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Item 7. Management’s Discussion and Analysis

2026-01-30 compared with 2025-02-03 · 277 added, 267 removed, 508 unchanged (52% of the section changed)

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We are one of the two major manufacturers of 100+ seat airplanes for the worldwide commercial airline industry and one of the largest defense contractors in the U.S.

While our principal operations are in the U.S., we conduct operations in an expanding number of countries and rely on an extensive network of non-U.S.

While our principal operations are in the U.S., we conduct operations in an expanding number of countries and rely on an extensive network of U.S.

partners, key suppliers and subcontractors.

Our strategy is centered on successful execution in healthy core businesses – Commercial Airplanes (BCA), Defense, Space & Security (BDS) and Global Services (BGS).

BCA is committed to being the leader in commercial aviation by offering airplanes and services that deliver superior design, safety, quality, efficiency and value to customers around the world.

BDS integrates its resources in defense, intelligence, communications, security, space and services to deliver capability-driven solutions to customers at reduced costs.

BCA is committed to offering airplanes that deliver superior design, safety, quality, efficiency and value to customers around the world.

BDS integrates its resources in defense, intelligence, communications, security, space and services to deliver capability-driven solutions to customers.

Our BDS strategy is to leverage our core businesses to capture key next-generation programs while expanding our presence in adjacent and international markets.

BGS provides support for commercial and defense through innovative, comprehensive and cost-competitive product and service solutions.

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

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

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

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

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

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

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

BGS provides support for commercial and defense customers through innovative, comprehensive and cost-competitive product and service solutions.

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

As a result of the accident, the Federal Aviation Administration (FAA) performed an investigation into the 737 quality control system and imposed certain additional requirements and restrictions.

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

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

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

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.

The IAM 751 work stoppage significantly reduced aircraft deliveries in the second half of 2024.

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 have also taken additional actions to improve safety and quality, including investing in workforce training, simplifying plans and processes, eliminating defects, and enhancing our safety and quality culture.

The 737-9 door plug accident and our resulting actions, including slowing production, significantly impacted our financial position, results of operations and cash flows during 2024 and 2025.

On November 4, 2024, the International Association of Machinists and Aerospace Workers District 751 (IAM 751), representing approximately 30,000 Boeing employees, 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 2025.

On November 13, 2025, the International Association of Machinists and Aerospace Workers District 837 (IAM 837), representing approximately 3,200 Boeing employees, voted to ratify a new contract thereby ending the work stoppage initiated on August 4, 2025, which disrupted our St.

Louis operations.

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

Our contracts with the Society of Professional Engineering Employees in Aerospace, representing approximately 16,000 Boeing employees, are scheduled to expire in October 2026, and could also have a material impact on our financial position, results of operations and cash flows.

During the fourth quarter of 2025, we completed a divestiture and an acquisition that are affecting our 2025 financial position, results of operations and cash flows.

On October 31, 2025, we completed the divestiture of portions of our BGS segment’s Digital Aviation Solutions business (Digital Aviation Solutions Divestiture) for $10.55 billion in an all-cash transaction.

On December 8, 2025, we completed the acquisition of Spirit AeroSystems Holdings, Inc.

(Spirit) by exchanging approximately $4.7 billion of Boeing shares for all of Spirit’s outstanding shares (Spirit Acquisition).

In connection with the Spirit Acquisition, we paid off certain Spirit debt and other obligations and assumed the remainder of Spirit’s outstanding debt and other obligations.

Boeing’s acquisition includes all of Spirit’s Boeing-related commercial operations, including fuselages for the 737, P-8 and KC-46 Tanker programs, as well as major structures for the 767, 777 and 787 programs.

It also includes Spirit’s defense and aftermarket businesses as well as portions of Spirit’s operations in Belfast, Ireland.

Spirit employs approximately 15,000 people.

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

Business Environment and Trends

In 2024, global air traffic continued to expand beyond 2019 levels with domestic travel continuing to be the most robust and the single-aisle market following closely.

International travel also surpassed pre-pandemic levels during 2024 and the wide-body market continues to improve with the international travel recovery.

The transition in the international commercial market from recovery to normal market conditions is continuing to progress as China international travel remains below 2019 levels.

In 2025, global air traffic expanded near historical trend rates on an annual basis.

This growth came despite a lower than usual contribution from the North American market, which saw stagnant demand particularly in the low-cost space.

International demand outpaced domestic demand on an annual basis as the former built on the recovery momentum from 2024, including in China, lifting demand for wide-body airplanes.

Based on these trends, both single-aisle and wide-body demand remain above current industry supply levels.

We are experiencing strong demand from our airline customers globally.

We and our suppliers are experiencing supply chain disruptions as a result of production quality issues, global supply chain constraints, and labor instability.

We and our suppliers are also experiencing inflationary pressures.

We and our suppliers are experiencing improving supply chain performance with fewer disruptions from production quality issues, global supply chain constraints and labor instability.

We and our suppliers continue to experience inflationary pressures.

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

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

Airline financial performance, which influences demand for new capacity, has benefited from the resilient demand for travel.

The International Air Transport Association (IATA) is estimating 2024 industry-wide net profits of $31.5 billion, up from its forecast of $25.7 billion a year ago, primarily driven by North America, Europe and the Middle East.

Notwithstanding improvements, these factors continue to challenge overall productivity and adversely impact our financial position, results of operations and cash flows.

Airline financial performance, which influences demand for new aircraft, is benefiting from the resilient demand for travel.

The International Air Transport Association (IATA) is estimating 2025 industry-wide net profits of $39.5 billion, up from $28.3 billion in 2024, primarily driven by Europe, North America and the Middle East.

For 2026, IATA is forecasting $41 billion in net profits for the industry globally.

The overall outlook continues to stabilize as we face uncertainties in the environment in the near- to medium-term as airlines are facing persistently high and volatile costs.

The overall outlook continues to stabilize.

We face uncertainties in the environment in the near- to medium-term as airlines are facing persistently high and volatile costs even as fuel prices have declined.

The global economy is expecting a continued easing of inflation and interest rates, with regional economic and geopolitical difficulties adding uncertainty to the outlook and the financial viability of some airlines and regions.

The long-term outlook for the industry remains positive due to the fundamental drivers of air travel demand:

economic growth, increasing propensity to travel due to increased trade, globalization and improved airline services driven by liberalization of air traffic rights between countries.

The long-term airline industry outlook remains positive due to the fundamental drivers of air travel demand:

economic growth, increasing propensity to travel, increased trade, globalization and improved airline services driven by liberalization of air traffic rights between countries.

Our Commercial Market Outlook forecast projects a 3.1% growth rate in the global fleet over a 20-year period.

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The industry remains vulnerable to exogenous developments including fuel price spikes, potential new or increased tariffs, changing energy policies, credit market shocks, acts of terrorism, natural disasters, conflicts, epidemics, pandemics and increased global environmental regulations.

At BDS, we continue to see stable demand reflecting the important role our products and services have in ensuring our national security.

At BDS, we see strong demand reflecting the important role our products and services have in ensuring our national security.

Outside of the U.S., we are seeing similar solid demand as governments prioritize security, defense technology and global cooperation given evolving threats.

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 fixed-price development programs as well as on a number of mature programs which are continuing to adversely affect margins and cash flows.

Our fixed-price development programs are maturing;

however, technical and schedule challenges remain and have resulted in significant earnings charges on these programs.

