of our portfolio assets experiences financial difficulties or otherwise defaults on or does not renew its leases with us at their expiration, and we are unable to redeploy the aircraft on reasonable terms, our financial position, results of operations and/or cash flows could be materially adversely affected.

The issuance of common stock upon the closing of the Spirit acquisition and upon conversion of our Mandatory convertible preferred stock, and the possibility of the sale or issuance of our common stock in the future, could cause dilution to the interests of our existing shareholders.

On the terms and subject to the conditions set forth in the Merger Agreement, each share of Spirit common stock will be exchanged for a number of shares of our common stock equal to an exchange ratio between 0.18 and 0.25, calculated as $37.25 divided by the volume weighted average share price of our shares over the 15-trading-day period ending on the second trading day prior to the closing (subject to a floor of $149.00 per share and a ceiling of $206.94 per share).

In addition, unless earlier converted, each outstanding share of Mandatory convertible preferred stock will automatically convert for settlement on or about October 15, 2027, into between 5.8280 and 6.9940 shares of common stock, subject to customary anti-dilution adjustments.

The issuance of our common stock upon conversion of our Mandatory convertible preferred stock, and the exchange of the Spirit Exchangeable Notes, as well as any other issuances of our common stock, could dilute the interests of our existing shareholders.

Unless earlier converted, each outstanding share of Mandatory convertible preferred stock will automatically convert for settlement on or about October 15, 2027, into between 5.8280 and 6.9940 shares of common stock, subject to customary anti-dilution adjustments.

At any time prior to October 15, 2027, a holder of Mandatory convertible preferred stock may convert one share of such stock into a number of shares of common stock equal to the minimum conversion rate of 5.8280, subject to certain anti-dilution and other adjustments.

We may also issue shares of our common stock upon the exchange of the $230 million of 3.250% Exchangeable Notes, maturing November 1, 2028 (the Spirit Exchangeable Notes), that we assumed in connection with the Spirit Acquisition.

For additional information on the Spirit Exchangeable Notes, see Note 17 to our Consolidated Financial Statements in Part II Item 8 of this Form 10-K.

In addition, a substantial number of shares of our common stock is reserved for issuance upon the exercise or settlement of equity awards.

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What changed 10-K

Item 1A. Risk Factors