What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-28 compared with 2026-04-22 · 155 added, 117 removed, 278 unchanged (49% of the section changed)

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

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

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

2026 2025 2026 2025

Revenues $46,777 $42,245 $24,560 $22,749

Earnings from operations $448 $461

Earnings/(loss) from operations $604 $285 $156 ($176)

Operating margins 1.3 % 0.7 % 0.6 % (0.8) %

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Diluted loss per share ($0.79) ($1.09) ($0.67) ($0.92)

Core operating earnings $293 $199

Core operating earnings/(loss) $294 ($234) $1 ($433)

Core operating margins 0.6 % (0.6) % 0.0 % (1.9) %

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The following table summarizes Revenues:

(Dollars in millions) Three months ended March 31

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

2026 2025 2026 2025

Commercial Airplanes $20,954 $19,021 $11,751 $10,874

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Total $46,777 $42,245 $24,560 $22,749

Revenues for the three months ended March 31, 2026, increased by $2,721 million compared with the same period in 2025 primarily driven by higher revenues at Defense, Space & Security (BDS) and Commercial Airplanes (BCA).

Earnings from Operations

The following table summarizes Earnings from operations:

(Dollars in millions) Three months ended March 31

Revenues for the six and three months ended June 30, 2026, increased by $4,532 million and $1,811 million compared with the same periods in 2025 primarily driven by higher revenues at Defense, Space & Security (BDS) and Commercial Airplanes (BCA).

Earnings/(Loss) from Operations

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

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

2026 2025 2026 2025

Commercial Airplanes ($885) ($1,094) ($322) ($557)

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Postretirement FAS/CAS service cost adjustment 125 129 63 60

Earnings from operations (GAAP) $448 $461

Earnings/(loss) from operations (GAAP) $604 $285 $156 ($176)

FAS/CAS service cost adjustment * (310) (519) (155) (257)

Core operating earnings (Non-GAAP) **

Core operating earnings/(loss) (Non-GAAP) ** $294 ($234) $1 ($433)

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

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See pages 49-50.

Earnings from operations for the three months ended March 31, 2026, decreased by $13 million compared with the same period in 2025, primarily driven by unfavorable changes in the FAS/CAS service cost adjustment ($107 million) and higher loss from operations at BCA ($26 million), partially offset by higher earnings from operations at BDS ($78 million) and Global Services (BGS) ($28 million).

Core operating earnings for the three months ended March 31, 2026, increased by $94 million compared with the same period in 2025, primarily due to higher Segment operating earnings and changes in the FAS/CAS service cost adjustment as described above.

Earnings from operations for the six months ended June 30, 2026, increased by $319 million compared with the same period in 2025, primarily driven by a decrease in loss from operations on Unallocated items, eliminations, and other ($419 million) and at BCA ($209 million), partially offset by unfavorable changes in the FAS/CAS service cost adjustment ($209 million).

Earnings from operations for the three months ended June 30, 2026, increased by $332 million compared with the same period in 2025, primarily driven by a decrease in loss from operations on Unallocated items, eliminations, and other ($405 million) and at BCA ($235 million), partially offset by lower earnings from operations at BDS ($125 million) and unfavorable changes in the FAS/CAS service cost adjustment ($102 million).

Core operating earnings for the six and three months ended June 30, 2026, increased by $528 million and $434 million compared with the same periods in 2025, primarily due to a decrease in loss from operations on Unallocated items, eliminations, and other.

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

Unallocated Items, Eliminations and Other

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

(Dollars in millions) Three months ended March 31

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

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

2026 2025 2026 2025

Share-based plans ($52) ($51) $3 ($21)

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Unallocated items, eliminations and other ($978) ($1,397) ($630) ($1,035)

Unallocated share-based plans expense for the three months ended March 31, 2026, increased by $25 million compared with the same period in 2025 primarily due to the timing of when share-based plans expense was recorded compared with when it was allocated to our segments.

Deferred compensation income for the three months ended March 31, 2026, increased by $12 million compared with the same period in 2025 driven by changes in broad stock market conditions, including changes in our stock price.