BDS’s production system and supply chain are beginning to stabilize;

however, prior period performance has adversely affected margins and cash flows.

At BGS, we expect commercial revenues to remain strong in future quarters as the commercial airline industry has largely recovered and transitions to growth.

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Revenues $89,463 $66,517 $77,794

Loss from operations ($10,707) ($773) ($3,519)

Earnings/(loss) from operations $4,281 ($10,707) ($773)

Operating margins 4.8 % (16.1) % (1.0) %

Effective income tax rate 15.1 % 3.1 % (11.8) %

Net loss attributable to Boeing shareholders ($11,817) ($2,222) ($4,935)

Diluted loss per share ($18.36) ($3.67) ($8.30)

Core operating loss ($11,811) ($1,829) ($4,662)

Net earnings/(loss) attributable to Boeing shareholders $2,235 ($11,817) ($2,222)

Diluted earnings/(loss) per share $2.48 ($18.36) ($3.67)

Core operating earnings/(loss)

$3,236 ($11,811) ($1,829)

Core operating margins 3.6 % (17.8) % (2.4) %

Core loss per share ($20.38) ($5.81) ($11.06)

Core earnings/(loss) per share

$1.19 ($20.38) ($5.81)

(1) These measures exclude certain components of pension and other postretirement benefit expense.

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Total $89,463 $66,517 $77,794

Revenues increased by $22,946 million in 2025 compared with 2024 primarily driven by higher revenues at BCA, BDS and BGS.

BCA revenues increased by $18,633 million primarily due to higher deliveries.

BDS revenues increased by $3,316 million primarily due to lower net unfavorable cumulative

contract catch-up adjustments and higher volume.

BGS revenues increased by $969 million primarily due to higher government and commercial services revenue.

Revenues decreased by $11,277 million in 2024 compared with 2023 driven by lower revenues at BCA and BDS, partially offset by higher revenues at BGS.

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BGS revenues increased by $827 million primarily due to higher commercial services revenue.

Revenues increased by $11,186 million in 2023 compared with 2022 driven by higher revenues at all three operating segments.

BCA revenues increased by $7,875 million primarily driven by higher 787 deliveries.

BDS revenues increased by $1,771 million primarily due to higher revenues on fixed-price development programs.

BGS revenues increased by $1,516 million primarily due to higher commercial services revenue driven by market recovery across the commercial portfolio.

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

Loss From Operations

The following table summarizes Loss from operations:

Earnings/(Loss) From Operations

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

(Dollars in millions)

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Global Services 13,474 3,618 3,329

Segment operating loss (9,764) (70) (3,158)

Segment operating earnings/(loss)

6,267 (9,764) (70)

Unallocated items, eliminations and other (3,031) (2,047) (1,759)

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Postretirement FAS/CAS service cost adjustment 261 293 257

Loss from operations (GAAP) ($10,707) ($773) ($3,519)

Earnings/(loss) from operations (GAAP)

$4,281 ($10,707) ($773)

FAS/CAS service cost adjustment (1)

(1,045) (1,104) (1,056)

Core operating loss (Non-GAAP) (2)

Core operating earnings/(loss) (Non-GAAP) (2)

$3,236 ($11,811) ($1,829)

(1) The FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments.

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

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

See pages 47 - 48.

Earnings from operations increased by $14,988 million in 2025 compared with 2024, primarily driven by BGS ($9,856 million), BDS ($5,285 million) and BCA ($890 million), partially offset by an increase in loss from operations on Unallocated items, eliminations and other ($984 million).

The increase in earnings at BGS is primarily driven by a gain on the Digital Aviation Solutions Divestiture.

The decrease in loss from operations at BDS is primarily driven by lower net unfavorable cumulative contract catch-up adjustments.

The decrease in loss from operations at BCA is primarily driven by higher deliveries partially offset by higher combined reach-forward losses on 777X and 767 programs.

The increase in loss from operations on Unallocated items, eliminations and other is primarily driven by an increase in unallocated General and administrative expense.

Loss from operations increased by $9,934 million in 2024 compared with 2023.

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BGS earnings from operations increased by $289 million in 2024 compared with 2023 primarily due to higher commercial services revenue.

Loss from operations on Unallocated items, eliminations and other increased by $288 million in 2024 primarily due to an increase in eliminations and other unallocated items expense, partially offset by an increase in share-based plans income.

Loss from operations decreased by $2,746 million in 2023 compared with 2022.

BDS loss from operations decreased by $1,780 million compared to the same period in 2022, primarily due to a reduction in net unfavorable cumulative contract catch-up adjustments, which were $2,328 million better than the net unfavorable impact in the prior year.

BCA loss from operations decreased by $706 million reflecting higher deliveries and lower period expenses including lower abnormal production costs, partially offset by higher spending on research and development.

BGS earnings from operations increased by $602 million in 2023 compared with 2022 primarily due to higher commercial services revenue.

Loss from operations on Unallocated items, eliminations and other increased by $255 million in 2023 primarily due to higher deferred compensation expense.

Core operating loss increased by $9,982 million in 2024 compared with 2023 and decreased by $2,833 million in 2023 compared with 2022 primarily due to changes in Segment operating loss as described above.

Loss from operations

on Unallocated items, eliminations and other increased by $288 million in 2024 primarily due to an increase in eliminations and other unallocated items expense, partially offset by an increase in share-based plans income.

Core operating earnings increased by $15,047 million in 2025 compared with 2024 and core operating loss increased by $9,982 million in 2024 compared with 2023 primarily due to changes in Segment operating earnings/(loss) as described above.

Unallocated Items, Eliminations and Other

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Unallocated items, eliminations and other ($3,031) ($2,047) ($1,759)

Unallocated share-based plans expense increased by $220 million in 2025 primarily due to the timing of when share-based plans expense was recorded compared with when it was allocated to our segments.

Share-based plans income increased by $109 million in 2024 primarily due to fewer outstanding share-based awards in 2024 and the timing of corporate allocations.

Share-based plans expense decreased by $176 million in 2023 primarily due to fewer share-based grants and the timing of corporate allocations.

Deferred compensation expense decreased by $74 million in 2024 primarily driven by changes in our stock price.

Deferred compensation expense increased by $305 million in 2023 primarily driven by changes in broad stock market conditions.

Research and development expense increased by $62 million in 2024 and $37 million in 2023 primarily due to increased spending on enterprise product development.

Eliminations and other unallocated items expense increased by $411 million in 2024 primarily due to a second quarter earnings charge of $244 million that reflects a fine that would be paid if an agreement with the U.S.

Department of Justice is approved by the federal district court.

Eliminations and other unallocated items was largely unchanged in 2023 compared to 2022.

Net periodic pension benefit costs included in Loss from operations were as follows:

Deferred compensation expense increased by $68 million in 2025 and decreased by $74 million in 2024 primarily driven by changes in our stock price.

Unallocated research and development expense increased by $34 million in 2025 and $62 million in 2024 primarily due to increased spending on enterprise product development.

Eliminations and other unallocated items expense increased by $663 million in 2025 primarily due to higher unallocated General and administrative expense.

General and administrative expense for 2025 and 2024 includes earnings charges of $445 million and $244 million related to agreements with the U.S.

Department of Justice.

Eliminations and other unallocated items expense increased by $411 million in 2024 primarily due to an earnings charge of $244 million related to an agreement with the U.S.

Department of Justice.

