Detailed Narrative
Production ramp and certification roadmap
BCA delivered 143 airplanes as management methodically raised rates. The 737 stabilized at 42/month with final-assembly rework hours down nearly 20% YoY, and is planned to reach 47/month this summer aided by buffer inventory. The 787 is stabilizing at 8/month in Charleston (rework down more than 25% YoY) en route to 10/month later this year. Completing certification of development programs — 737-7/-10 and 777X — is the top 2026 focus; the 737-7/-10 are on plan to certify later this year with deliveries starting 2027.
Defense growth from rising budgets and operational tempo
BDS revenue grew 21% to $7.6B on KC-46, missiles/weapons and classified programs, with a record $86B backlog and $9B of orders (E7 Wedgetail development, KC-46 international). Ortberg framed upside from the defense budget: F-47 ($5B), KC-46 ($4B), F-15EX ($3B), and enhanced strategic SATCOM ($2B), noting much of it funds additional production of existing, lower-risk systems. Higher op tempo (Apache anti-drone, PAC-3 intercepts) is lifting defense services. Tanker deliveries are expected to rise from ~14 to ~19 aircraft this year.
787 supply-chain and seat-certification bottleneck
787 deliveries (15 in the quarter) were held back by delays in premium-seat certification for new cabin configurations — airplanes are built but cannot be delivered — and by engine deliveries falling behind. Management is forward-deploying resources to suppliers on a recovery plan and, for seats, partnering earlier in development and creating contractual off-ramps to avoid future delivery delays. The full-year 90-100 range is unchanged though the cadence will be non-linear.
777X certification and change incorporation
Boeing received FAA TIA-4A approval (notably enabling natural-ice testing in Alaska) and completed flight testing for handling qualities, lighting, and stability/control; TIA-4B, a larger package, is expected soon. GE has identified root cause on the engine durability / mid-seal issue and is finalizing a modification that will require an engine update before delivery. Roughly 30 built 777s will undergo change incorporation over several years — bringing all to a common configuration — an activity already embedded in the EAC and operating plan. First delivery remains targeted for 2027, with a long-term rate of 5/month.
Cash flow trajectory and balance sheet
Q1 free cash flow was a $1.5B usage — better than expected — driven by seasonal and planned capex (St. Louis, Charleston) and offset by strong 737 wiring recovery and favorable late-quarter collections. The full-year guide is $1-3B positive, back-end loaded⚖️, with Q2 a low-hundreds-of-millions outflow. Debt fell to $47.2B (about $6.9B paid down), leaving $1.4B of maturities this year, $20.9B cash and $10B undrawn facilities, consistent with defending the investment-grade rating. Management reiterated $10B FCF as attainable with growth beyond into the next decade.
Middle East conflict exposure
The Iran war has produced no delivery deferral requests and no material supply-chain disruption🌐; Boeing delivered four airplanes to Middle East customers since the conflict began. The bigger watch item is jet-fuel prices hitting flight-hour-dependent commercial aftermarket. About 14% of unit backlog is Middle East customers, but two-thirds delivers in 2030 and beyond, and Boeing can resequence within a 12-18 month window; some airlines have offered to pull forward📎. Higher defense op tempo is expected to partially offset any commercial MRO weakness.
China order and demand outlook
On the largest order campaign, Ortberg said a potential China order is 100% dependent on U.S.-China negotiations and an upcoming Trump-Xi summit; he expressed high confidence that a country-level agreement would include a 'big number' of aircraft, but declined to quantify units or timing. He otherwise reported no erosion in demand across the commercial backlog.