Research and development expense for the three months ended March 31, 2026, increased by $22 million compared with the same period in 2025 due to increases in enterprise investments in product development.

Eliminations and other unallocated items expense for the three months ended March 31, 2026, decreased by $50 million compared with the same periods in 2025 primarily due to lower unallocated expenses.

Unallocated share-based plans expense for the six and three months ended June 30, 2026, increased by $1 million and decreased by $24 million compared with the same periods in 2025.

Changes are due to the timing of when share-based plans expense was recorded compared with when it was allocated to our segments.

Deferred compensation expense for the six and three months ended June 30, 2026, increased by $27 million and $39 million compared with the same periods in 2025 due to changes in broad stock market conditions.

Research and development expense for the six and three months ended June 30, 2026, increased by $27 million and $5 million compared with the same periods in 2025 due to increases in enterprise investments in product development.

Eliminations and other unallocated items expense for the six and three months ended June 30, 2026, decreased by $477 million and $427 million compared with the same periods in 2025.

The decrease reflects the absence of an earnings charge of $445 million recorded in the second quarter of 2025 related to an agreement with the Department of Justice.

Other Earnings Items

(Dollars in millions) Three months ended March 31

Earnings from operations $448 $461

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

2026 2025 2026 2025

Earnings/(loss) from operations $604 $285 $156 ($176)

Other income, net 273 648 79 325

Interest and debt expense (1,216) (1,418) (600) (710)

Earnings before income taxes 26 76

Loss before income taxes (339) (485) (365) (561)

Income tax expense (96) (158) (63) (51)

Net loss (435) (643) (428) (612)

Net (loss)/earnings attributable to noncontrolling interest (3) 6

Net earnings/(loss) attributable to noncontrolling interest 13 5 16 (1)

Net loss attributable to Boeing shareholders ($448) ($648) ($444) ($611)

Other income, net for the three months ended March 31, 2026, decreased by $129 million compared with the same period in 2025, primarily due to higher non-operating pension expense.

Interest and debt expense for the three months ended March 31, 2026, decreased by $92 million compared with the same period in 2025 primarily as a result of lower debt balances.

Other income, net for the six and three months ended June 30, 2026, decreased by $375 million and $246 million compared with the same periods in 2025, primarily due to higher non-operating pension expense.

Interest and debt expense for the six and three months ended June 30, 2026, decreased by $202 million and $110 million compared with the same periods in 2025, primarily as a result of lower debt balances.

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

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

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

government and other

customers that generally extend over several years.

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

government and other customers that generally extend over several years.

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

The following table summarizes cost of sales:

(Dollars in millions) Three months ended March 31

2026 2025 Change

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

2026 2025 Change 2026 2025 Change

Cost of sales $41,817 $37,393 $4,424 $22,146 $20,314 $1,832

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89.4 % 88.5 % 0.9 % 90.2 % 89.3 % 0.9 %

Cost of sales for the three months ended March 31, 2026, increased by $2,592 million, or 15%, compared with the same period in 2025, primarily due to higher revenues at BCA and BDS.

Cost of sales as a percentage of Revenues increased during the three months ended March 31, 2026, compared with the same period in 2025 primarily due to lower margins at BGS.

Cost of sales for the six and three months ended June 30, 2026, increased by $4,424 million and $1,832 million, or 12% and 9%, compared with the same periods in 2025, primarily due to higher revenues at BDS and BCA.

Cost of sales as a percentage of Revenues increased during the six and three months ended June 30, 2026, compared with the same periods in 2025 due to lower margins at BGS and BDS.

Research and Development

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

(Dollars in millions) Three months ended March 31

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

2026 2025 2026 2025

Commercial Airplanes $1,200 $1,092 $597 $558

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Global Services 48 59 26 30

Other 210 183 106 101

Total $1,824 $1,754 $921 $910

Research and development expense increased by $59 million during the three months ended March 31, compared to the same period in 2025.

The increase in expense was primarily due to higher spending at BCA.