For additional discussion, see Note 23 to our Consolidated Financial Statements.

Net periodic pension benefit costs included in Earnings/(loss) from operations were as follows:

(Dollars in millions) Pension

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Pension FAS/CAS service cost adjustment 784 811 799

Net periodic pension benefit cost included in Loss from operations

Net periodic pension benefit cost included in Earnings/(loss) from operations

($9) ($5) ($2)

The pension FAS/CAS service cost adjustment recognized in Loss from operations was largely consistent in 2024 compared with 2023 and decreased by $50 million in 2023 compared with 2022 due to changes in allocated pension cost year over year.

Net periodic benefit cost included in Loss from operations in 2024 was largely consistent with 2023 and 2022.

The pension FAS/CAS service cost adjustment recognized in Earnings/(loss) from operations in 2025 was largely consistent with 2024 and 2023.

Net periodic benefit cost included in Earnings/(loss) from operations in 2025 was largely consistent with 2024 and 2023.

For additional discussion related to Postretirement Plans, see Note 18 to our Consolidated Financial Statements.

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Years ended December 31, 2025 2024 2023

Loss from operations ($10,707) ($773) ($3,519)

Earnings/(loss) from operations $4,281 ($10,707) ($773)

Other income, net 1,125 1,222 1,227

Interest and debt expense (2,771) (2,725) (2,459)

Loss before income taxes (12,210) (2,005) (5,022)

Income tax benefit/(expense) 381 (237) (31)

Net loss (11,829) (2,242) (5,053)

net loss attributable to noncontrolling interest (12) (20) (118)

Net loss attributable to Boeing shareholders ($11,817) ($2,222) ($4,935)

Earnings/(loss) before income taxes 2,635 (12,210) (2,005)

Income tax (expense)/benefit (397) 381 (237)

Net earnings/(loss) 2,238 (11,829) (2,242)

Net earnings/(loss) attributable to noncontrolling interest 3 (12) (20)

Net earnings/(loss) attributable to Boeing shareholders $2,235 ($11,817) ($2,222)

Non-operating pension income included in Other income, net was $176 million in 2025, $476 million in 2024 and $529 million in 2023.

The decreased income in 2025 compared to 2024 was primarily due to lower expected return on plan assets.

The decreased income in 2024 compared to 2023 was primarily due to lower expected return on plan assets and higher amortization of net actuarial losses, partially offset by lower interest cost.

The decreased non-operating pension income in 2023 compared to 2022 was primarily due to higher interest cost and lower expected return on plan assets, partially offset by lower amortization of net actuarial losses.

Non-operating postretirement income included in Other income, net was $73 million in 2024 and $58 million in 2023 and 2022.

Non-operating postretirement income included in Other income, net was $19 million in 2025, $73 million in 2024 and $58 million in 2023.

The decreased income in 2025 was primarily due to lower amortization of net actuarial gains and higher interest cost.

The increased income in 2024 was primarily due to lower interest cost, partially offset by amortization of prior service credits.

For additional discussion related to Postretirement Plans, see Note 18 to our Consolidated Financial Statements.

Interest and debt expense increased by $46 million in 2025 primarily due to higher average interest rates.

Interest and debt expense increased by $266 million in 2024 primarily due to higher average debt balances.

Interest and debt expense decreased by $102 million in 2023 primarily due to lower average debt balances.

For a discussion related to Income Taxes, see Note 6 to our Consolidated Financial Statements.

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Cost of sales as a % of Revenues 95.2 % 103.0 % (7.8) % 103.0 % 90.1 % 12.9 %

Cost of sales increased by $16,666 million in 2025 compared with 2024, primarily due to higher deliveries 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 in 2025 compared to 2024 primarily due to lower charges on BDS fixed-price development programs, partially offset by higher combined reach-forward losses on the 777X and 767 programs at BCA.

Cost of sales decreased by $1,562 million in 2024 compared with 2023, primarily due to lower revenues at BCA, partially offset by the reach-forward losses on the 777X and 767 programs and higher charges on the BDS fixed-price development programs.

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

Cost of sales increased by $6,992 million in 2023 compared with 2022, primarily due to higher revenues at BCA and BGS, partially offset by lower development charges at BDS.

Cost of sales as a percentage of Revenues decreased in 2023 compared to 2022 primarily due to lower charges on BDS development programs.

Research and Development

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Total $3,615 $3,812 $3,377

Research and development expense decreased by $197 million in 2025 compared with 2024.

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

Research and development expense increased by $435 million in 2024 compared with 2023 primarily due to the 777X program at BCA and higher enterprise investments in product development.

Research and development expense increased by $525 million in 2023 compared with 2022 primarily due to higher research and development expenditures on the 777X program and enterprise investments in product development.

Our backlog at December 31 was as follows:

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government contract funding.

The increase in contractual backlog during 2024 was primarily due to an increase in BDS and BGS backlog that was partially offset by a decrease in BCA backlog.

The increase in contractual backlog during 2025 was primarily due to an increase in BCA backlog.

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

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government definitive contracts for which funding has not been authorized.

Unobligated backlog was largely unchanged in 2024.

The increase in unobligated backlog during 2025 was due to an increase in BDS backlog.

Additional Considerations

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

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

The Continuing Resolution (CR) enacted on December 21, 2024, continues federal funding at fiscal year 2024 appropriated levels through March 14, 2025.

Congress and the President must enact either full-year fiscal year 2025 (FY25) appropriations bills or an additional CR to fund government departments and agencies after March 14, 2025, or a government shutdown could result.

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

From October 1 through November 12, 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, had lapsed.

The Continuing Appropriations, Agriculture, Legislative Branch, Military Construction Veterans Affairs Appropriations Bill and Extensions Act, 2026, enacted November 12, 2025, largely funded the DoW, NASA and the DOT at fiscal year 2025 (FY25) appropriated levels through January 30, 2026.

The Commerce, Justice Science;

Energy and Water Development;

and Interior and Environment Appropriations Act, 2026 (H.R.

6938), enacted January 23, 2026, funded certain federal departments and agencies, including NASA, through FY26.

After January 30, 2026, the government will enter a partial shutdown unless and until Congress and the President enact either full-year FY26 appropriations bills or an additional Continuing Resolution.

We rely on the U.S.

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

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

Department of Defense (U.S.

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

government could experience a disruption to its operations and/or payments in 2025 as a result of the U.S.

Treasury exhausting extraordinary measures after reaching its debt limit.

In addition, U.S.

government discretionary spending in FY24 and fiscal year 2025 (FY25), including defense spending, was capped by the Fiscal Responsibility Act of 2023 (FRA).

If a CR for FY25 is in place on April 30, 2025, it would trigger a sequester under the FRA.

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

Global Trade The global trade landscape is growing more volatile, and the likelihood of new or reciprocal tariffs, export restrictions, sanctions or other restrictions is increasing.

We continually monitor the global trade environment and any changes in tariffs, trade agreements, restrictions or sanctions that may impact the Company or our suppliers or customers, and work to mitigate potential impacts.

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

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

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

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

During a shutdown, requirements to furlough employees in the DoW, the DOT 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 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 countries including the United Kingdom, Japan, South Korea, Malaysia, and the European Union.

As of December 31, 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 November 1, 2025, the U.S.

and China announced a bilateral trade arrangement and further extended the pause on the reciprocal and retaliatory tariffs on each other's imports until November 10, 2026.

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

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

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

During 2025, certain customers in China temporarily paused accepting delivery of our aircraft in response to ongoing tariff negotiations between the U.S.

In addition, as of December 31, 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.

As of December 31, 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 results reflect our best estimate of the impacts of the tariffs enacted as of December 31, 2025, and certain potential mitigating actions.

We seek to comply with all U.S.

and other government export control restrictions and sanctions.

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

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

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

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

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

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

Certain of our suppliers are also experiencing financial difficulties.

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In addition, we recorded losses on the KC-46A Tanker and Commercial Crew programs 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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Approximately 85% of BCA’s total backlog, in dollar terms, is with non-U.S.

We face aggressive international competitors who are intent on increasing their market share.

We face aggressive international competitors who are intent on defending or increasing their market share.

They offer competitive products and have access to most of the same customers and suppliers.

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Research and development $2,202 $2,386 $2,036

BCA revenues decreased by $11,040 million in 2024 compared with 2023 primarily due to lower deliveries across all programs and 737-9 customer considerations related to the January 2024 grounding.

BCA revenues increased by $7,875 million in 2023 compared with 2022 primarily due to higher 787 deliveries in 2023.

BCA revenues increased by $18,633 million in 2025 compared with 2024 primarily due to higher deliveries across all programs and the absence of $443 million of 737-9 customer considerations related to the January 2024 grounding.

BCA revenues decreased by $11,040 million in 2024 compared with 2023 primarily due to lower deliveries across all programs and 737-9 customer considerations.

BCA deliveries, including intercompany deliveries, as of December 31 were as follows:

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Loss From Operations

BCA loss from operations was $7,969 million in 2024 compared with $1,635 million in 2023 reflecting reach-forward losses of $4,079 million on the 777X and 767 programs in the third and fourth quarter of 2024, $443 million of 737-9 customer considerations related to the January 2024 grounding, lower deliveries, lower margins driven by production disruption including the IAM 751 work stoppage and new agreement, and higher research and development expense, partially offset by $1,271 million of lower abnormal production costs.

BCA loss from operations was $1,635 million in 2023 compared with $2,341 million in 2022 reflecting higher deliveries and lower period expenses including lower abnormal production costs, partially offset by higher spending on research and development.

Abnormal production costs in 2023 were $1,527 million, including $1,014 million related to the 787 program and $513 million related to the 777X program.

Abnormal production costs in 2022 were $1,753 million, including $1,240 million related to the 787 program, $325 million related to the 777X program, and $188 million related to the 737 program.

BCA loss from operations was $7,079 million in 2025 compared with $7,969 million in 2024 reflecting higher deliveries across all programs, the absence of 737-9 customer considerations related to the January 2024 grounding, lower abnormal production costs, and lower research and development costs, partially offset by higher combined reach-forward losses of $5,283 million on the 777X and 767 programs in 2025 and lower program margins.

BCA loss from operations was $7,969 million in 2024 compared with $1,635 million in 2023 reflecting reach-forward losses of $4,079 million on the 777X and 767 programs in 2024, $443 million of 737-9 customer considerations related to the January 2024 grounding, lower deliveries, lower margins driven by production disruption including the IAM 751 work stoppage and new agreement, and higher research and development expense, partially offset by $1,271 million of lower abnormal production costs.

Our total backlog represents the estimated transaction prices on unsatisfied and partially satisfied performance obligations to our customers where we believe it is probable that we will collect the consideration due and where no contingencies remain before we and the customer are required to perform.

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The value of orders in backlog is adjusted as changes to price and schedule are agreed to with customers and is reported in accordance with the requirements of Accounting Standards Codification (ASC) 606.

BCA total backlog of $435,175 million at December 31, 2024 decreased from $440,507 million at December 31, 2023, reflecting an increase in the value of existing orders that in our assessment do not meet the accounting requirements of ASC 606 for inclusion in backlog, cancellations and decreases in estimated contractual prices, partially offset by new orders in excess of deliveries.

Aircraft order cancellations during the year ended December 31, 2024 totaled $11,311 million and primarily related to 737 aircraft.

Net ASC 606 adjustments for the year ended December 31, 2024 totaled $16,553 million and primarily related to 777X aircraft.

ASC 606 adjustments include consideration of aircraft orders where a customer-controlled contingency may exist, as well as an assessment of whether the customer is committed to perform, impacts of geopolitical events or related sanctions, or whether it is probable that the customer will pay the full amount of consideration when it is due.

BCA total backlog of $567,290 million at December 31, 2025 increased from $435,175 million at December 31, 2024, 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 year ended December 31, 2025 totaled $11,094 million and primarily relate to 777X, 737, and 787 aircraft.

Net ASC 606 adjustments for the year ended December 31, 2025 totaled $17,759 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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Program Highlights

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

Following the accident, the FAA grounded and required inspections of all 737-9 aircraft with a mid-exit door plug.

All 737-9 aircraft returned to service in the first quarter of 2024.

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

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

In addition, the FAA 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 communicated findings from its investigation in February 2024 and identified multiple instances where Boeing and Spirit failed to comply with manufacturing quality control requirements.

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

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

These actions also include conducting fuselage inspections at Spirit to improve quality prior to shipment to Boeing.

Production was paused on September 13, 2024, because of the work stoppage initiated by IAM 751.

A new IAM 751 contract was ratified in November 2024, and production resumed in early December 2024.

Prior to the work stoppage, production rates gradually increased in 2024 as we implemented new processes aligned with our safety and quality plan.

We plan to gradually increase the production rate.

As of December 31, 2024, we had approximately 55 737-8 aircraft in inventory that were produced prior to 2023, including approximately 40 aircraft for customers in China.

We expect to deliver these aircraft in 2025.

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

737 Program The 737 production rate was significantly disrupted in 2024 because of the 737-9 door plug accident and the IAM labor strike.

Throughout 2025, the rate recovered from below 38 aircraft per month at the beginning of the year to 42 per month during the fourth quarter.

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.

The program plans to increase the production rate from 42 to 47 in 2026 with the concurrence of the FAA.

We are also planning for additional production rate increases beyond 47 per month as well as adding a 737 production line.

We increased the accounting quantity by 800 units during the year ended December 31, 2025, due to the program's normal progress of obtaining additional orders and delivering airplanes.

In early 2026, we expect to deliver the last 737-8 aircraft produced prior to 2023.

We have a final set of design changes to address the engine anti-ice issue on the 737-7 and 737-10 and are continuing to work through the certification process of the 737-7 and 737-10 models.

We continue to expect certification to occur in 2026.

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

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

The production slow-down, the IAM 751 work stoppage and new agreement, and the timing of minor model certifications have had an adverse impact on our financial position, results of operations and cash flows during 2024.

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

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

See further discussion of the 737 MAX in Note 9 and Note 15 to our Consolidated Financial Statements .

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

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

Prior to the IAM 751 work stoppage, we experienced factory disruption, including supply chain delays and quality issues.

We slowed production to reduce traveled work and enable supply chain recovery, which resulted in higher near-term production costs.

Production resumed in December 2024.

During the third quarter of 2024, we decided to end production of the 767 freighter program in 2027 and, as a result of this decision, we reduced the accounting quantity for the 767 program by 9 units.

Impacts of this decision, as well as the IAM 751 work stoppage and contract negotiations, and higher costs driven by ongoing factory disruption resulted in a reach-forward loss of $398 million during the third quarter of 2024.