(Dollars in millions) March 31

Research and development expense increased by $70 million and $11 million during the six and three months ended June 30, 2026, compared with the same periods in 2025, primarily due to higher spending at BCA.

(Dollars in millions) June 30

2026 December 31

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government contract funding.

The increase in contractual backlog of $12,950 million during the three months ended March 31, 2026, was primarily due to a $8,293 million increase in BCA backlog and $2,856 million increase in BGS contractual backlog.

The increase in contractual backlog of $34,785 million during the six months ended June 30, 2026, was primarily due to a $29,434 million increase in BCA backlog.

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

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government definitive contracts for which funding has not been authorized.

The decrease of $448 million in unobligated backlog during the three months ended March 31, 2026 was due to a decrease in BDS unobligated backlog partially offset by an increase in BGS unobligated backlog.

The decrease of $1,731 million in unobligated backlog during the six months ended June 30, 2026 was due to a decrease in BDS backlog primarily reflecting reclassifications to contractual backlog, partially offset by new awards.

Additional Considerations

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

As of March 31, 2026, the majority of government departments and agencies, including the Department of War (DoW), the National Aeronautics and Space Administration (NASA), and the Department of Transportation are funded through September 30, 2026.

Global Trade The global trade landscape continues to be highly volatile.

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

As of June 30, 2026, government departments and agencies, including the Department of War (DoW), the National Aeronautics and Space Administration (NASA), and the Department of Transportation are funded through September 30, 2026.

Global Trade The global trade landscape continues to evolve.

Following the February 20, 2026, Supreme Court ruling regarding the imposition of tariffs under the International Emergency Economic Powers Act (IEEPA), U.S.

Customs and Border Protection is developing refund procedures for tariffs previously paid under IEEPA.

Concurrently, the Administration imposed a temporary 10% general tariff under Section 122 of the Trade Act of 1974 subject to several exemptions, including the import into the United States of certain aerospace products.

These developments did not have a material impact on our financial position, results of operations and cash flows during the first quarter of 2026.

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

Customs and Border Protection defined processes for submitting claims for tariffs previously paid under IEEPA.

Tariffs did not have a material impact on our financial position, results of operations and cash flows during the first half of 2026.

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.

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

We seek to comply with all U.S.

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Human Capital Some of our and our suppliers' workforces are represented by labor unions.

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

If we are unable to successfully negotiate successor agreements with our unions that our employees will ratify (including with Society of Professional Engineering Employees in Aerospace who have two contacts expiring October 2026), we may experience additional work stoppages in the future, which could materially adversely affect our business, financial position, results of operations and cash flows.

Work stoppages and instability in our and our suppliers' union relationships have in the past and could in the future disrupt and/or delay the production, delivery and/or development of our products and services, which could strain relationships with customers and result in lower revenues, earnings and cash flows.

If we are unable to successfully negotiate successor agreements with our unions that our employees will ratify, we may experience additional work stoppages in the future and/or higher than anticipated costs, which could materially adversely affect our business, financial position, results of operations and cash flows.

We have two contracts with the Society of Professional Engineering Employees in Aerospace expiring October 6, 2026, and we are currently in negotiations working toward reaching new agreements in the third quarter of 2026.

Segment Results of Operations and Financial Condition

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Results of Operations

(Dollars in millions) Three months ended March 31

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

2026 2025 2026 2025

Revenues $20,954 $19,021 $11,751 $10,874

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Operating margins (4.2)% (5.8)% (2.7) % (5.1) %

BCA revenues increased by $1,056 million for the three months ended March 31, 2026, compared with the same period in 2025 primarily due to higher deliveries across all programs.

BCA revenues increased by $1,933 million for the six months ended June 30, 2026, compared with the same period in 2025 primarily due to higher deliveries on 737 and 787 programs partially offset by lower deliveries on 777 program.

BCA revenues increased by $877 million for the three months ended June 30, 2026, compared with the same period in 2025 primarily due to higher deliveries on 737 program partially offset by lower deliveries on 777 program.