During the fourth quarter of 2024, we reduced the accounting quantity by 7 units.

We now expect to end production in late 2026 or early 2027.

We recorded an additional reach-forward loss of $182 million as a result of the reduction in the accounting quantity and the new IAM 751 agreement.

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

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

During 2024 and 2025, we recorded reach-forward losses of $580 million and $384 million primarily driven by higher production costs.

See further discussion of the KC-46A Tanker program in Note 15 to our Consolidated Financial Statements.

777 and 777X Programs The accounting quantity for the 777 program increased by 32 units during the year ended December 31, 2024, due to the program's normal progress of obtaining additional orders and delivering airplanes.

The accounting quantity for the 777X program remained unchanged during 2024.

We are currently targeting a combined production rate of 4 per month for the 777/777X programs having resumed production in December 2024.

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

777 and 777X Programs The accounting quantity for the 777 program extends through year-end 2027 and reflects the number of units we expect to produce and deliver by 2027.

During 2025, we increased the accounting quantity by six units reflecting increased demand and our decision to produce more 777 models by 2027.

We increased the accounting quantity for the 777X program by 100 units in the third quarter of 2025 and 50 units in the fourth quarter of 2025 reflecting strong order activity in 2025 and production plan updates.

Cumulative firm orders for the 777X increased from 358 units at December 31, 2024, to 560 units at December 31, 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 third quarter of 2024, based on flight test delays and our revised assessment of certification timelines, the anticipated first delivery of the 777-9 was delayed to 2026 and the 777-8 Freighter moved to 2028.

In July 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.

In November 2025, we obtained FAA approval to begin the third phase of flight testing which is currently ongoing.

In the third quarter of 2025, we reassessed the anticipated timing to complete FAA certification flight testing and delayed first delivery of the 777-9 to 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 2025.

During recent inspections on the 777X, we identified a potential durability issue on the engine.

We are continuing certification flight testing as we work with the supplier to determine root cause and corrective action.

We continue to expect first delivery of the 777-9 to occur in 2027.

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.

In addition, we decided to slow the production rate ramp of 777X to address production challenges, which resulted in higher production costs and further customer delivery delays.

As a result of these changes, as well as higher estimated labor and supplier costs, we recorded a $2,608 million reach-forward loss during the third quarter of 2024.

During the fourth quarter of 2024, we recorded an additional reach-forward loss of $891 million on the 777X program primarily due to higher costs as a result of the new IAM 751 agreement.

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.

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 contraction of the accounting quantity.

These factors include aircraft certification requirements and timing, flight test discoveries, design changes, 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 additional reach-forward losses in future periods.

787 Program The accounting quantity for the 787 program increased by 100 units during the year ended December 31, 2024, due to the program's normal progress of obtaining additional orders and delivering airplanes.

During 2024, we slowed production to below 5 per month due to supply chain constraints as well as other production issues.

While we continue to be impacted by performance challenges and supply chain constraints, we are working to increase production rates.

Delays associated with business class seats adversely impacted 2024 deliveries and will continue to impact deliveries in 2025.

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

We expect to complete the rework and deliver the majority of these aircraft in 2025.

The inspections and rework costs on inventoried aircraft are accounted for as abnormal production costs, and we expensed $256 million during the year ended December 31, 2024.

787 Program During 2024, the 787 production rate was slowed to below five per month while addressing performance challenges and supply chain constraints.

In 2025, while continuing to monitor supply chain health and factory performance, we increased the production rate from five to seven per month.

We began increasing the production rate to eight per month during the fourth quarter of 2025 and continue to work toward stabilizing production.

In February 2025, we completed the remaining rework on aircraft produced prior to 2023.

At December 31, 2025, we had approximately five of those aircraft in inventory and expect to deliver them in 2026.

Fleet Support We provide the operators of our commercial aircraft with assistance and services to facilitate efficient and safe airplane operation.

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Additional Considerations

On June 30, 2024, we entered into an agreement to acquire Spirit.

On December 8, 2025, we completed the acquisition of Spirit.

See Note 2 to our Consolidated Financial Statements.

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Business Environment and Trends

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

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

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

In March 2024, the U.S.

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

DoD and $25 billion for NASA.

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

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

In May 2025, the U.S.

government released the President's budget request for 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.

6938 provided FY26 appropriations of $24 billion for NASA, an increase of approximately $5 billion from the FY26 request.

On January 30, 2026, funding for the DoW will lapse.

For additional information on U.S.

government appropriations and budgets, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Additional Considerations – U.S.

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

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.

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

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

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

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

At the end of 2024, 29% of BDS backlog was attributable to non-U.S.

At December 31, 2025, 26% of BDS backlog was attributable to non-U.S.

Results of Operations

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The following discussions of comparative results among periods should be viewed in this context.

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

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

Years ended December 31, 2025 2024 2023

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Commercial Satellites 4 2 5

Military Satellites 1

Total 131 112 162

BDS revenues in 2025 increased by $3,316 million compared with 2024.

The increase is primarily due to $1,864 million lower net unfavorable cumulative contract catch-up adjustments and higher volume compared to the prior year.

BDS revenues in 2024 decreased by $1,015 million compared with 2023.

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Overall, net unfavorable cumulative contract catch-up adjustments in 2024 were $995 million higher than 2023.

BDS revenues in 2023 increased by $1,771 million compared with 2022.

Revenues related to BDS’ five major fixed-price development programs increased by $1,767 million in 2023 compared with 2022.

This increase reflects lower unfavorable net cumulative contract catch-up adjustments in 2023 as well as higher costs incurred in 2023 to complete these contracts.

Net unfavorable cumulative contract catch-up adjustments in 2023 were $648 million better than in 2022 largely due to lower charges on development programs in 2023, partially offset by unfavorable performance on other programs.

Loss From Operations

BDS loss from operations in 2025 was $128 million compared with $5,413 million in 2024.

The year over year improvement in earnings is primarily due to lower net unfavorable cumulative contract catch-up adjustments of $5,196 million compared to 2024.

During 2025, losses incurred on the five major fixed-price development programs totaled $802 million, primarily on KC-46A Tanker ($714 million), compared to losses of $5,013 million during 2024.

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

BDS loss from operations in 2024 was $5,413 million compared with $1,764 million in 2023.

The increase is primarily due to higher net unfavorable cumulative contract catch-up adjustments of $3,428 million on BDS’ five major fixed-price development programs compared to 2023.

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See further discussion of fixed-price contracts in Note 15 to our Consolidated Financial Statements.

BDS loss from operations in 2023 of $1,764 million decreased by $1,780 million compared with $3,544 million in 2022.

The decrease is primarily due to $2,863 million of lower charges in 2023 on fixed-price development programs that were partially offset by lower earnings across other programs including satellites and F-15, as well as higher period expenses.

During 2023, losses incurred on the five fixed-price development programs totaled $1,585 million compared with $4,448 million in 2022.

Charges on fixed-price development programs in 2023 included VC-25B ($482 million), KC-46A Tanker ($309 million), Commercial Crew ($288 million), T-7A Red Hawk ($275 million) and MQ-25 ($231 million).

Loss from operations in 2023 includes a $315 million impact from an agreement with one of our satellite customers which includes customer considerations as well as increased costs to enhance the

constellation and meet lifecycle commitments.

Net unfavorable cumulative contract catch-up adjustments were $2,328 million better than in 2022.