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

737 * 767 * 777 787 Total

Deliveries during the first three months of 2026 114 (1) 6 (3) 8 15 143

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

Deliveries during the first six months of 2026 243 (3) 16 (9) 15 40 314

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

Deliveries during the second quarter of 2026 129 (2) 10 (6) 7 25 171

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

Cumulative deliveries as of 6/30/2026 9,483 1,367 1,791 1,289

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Loss From Operations

BCA loss from operations was $563 million for the three months ended March 31, 2026, compared with $537 million in the same period in 2025 primarily reflecting higher spending on research and development, partially offset by higher deliveries.

BCA loss from operations was $885 million for the six months ended June 30, 2026, compared with $1,094 million in the same period in 2025 primarily reflecting higher deliveries, partially offset by higher spending on research and development.

BCA loss from operations was $322 million for the three months ended June 30, 2026, compared with $557 million in the same period in 2025 primarily reflecting higher revenues and a lower reach-forward loss on the 767 program, partially offset by higher spending on research and development.

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

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We address customer claims and requests for other contractual relief as they arise.

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

BCA total backlog increased from $567,290 million as of December 31, 2025, to $575,583 million at March 31, 2026, reflecting new orders in excess of deliveries.

Aircraft order cancellations during the three months ended March 31, 2026, totaled $933 million and primarily relate to 737 and 787 aircraft.

Net ASC 606 adjustments during the three months ended March 31, 2026, totaled $505 million and primarily relate to 777X and 737 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.

The value of orders in backlog is

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

BCA total backlog increased from $567,290 million as of December 31, 2025, to $596,724 million at June 30, 2026, reflecting new orders in excess of deliveries.

Aircraft order cancellations during the six months ended June 30, 2026, totaled $2,777 million and primarily relate to 737 aircraft.

Net ASC 606 adjustments during the six months ended June 30, 2026, totaled $2,089 million and primarily relate to 737 and 777X aircraft.

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

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† Customer financing aircraft orders are identified in parentheses.

* Approximate undelivered orders by minor model for March 31, 2026 and December 31, 2025:

* Approximate undelivered orders by minor model for June 30, 2026 and December 31, 2025:

737-7 (6%, 6%), 737-8 (58%, 60%), 737-9 (5%, 5%) and 737-10 (31%, 29%).

Program Highlights

737 Program During the first quarter of 2026, the 737 program continued to produce at a rate of 42 per month.

The program plans to increase the production rate from 42 to 47 in 2026 with the concurrence of the Federal Aviation Administration (FAA).

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

We expect to begin low-rate production on the new 737 production line later in 2026.

The new production line will have to be production-certified by the FAA prior to first delivery.

737 Program We increased the accounting quantity by 400 units during the six months ended June 30, 2026, due to the program's normal progress of obtaining additional orders and delivering airplanes.

During the first half of 2026, the 737 program began to transition from a production rate of 42 to 47 per month with the concurrence of the Federal Aviation Administration (FAA).

We are also planning for additional production rate increases beyond 47 per month and began low-rate production on a new 737 production line in July 2026.

The new production line must be production-certified by the FAA prior to first delivery.

We continue to expect certification of the 737-7 and 737-10 in 2026, including the final certification of the engine anti-ice solution.

As of March 31, 2026, we had approximately 35 737-7 and 737-10 aircraft in inventory.

As of June 30, 2026, we had approximately 40 737-7 and 737-10 aircraft in inventory.

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

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

This program has break-even gross margins.

This program recorded a reach-forward loss of $40 million during the first half of 2026 and $191 million in the same period in 2025.

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

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

In July 2024, we obtained approval from the FAA to begin certification flight testing which is ongoing.

We continue to work with our supplier and the FAA on the solution and certification plan related to the engine durability issue identified in 2025.

In the first quarter of 2026, we received approval from the FAA to begin the Type Inspection Authorization 4a phase of flight testing.

Through the end of 2025, we obtained approval from the FAA to begin the first three phases of certification flight testing.

In the first half of 2026, we received approval to begin the fourth phase of certification flight testing.

We expect approval on the final phases of flight testing during the second half of 2026.

We continue to work with our supplier and the FAA to incorporate and certify their solution related to the engine durability issue identified in 2025.

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

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787 Program We increased the accounting quantity by 100 units during the three months ended March 31, 2026, due to the program's normal progress of obtaining additional orders and delivering airplanes.

During the first quarter of 2026, we continued to work toward stabilizing the production rate at eight per month.

We are experiencing factory disruption as a result of supply chain shortages which has impacted production and we are working with our supply chain to enable recovery.

The accounting quantity was unchanged during the three months ended June 30, 2026.

During the fourth quarter of 2025, we began increasing the production rate to eight per month.

We continued to work toward stabilizing production during the first quarter of 2026.

We briefly slowed the factory in April 2026

due to supply chain shortages.

The factory recovered in May, and we have now stabilized at eight per month enabled by continued supply chain and factory recovery.

Additional Considerations

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

At March 31, 2026, 27% of BDS backlog was attributable to non-U.S.

At June 30, 2026, 27% of BDS backlog was attributable to non-U.S.

Results of Operations

(Dollars in millions) Three months ended March 31

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

2026 2025 2026 2025

Revenues $15,082 $12,915 $7,483 $6,617

Earnings from operations $233 $155

Earnings/(loss) from operations $218 $265 ($15) $110

Operating margins 1.4 % 2.1 % (0.2) % 1.7 %

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

Three months ended March 31

Six months ended June 30 Three months ended June 30

2026 2025 2026 2025

F/A-18 Models 5 9 3 4

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Commercial Satellites 1 2 2

BDS revenues for the three months ended March 31, 2026, increased by $1,301 million compared with the same period in 2025.

The increase was primarily due to increased revenues on proprietary and weapons programs, higher KC-46 production and Foreign Military Sales to Israel and Japan, and the acquisition of Spirit's defense business.

Total 65 62 35 36

BDS revenues for the six months ended June 30, 2026, increased by $2,167 million compared with the same period in 2025.

The increase was primarily due to increased revenues on proprietary and weapons programs, higher KC-46 volume and Foreign Military Sales to Israel and Japan, and the acquisition of Spirit's defense business.

Revenue was further increased by $135 million lower net unfavorable cumulative contract catch-up adjustments compared to the prior year comparable period.

Earnings From Operations

BDS earnings from operations for the three months ended March 31, 2026, was $233 million, compared with earnings from operations of $155 million in the same period in 2025.

The $78 million improvement in earnings is primarily due to lower net unfavorable cumulative catch-up adjustments of $80 million compared to the prior year comparable period.

BDS earnings from operations includes our share of losses from equity method investments of $4 million for the three months ended March 31, 2026, compared with earnings of $6 million for the same period in 2025.

BDS backlog was $85,821 million at March 31, 2026 compared with $84,786 million as of December 31, 2025.

BDS revenues for the three months ended June 30, 2026, increased by $866 million compared with the same period in 2025.

The increase was primarily due to increased revenues on proprietary and weapons programs, higher KC-46 volume and the acquisition of Spirit's defense business.

The net cumulative contract catch-up adjustments were $11 million less unfavorable than the comparable period in the prior year.

Earnings/(Loss) From Operations

BDS earnings from operations for the six months ended June 30, 2026, was $218 million, compared with earnings from operations of $265 million in the same period in 2025.

The $47 million decrease in earnings is primarily due to higher net unfavorable cumulative catch-up adjustments of $107 million compared to the prior year comparable period and higher general and administrative expense, partially offset by higher net volume and mix.

The higher net unfavorable cumulative catch-up adjustments were primarily driven by the 2026 reach-forward loss on VC-25B ($280 million).

BDS loss from operations for the three months ended June 30, 2026, was $15 million compared with earnings from operations of $110 million in the same period in 2025.