See further discussion of fixed-price contracts in Note 14 to our Consolidated Financial Statements.

BDS loss from operations includes our share of income from equity method investments of $125 million, $44 million and $13 million primarily from our United Launch Alliance and other joint ventures in 2024, 2023 and 2022, respectively.

Total backlog of $64,023 million at December 31, 2024 was $5,011 million higher than December 31, 2023, reflecting the timing of awards, partially offset by revenue recognized on contracts awarded in prior periods.

BDS earnings/(loss) from operations includes our share of income from equity method investments of $21 million, $125 million and $44 million primarily from our United Launch Alliance and other joint ventures in 2025, 2024 and 2023, respectively.

BDS backlog was $84,786 million at December 31, 2025 compared with $64,023 million at December 31, 2024.

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

Additional Considerations

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training and professional services;

and data analytics and digital services.

We expect BGS commercial revenues to remain strong in future quarters as the commercial airline industry transitions from recovery to growth.

Over the long-term, as the size of the worldwide commercial airline fleet continues to grow, so does demand for aftermarket services designed to increase efficiency and extend the economic lives of aircraft.

and digital solutions and analytics.

We expect BGS commercial revenues to remain strong in future quarters as the commercial airline industry has largely recovered and transitions to growth.

Over the long-term, as the size of the worldwide commercial airline fleet continues to grow, so does demand for after-market services designed to increase efficiency and extend the economic lives of aircraft.

Airlines are using data analytics to plan flight operations and predictive maintenance to improve their productivity and efficiency.

Airlines continue to look for opportunities to reduce the size and cost of their spare parts inventory, frequently outsourcing spares management to third parties.

The demand outlook for our government services business has remained stable in 2024.

The demand outlook for our government services business has remained stable with low growth in 2025.

Government services market segments are growing on pace with related fleets, but vary based on the utilization and age of the aircraft.

government services market is the single largest individual market, comprising over 50 percent of the government services markets served.

government services is the single largest individual served market.

Over the next decade, we expect U.S.

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fleets to add rotorcraft and commercial derivative aircraft at faster rates.

We expect approximately 30 percent of the worldwide fleet of military aircraft to be retired and replaced over the next ten years, driving increased demand for services to maintain aging aircraft and enhance aircraft capability.

We expect approximately 30 percent of the worldwide fleet of military aircraft to be retired and replaced over the next 10 years, driving increased demand for services to maintain aging aircraft and enhance aircraft capability.

BGS’ major customer, the U.S.

government, remains subject to the spending limits and uncertainty, which could restrict the execution of certain program activities and delay new programs or competitions.

government, remains subject to budget availability and uncertainty, which could restrict the execution of certain program activities and delay new programs or competitions.

Industry Competitiveness Aviation services is a competitive market with many domestic and international competitors.

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Operating margins 64.4 % 18.1 % 17.4 %

BGS revenues in 2025 increased by $969 million compared with 2024 primarily due to higher government and commercial services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments in 2025 was $14 million lower than the prior year comparable period.

BGS revenues in 2024 increased by $827 million compared with 2023 primarily due to higher commercial services revenue.

The net unfavorable impact of cumulative contract catch-up adjustments in 2024 was $96 million higher than the prior year comparable period.

BGS revenues in 2023 increased by $1,516 million compared with 2022 primarily due to higher commercial services revenue driven by market recovery across the commercial portfolio.

The net unfavorable impact of cumulative contract catch-up adjustments in 2023 was $16 million worse than the net favorable impact in the prior year comparable period.

Earnings From Operations

BGS earnings from operations in 2024 increased by $289 million compared with 2023, primarily due to higher commercial services revenue.

BGS earnings from operations in 2025 increased by $9,856 million compared with 2024, primarily due to a 2025 gain on the Digital Aviation Solutions Divestiture of $9,566 million.

The net unfavorable impact of cumulative contract catch-up adjustments in 2025 was $4 million higher than the prior year.

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Years ended December 31, 2025 2024 2023

Net loss ($11,829) ($2,242) ($5,053)

Net earnings/(loss) $2,238 ($11,829) ($2,242)

Non-cash items (171) 8,517 4,113

Changes in assets and liabilities (1,002) (8,768) 4,089

Net cash (used)/provided by operating activities (12,080) 5,960 3,512

Net cash (used)/provided by investing activities (11,973) (2,437) 4,370

Net cash provided/(used) by financing activities 25,209 (5,487) (1,266)

Net cash provided/(used) by operating activities 1,065 (12,080) 5,960

Net cash provided/(used) by investing activities 499 (11,973) (2,437)

Net cash (used)/provided by financing activities (3,763) 25,209 (5,487)

Effect of exchange rate changes on cash and cash equivalents 40 (47) 30

Net increase/(decrease) in cash & cash equivalents, including restricted 1,109 (1,934) 6,543

Net (decrease)/increase in cash & cash equivalents, including restricted (2,159) 1,109 (1,934)

Cash & cash equivalents, including restricted, at beginning of year 13,822 12,713 14,647

Cash & cash equivalents, including restricted, at end of year $11,663 $13,822 $12,713

Operating Activities Net cash used by operating activities was $12.1 billion during 2024 compared with net cash provided of $6.0 billion during 2023.

Operating Activities Net cash provided by operating activities was $1.1 billion during 2025 compared with net cash used of $12.1 billion during 2024.

The $13.1 billion increase in net cash provided by operating activities was primarily driven by higher commercial airplane deliveries, lower customer considerations and working capital improvements.

The change in Non-cash items of $8.7 billion compared with 2024 was primarily due to a gain on the Digital Aviation Solutions Divestiture in October 2025, partially offset by higher combined 777X and 767 reach-forward losses recorded during 2025 compared to 2024.

Changes in assets and liabilities for 2025 improved by $7.8 billion compared to 2024 primarily driven by favorable changes in Inventories ($10.9 billion) and Accounts payable ($1.5 billion), partially offset by unfavorable changes in Advances and progress billings ($4.8 billion).

The change in Inventories was primarily driven by higher deliveries on our commercial airplane programs during 2025 as compared to 2024.

The change in Accounts payable during 2025 compared to 2024 reflects increased production primarily in our commercial airplanes business.

The change in Advances and progress billings during 2025 compared to 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 $0.2 billion and $0.9 billion during 2025 and 2024.

Net cash used by operating activities was $12.1 billion during 2024 compared with net cash provided of $6.0 billion during 2023.

The increase in cash outflows from operating activities in 2024 was primarily driven by our commercial airplanes business.

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

Commercial airplane cash outflows reflected slowed and/or paused production and lower deliveries as a result of ongoing safety and quality improvement actions the Company is taking following the 737-9 door plug accident on January 5, 2024, supply chain constraints, and the IAM 751 work stoppage.

The higher net loss of $11.8 billion during 2024 compared to $2.2 billion in 2023 primarily reflects higher losses from operations at BCA and BDS.

The change in Non-cash items is primarily due to the 777X and 767 reach-forward losses of $4.1 billion recorded in 2024.

Changes in assets and liabilities for 2024 decreased by $12.9 billion compared to 2023 primarily driven by unfavorable changes in Inventories ($10.7 billion), Accounts payable ($2.5 billion) and Unbilled receivables ($0.4 billion), partially offset by changes in Accrued Liabilities ($0.8 billion) and Advances and progress billings ($0.7 billion).

The change in Non-cash items was primarily due to the 777X and 767 reach-forward losses of $4.1 billion recorded in 2024.

and progress billings ($0.7 billion).

The growth in Inventories was primarily driven by lower deliveries on our commercial airplane programs during 2024 as compared to 2023.

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Cash provided by Advances and progress billings during 2024 was $4.1 billion compared to cash provided of $3.4 billion during 2023.

Net cash provided by operating activities was $6.0 billion during 2023 compared with $3.5 billion during 2022.

Net cash provided by operating activities in 2022 included a $1.5 billion income tax refund.

The year-over-year improvement in cash provided by operating activities reflects increases in revenues at BCA and BGS, higher Advances and progress billings ($3.3 billion) and lower payments to 737 MAX customers ($0.6 billion), partially offset by increased Inventories ($2.1 billion).

Increases in Accrued liabilities in both years primarily reflects accrued reach-forward losses on BDS programs.

Changes in assets and liabilities for 2023 decreased by $0.1 billion compared to 2022 primarily driven by unfavorable changes in Inventories ($2.1 billion) and Accrued liabilities ($2.2 billion), partially offset by

increases in Advances and progress billings ($3.3 billion).

The change in Inventories was primarily driven by increased production on the 737 and 777X programs, partially offset by increased deliveries for the 787 program in 2023.

The change in Accrued liabilities was primarily driven by higher accrued losses on BDS fixed-price development programs recorded in the prior year.

Cash provided by Advances and progress billings was $3.4 billion in 2023 as compared with $0.1 billion in 2022.

Concessions paid to 737 MAX customers totaled $0.4 billion in 2023 and $1.0 billion in 2022.

Payables to suppliers who elected to participate in supply chain financing programs decreased by $0.2 billion in 2024, and increased by $0.4 billion and $0.2 billion in 2023 and 2022.

Payables to suppliers who elected to participate in supply chain financing programs decreased by $0.7 billion and $0.2 billion in 2025 and 2024, and increased by $0.4 billion in 2023.

Supply chain financing is not material to our overall liquidity.

Investing Activities Cash used by investing activities during 2024 was $12.0 billion, compared with cash used of $2.4 billion during 2023 and cash provided by investment activities of $4.4 billion during 2022.

The increase in cash used in 2024 compared to 2023 was primarily due to net contributions to investments of $9.1 billion in 2024 compared to $0.7 billion in 2023.

The increase in cash outflows in 2023 compared to 2022 was primarily due to net contributions to investments of $0.7 billion in 2023 compared to net proceeds from investments of $5.6 billion in 2022.

Investing Activities Net cash provided by investing activities during 2025 was $0.5 billion, compared with cash used of $12.0 billion during 2024 and $2.4 billion during 2023.

The increase in net cash provided in 2025 compared to 2024 was primarily due to an increase in Proceeds from dispositions of $10.5 billion and a decrease in net contributions to investments of $3.8 billion, partially offset by an increase in cash paid for Acquisitions, net of cash acquired of $1.2 billion.

Proceeds from dispositions in 2025 were primarily driven by the Digital Aviation Solutions Divestiture in October 2025.

Acquisitions, net of cash acquired of $1.2 billion in 2025 reflects the Spirit Acquisition in December 2025.

The increase in net cash used by investing activities in 2024 compared to 2023 was primarily due to net contributions to investments of $9.1 billion in 2024 compared to net contributions to investments of $0.7 billion in 2023.

Capital expenditures totaled $2.9 billion in 2025, compared with $2.2 billion in 2024 and $1.5 billion in 2023.

We expect capital expenditures to grow in 2026 compared with 2025.

Financing Activities Cash provided by financing activities was $25.2 billion during 2024, compared with cash used of $5.5 billion during 2023, and $1.3 billion in 2022.

Cash provided by financing activities during 2024 was primarily driven by the issuance of common stock and Mandatory convertible preferred stock in the fourth quarter of 2024, which resulted in cash proceeds of $18.2 billion and $5.7 billion, net of issuance costs, as well as the issuance of $10.0 billion of fixed-rate senior notes in the second quarter of 2024.

During 2024, net borrowings were $1.5 billion compared to net repayments of $5.1 billion and $1.3 billion in 2023 and 2022.

Financing Activities Net cash used by financing activities was $3.8 billion during 2025, compared with net cash provided of $25.2 billion during 2024, and net cash used of $5.5 billion in 2023.

Net cash used during 2025 was primarily driven by net repayments of $3.5 billion.

Net cash provided during 2024 was primarily driven by the issuance of common stock and Mandatory convertible preferred stock in the fourth quarter of 2024, which resulted in cash proceeds of $18.2 billion and $5.7 billion, net of issuance costs.

At December 31, 2025 and 2024 debt balances totaled $54.1 billion and $53.9 billion, of which $8.5 billion and $1.3 billion were classified as short-term.

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The increase in 2023 was primarily due to the vesting of a one-time RSU grant awarded to most employees in December 2020.

In 2020, we announced the suspension of our dividend to common shareholders until further notice.

As a result, we did not pay any dividends to common shareholders in 2024, 2023 and 2022.

Our dividend to common shareholders has been suspended since 2020.

Capital Resources

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Purchase obligations 80,965 109,911 190,876

During 2024, net cash used by operating activities was $12.1 billion.

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

Commercial airplanes cash outflows reflect slowed production and lower deliveries following the Alaska Airlines accident, supply chain constraints and the IAM 751 work stoppage.

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

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

See Note 2 to our Consolidated Financial Statements.

At December 31, 2025, we had $10.9 billion of cash, $18.5 billion of short-term investments, and $10.0 billion of unused borrowing capacity on revolving credit line agreements.

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

In the second quarter of 2024, we terminated the $0.8 billion 364-day revolving credit agreement that was scheduled to expire in August 2024, and the $3.2 billion five-year revolving credit agreement, as amended, that was scheduled to expire in October 2024.

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

We expect to pay $8.5 billion in short-term and long-term debt due within the next 12 months from our available cash balance.

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 December 31, 2024 we were in full compliance with all covenants contained in our debt and credit facility agreements.

We currently maintain investment grade credit ratings;

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

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

In January 2025, Moody’s affirmed the Baa3/P-3 investment grade credit rating with negative outlook.

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

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

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

In October 2025, S&P affirmed the BBB- credit rating and revised the outlook to stable from negative.

In December 2025, Moody’s affirmed the Baa3 credit rating and revised the outlook to stable from negative.

We may, from time to time, purchase, redeem or retire any of our outstanding debt securities in open market or privately negotiated transactions, by tender offer or otherwise, after consideration of market conditions, our liquidity needs and other factors.

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

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

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

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

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

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On an ERISA basis, our plans are more than 90% funded at December 31, 2025.

We do not expect to make significant contributions

to our pension plans in 2025.

We do not expect to make significant contributions to our pension plans in 2026.

We may be required to make higher contributions to our pension plans in future years.

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Purchase obligations include amounts recorded as well as amounts that are not recorded on the Consolidated Statements of Financial Position.

Purchase obligations not recorded on the Consolidated Statements of Financial Position include agreements for inventory procurement, information technology software and hardware, aircraft trade-ins, property, plant and equipment, electricity and natural gas contracts, tooling costs, and other miscellaneous production related obligations.

Purchase obligations not recorded on the Consolidated Statements of Financial Position include agreements for inventory procurement, information technology software and hardware, aircraft trade-ins, engineering and research and development, property, plant and equipment, tooling costs, and other miscellaneous production related obligations.

The most significant obligation relates to inventory procurement contracts.

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Purchase order commitments associated with industrial participation agreements are included in purchase obligations.

To be eligible for such a purchase order commitment from us, a non-U.S.

To be eligible for such a purchase order

commitment from us, a non-U.S.

supplier must have sufficient capability to meet our requirements and must be competitive in cost, quality and schedule.

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

Government Cost Accounting Standards (CAS), which employ different actuarial assumptions

and accounting conventions than GAAP.

Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP.

CAS costs are allocable to government contracts.

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

The Pension FAS/CAS service cost adjustments recognized in Loss from operations were benefits of $811 million in 2024, $799 million in 2023 and $849 million in 2022.

The higher benefits in 2024 were primarily due to increases in allocated pension cost year over year, while the lower benefits in 2023 were primarily due to reductions in allocated pension cost year over year.

The Pension FAS/CAS service cost adjustments recognized in Earnings/(loss) from operations were benefits of $784 million in 2025, $811 million in 2024 and $799 million in 2023.

The lower benefits in 2025 were primarily due to reductions in allocated pension cost year over year, while the higher benefits in 2024 were primarily due to increases in allocated pension cost year over year.

The non-operating pension income included in Other income, net was $176 million in 2025, $476 million in 2024 and $529 million in 2023.

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

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

The lower benefits in 2023 were primarily due to higher interest costs and lower expected return on plan assets, offset by lower amortization of net actuarial losses.

For further discussion of pension and other postretirement costs, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 28 of this Form 10-K and see Note 23 to our Consolidated Financial Statements.

For further discussion of pension and other postretirement costs, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 28 and 29 of this Form 10-K and see Note 24 to our Consolidated Financial Statements.

Management uses Core operating earnings/(loss), Core operating margins and Core earnings/(loss) per share for purposes of evaluating and forecasting underlying business performance.

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Reconciliation of Non-GAAP Measures to GAAP Measures

The table below reconciles the non-GAAP financial measures of Core operating 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.

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

(Dollars in millions, except per share data)

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Revenues $89,463 $66,517 $77,794

Loss from operations, as reported ($10,707) ($773) ($3,519)

Earnings/(loss) from operations, as reported

$4,281 ($10,707) ($773)

Operating margins 4.8 % (16.1) % (1.0) %

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($1,045) ($1,104) ($1,056)

Core operating loss (non-GAAP) ($11,811) ($1,829) ($4,662)

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

$3,236 ($11,811) ($1,829)

Core operating margins (non-GAAP) 3.6 % (17.8) % (2.4) %

Diluted loss per share, as reported ($18.36) ($3.67) ($8.30)

Diluted earnings/(loss) per share, as reported

$2.48 ($18.36) ($3.67)

Pension FAS/CAS service cost adjustment (1)

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0.34 0.54 0.57

Core loss per share (non-GAAP) ($20.38) ($5.81) ($11.06)

Weighted average diluted shares (in millions) 647.2 606.1 595.2

Core earnings/(loss) per share (non-GAAP)

$1.19 ($20.38) ($5.81)

Diluted weighted average common shares outstanding (in millions) 762.3 646.9 605.8

(1) FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments.

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

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

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

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

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

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

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Changes in revenue and cost estimates could also result in a reach-forward loss or an adjustment to a reach-forward loss which would be recorded immediately in earnings.

Net cumulative catch-up adjustments for changes in estimated revenues and costs at completion across all long-term contracts, including the impact of estimated losses on unexercised options, increased Loss from operations by $6,562 million, $2,943 million and $5,253 million in 2024, 2023 and 2022, respectively, and were primarily due to losses recognized on the KC-46A Tanker, T-7A Red Hawk, Commercial Crew, VC-25B, and MQ-25 programs.

Net cumulative catch-up adjustments for changes in estimated revenues and costs at completion across all long-term contracts, including the impact of estimated losses on unexercised options, decreased Earnings from operations by $1,377 million in 2025 and increased Loss from operations by $6,562 million and $2,943 million in 2024 and 2023, respectively, and were primarily due to losses recognized on the KC-46A Tanker, VC-25B, T-7A Red Hawk, MQ-25, and Commercial Crew programs.

These are all fixed-price development programs, and there is ongoing risk that similar losses may have to be recognized in future periods on these and/or other programs.

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Factors that influence these estimates include the timing of production rate increases, internal and supplier performance trends, production quality, labor instability, supply chain delays and quality issues, learning curve, change incorporation, rework or safety enhancements, regulatory requirements, flight test and certification requirements and schedules, performance or reliability issues involving completed aircraft, customer and/or supplier claims or assertions, asset utilization, anticipated labor agreements, and inflationary or deflationary trends.

Certain production rate increases require regulatory approval.

For example, during 2024, the FAA communicated it will not approve production rate increases for the 737 program beyond 38 per month or additional production lines until Boeing has complied with required quality and safety standards.

Since the 737-9 door plug accident in January 2024, the 737 program may only increase production rates and/or implement new production lines with the concurrence of the FAA .

If we are unable to increase production rates consistent with our assumptions, our financial position, results of operations and cash flows could be materially impacted.

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Adverse changes to the revenue and/or cost estimates for these programs could result in further earnings charges in future periods.

Lower production rates and the IAM 751 work stoppage and new agreement as well as pay enhancements for certain other non-union employees have also pressured margins on other commercial airplane programs.

Due to the significance of judgment in the estimation process described above, it is reasonably possible that changes in underlying circumstances or assumptions could have a material effect on program gross margins.

If the combined gross margin percentages for our commercial airplane programs had

been estimated to be 1% higher or lower it would have an approximately $210 million impact on operating earnings for the year ended December 31, 2024.

If the combined gross margin percentages for our commercial airplane programs had been estimated to be 1% higher or lower it would have an approximately $390 million impact on operating earnings for the year ended December 31, 2025.

Pension Plans

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We believe that the methodologies we use are reasonable and can be replicated on a consistent basis in future periods.

Deferred tax liabilities represent the assumed source of future taxable income and the majority are assumed to generate taxable amounts during the next five years.

Deferred tax assets include amounts related to pension and other postretirement benefits that are assumed to generate significant deductible amounts beyond five years.

The Company’s valuation allowance of $7,837 million at December 31, 2024, primarily relates to pension and other postretirement benefit obligation deferred tax assets, tax net operating losses, tax credits and interest carryforwards that are assumed to reverse beyond the period in which reversals of deferred tax liabilities are assumed to occur.

During 2024, the Company

increased the valuation allowance by $3,287 million primarily due to tax credits and other carryforwards generated in 2024 that cannot be realized in 2024.

The Company’s valuation allowance of $9,754 million at December 31, 2025, primarily relates to certain domestic deferred tax assets and domestic tax net operating losses, tax credits and interest carryforwards that are assumed to reverse beyond the period in which reversals of deferred tax liabilities are assumed to occur.

The Company’s valuation allowance increased by $1,917 million in 2025 primarily reflecting $1,833 million recorded as part of acquisition accounting against acquired Spirit deferred tax assets as well as tax credits and other carryforwards generated in 2025 that cannot be realized in 2025.

Until the Company generates sustained levels of profitability, additional valuation allowances may have to be recorded with corresponding adverse impacts on earnings and/or other comprehensive income.

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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-K

Item 7. Management’s Discussion and Analysis