The $125 million decrease in earnings is primarily due to higher net unfavorable cumulative catch-up adjustments of $186 million compared to the prior year comparable period and higher general and administrative expense, partially offset by higher volume.

The higher net unfavorable cumulative catch-up adjustments were primarily driven by the 2026 reach-forward loss on VC-25B ($280 million).

BDS earnings/(loss) from operations includes our share of earnings from equity method investments of $4 million and $8 million for the six and three months ended June 30, 2026, compared with $20 million and $14 million for the same periods in 2025.

BDS backlog was $85,322 million at June 30, 2026 compared with $84,786 million as of December 31, 2025.

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

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Results of Operations

(Dollars in millions) Three months ended March 31

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

2026 2025 2026 2025

Revenues $10,714 $10,344 $5,344 $5,281

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Operating margins 18.1 % 19.3 % 18.1 % 19.9 %

BGS revenues for the three months ended March 31, 2026 increased by $307 million compared with the same period in 2025, primarily due to higher commercial and government services revenue, partially offset by the absence of $305 million of revenue as a result of the Digital Aviation Solutions Divestiture.

The net favorable impact of cumulative contract catch-up adjustments for the three months ended March 31, 2026, was $39 million higher than the net unfavorable impact in the prior year comparable period.

BGS revenues for the six months ended June 30, 2026 increased by $370 million compared with the same period in 2025, primarily due to higher commercial and government services revenue, partially offset by the absence of $632 million of revenue as a result of the Digital Aviation Solutions Divestiture.

The net favorable impact of cumulative contract catch-up adjustments for the six months ended June 30, 2026, was $51 million higher than the net unfavorable impact in the prior year comparable period.

BGS revenues for the three months ended June 30, 2026 increased by $63 million compared with the same period in 2025, primarily due to higher commercial and government services revenue, partially offset by the absence of $327 million of revenue as a result of the Digital Aviation Solutions Divestiture.

The net favorable impact of cumulative contract catch-up adjustments for the three months ended June 30, 2026 was $13 million higher than the net favorable impact in the prior year comparable period.

Earnings From Operations

BGS earnings from operations for the three months ended March 31, 2026 increased by $28 million compared with the same period in 2025 primarily due to higher government services revenue, partially offset by the absence of $79 million of earnings as a result of the Digital Aviation Solutions Divestiture.

The net favorable impact of cumulative contract catch-up adjustments for the three months ended March 31, 2026, was $40 million higher than the net unfavorable impact in the prior year comparable period.

The Digital Aviation Solutions Divestiture also contributed to the year-over-year reduction in operating margin.

BGS total backlog increased from $29,720 million at December 31, 2025 to $32,957 million at March 31, 2026, primarily due to the timing of awards, partially offset by revenue recognized on contracts awarded in prior years.

BGS earnings from operations for the six months ended June 30, 2026 decreased by $53 million compared with the same period in 2025 primarily due to the absence of $145 million of earnings as a

result of the Digital Aviation Solutions Divestiture, partially offset by higher government services revenue.

A 2026 gain on asset disposition offset a similar gain on asset disposition in 2025.

The net unfavorable impact of cumulative contract catch-up adjustments for the six months ended June 30, 2026, was $57 million lower than the net unfavorable impact in the prior year comparable period.

The Digital Aviation Solutions Divestiture and ongoing disruption in one of our distribution businesses resulting from the transition to a new enterprise resource planning system in late 2025 contributed to the year-over-year reduction in operating margins.

BGS earnings from operations for the three months ended June 30, 2026 decreased by $81 million compared with the same period in 2025 primarily due to the absence of $78 million of earnings as a result of the Digital Aviation Solutions Divestiture.

A 2026 gain on asset disposition offset a similar gain on asset disposition in 2025.

The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended June 30, 2026 was $16 million lower than the net unfavorable impact in the prior year comparable period.

The year-over-year reduction in operating margins reflects the Digital Aviation Solutions Divestiture and ongoing disruption in one of our distribution businesses resulting from the transition to a new enterprise resource planning system in late 2025.

BGS total backlog increased from $29,720 million at December 31, 2025 to $32,840 million at June 30, 2026, primarily due to the timing of awards, partially offset by revenue recognized on contracts awarded in prior years.

Liquidity and Capital Resources

Cash Flow Summary

(Dollars in millions) Three months ended March 31

(Dollars in millions) Six months ended June 30

Net loss ($435) ($643)

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Changes in assets and liabilities (756) (2,847)

Net cash used by operating activities (179) (1,616)

Net cash provided/(used) by operating activities 1,185 (1,389)

Net cash provided/(used) by investing activities 3,629 (3,946)

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Cash & cash equivalents, including restricted, at end of period $7,966 $7,796

Operating Activities Net cash used by operating activities was $0.2 billion during the three months ended March 31, 2026, compared with $1.6 billion during the same period in 2025.

The $1.4 billion decrease in net cash used by operating activities was primarily driven by favorable changes in working capital.

Changes in assets and liabilities during the three months ended March 31, 2026, improved by $1.3 billion compared with the same period in 2025, primarily driven by favorable changes in Advances and progress billings ($2.4 billion) and Accounts payable ($1.2 billion), partially offset by unfavorable changes in Inventories ($1.1 billion) and Accrued liabilities ($0.9 billion).

The change in Advances and progress billings during the three months ended March 31, 2026, compared to the same period in 2025 was primarily driven by higher advances on commercial airplane orders.

The favorable change in Accounts payable and unfavorable change in Inventories during the three months ended March 31, 2026, compared to the same period in 2025 primarily reflect increased production primarily in our commercial airplanes business.

Unfavorable changes in Accrued liabilities during the three months ended March 31, 2026 were $1.3 billion compared to $0.4 billion during the same period in 2025.

Payables to suppliers who elected to participate in supply chain financing programs decreased by $0.2 billion and $0.6 billion during the three months ended March 31, 2026 and 2025.

Supply chain financing is not material to our overall liquidity.

Investing Activities Net cash provided by investing activities during the three months ended March 31, 2026, was $5.7 billion, compared with net cash used of $1.7 billion during the same period in 2025.

Operating Activities Net cash provided by operating activities was $1.2 billion during the six months ended June 30, 2026, compared with cash used of $1.4 billion during the same period in 2025, primarily driven by favorable changes in working capital.

Changes in assets and liabilities during the six months ended June 30, 2026, improved by $2.1 billion compared with the same period in 2025, primarily driven by favorable changes in Advances and progress billings ($5.3 billion) and Accounts payable ($1.4 billion), partially offset by unfavorable changes in Inventories ($3.5 billion), Other current assets ($0.9 billion), and Accrued liabilities ($0.8 billion).

The change in Advances and progress billings was primarily driven by higher advances and progress billings at BCA and BDS.

The changes in Accounts payable and Inventories reflect increased production in our commercial airplanes business.

Payables related to suppliers who elected to participate in supply chain financing programs were largely unchanged during the six months ended June 30, 2026 and decreased by $1.1 billion during the same period in 2025.

At June 30, 2026 and December 31, 2025, payables related to suppliers who elected to participate in supply chain programs were $2.0 billion.

Investing Activities Net cash provided by investing activities during the six months ended June 30, 2026, was $3.6 billion, compared with net cash used of $3.9 billion during the same period in 2025.

The increase in cash provided was primarily due to net proceeds from investments of $5.6 billion in 2026 compared with net contributions to investments of $2.7 billion in 2025.

During the three months ended March 31, 2026 and 2025, capital expenditures were $1.3 billion and $0.7 billion.

During the six months ended June 30, 2026 and 2025, capital expenditures were $2.0 billion and $1.1 billion.

We continue to expect capital expenditures in 2026 to be higher than in 2025.

Financing Activities Net cash used by financing activities was $7.0 billion during the three months ended March 31, 2026, compared with net cash used of $0.3 billion during the same period in 2025.

During the three months ended March 31, 2026, net repayments were $6.9 billion compared with net repayments of $0.3 billion during the same period in 2025.

As of March 31, 2026, the total debt balance was $47.2 billion, down from $54.1 billion at December 31, 2025.

At March 31, 2026, $2.9 billion of debt was classified as short-term.

Financing Activities Net cash used by financing activities was $8.5 billion during the six months ended June 30, 2026, compared with net cash used of $0.7 billion during the same period in 2025, primarily due to $7.8 billion higher net repayments.

As of June 30, 2026, the total debt balance was $45.9 billion, down from $54.1 billion at December 31, 2025.

At June 30, 2026, $4.6 billion of debt was classified as short-term.

Capital Resources

At March 31, 2026, we had $9.4 billion of cash, $11.5 billion of short-term investments, and $10.0 billion of unused borrowing capacity on revolving credit line agreements.

At June 30, 2026, we had $7.2 billion of cash, $12.8 billion of short-term investments, and $10.0 billion of unused borrowing capacity on revolving credit line agreements.

Our $3.0 billion, 364-day revolving credit agreement expiring in August 2026, $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.

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

At Fitch and S&P, we are rated BBB- with a stable outlook, and at Moody’s, we are rated Baa3 with a stable outlook.

In June 2026, Fitch affirmed the BBB- credit rating and revised the outlook to positive from stable.

At S&P, we are rated BBB- with a stable outlook, and at Moody’s, we are rated Baa3 with a stable outlook.

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.

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Legal contingencies are discussed in Note 18 to our Condensed Consolidated Financial Statements.

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $876 million at March 31, 2026.

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $971 million at June 30, 2026.

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

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

The Pension FAS/CAS service cost adjustments recognized in Earnings from operations were benefits of $93 million and $193 million for the three months ended March 31, 2026 and 2025 .

The Pension FAS/CAS service cost adjustments recognized in Earnings/(loss) from operations were benefits of $185 million and $92 million for the six and three months ended June 30, 2026, compared with benefits of $390 million and $197 million for the same periods in 2025 .

The lower benefits in 2026 were primarily due to reductions in allocated pension cost year over year.

The non-operating pension (expense)/income included in Other income, net was ($74) million and $43 million for the three months ended March 31, 2026 and 2025 .

The higher expense in 2026 was primarily due to lower expected return on plan assets and higher amortization of net actuarial losses, partially offset by lower interest costs.

The non-operating pension expense included in Other income, net was $147 million and $73 million for the six and three months ended June 30, 2026, compared with income of $85 million and $42 million for the same periods in 2025 .

The higher expense in 2026 was primarily due to higher amortization of net actuarial losses and lower expected return on plan assets, partially offset by lower interest costs.

For further discussion of pension and other postretirement costs see "Management’s Discussion and Analysis of Financial Condition and Results of Operations" on pages 28 and 29 of our 2025 Annual Report on Form 10-K.

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Reconciliation of Non-GAAP Measures to GAAP Measures

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

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

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

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

2026 2025 2026 2025

Revenues $46,777 $42,245 $24,560 $22,749

Earnings from operations, as reported $448 $461

Earnings/(loss) from operations, as reported $604 $285 $156 ($176)

Operating margins 1.3 % 0.7 % 0.6 % (0.8) %

Pension FAS/CAS service cost adjustment (1)

($185) ($390) ($92) ($197)

Postretirement FAS/CAS service cost adjustment (1)

(125) (129) (63) (60)

FAS/CAS service cost adjustment (1)

($310) ($519) ($155) ($257)

Core operating earnings (non-GAAP)

Core operating earnings/(loss) (non-GAAP) $294 ($234) $1 ($433)

Core operating margins (non-GAAP) 0.6 % (0.6) % 0.0 % (1.9) %

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Non-operating pension expense/(income) (2)

0.18 (0.11) 0.10 (0.05)

Non-operating postretirement income (2)

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Provision for deferred income taxes on adjustments (3)

0.05 0.17 0.02 0.08

Core loss per share (non-GAAP) ($0.97) ($1.73) ($0.76) ($1.24)

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

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

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

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

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

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis