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    BA
    Earnings call· Jun 2026(Q2 FY26)

    BOEING Q2 FY26 earnings call BA

    Jul 28, 2026 Source

    Executive summary

    The Boeing Company Q2 FY26 — Production Ramps and Certification Progress

    Boeing demonstrated strong execution in Q2 FY26, with increased commercial production rates and significant progress on key certification programs for 737 MAX and 777X. The company is focused on stabilizing its production system and supply chain to meet rising demand and deliver on its record backlog, while addressing program-specific challenges and aiming for sustained free cash flow growth. Labor negotiations with SPIA are underway, with management hoping to avoid a work stoppage.

    Highlights

    5

    • Commercial airplane deliveries reached 171 in the quarter, the highest quarterly total since 2018.

    • Consolidated revenue increased 8% to $24.6 billion, driven by solid growth across all three segments.

    • Free cash flow was positive $631 million, exceeding prior expectations for the quarter.

    • BDS core operating margin (excluding VC-25B charge) was 3.5%, reflecting better operating performance.

    • BGS revenue was up 8% year-over-year, excluding the impact of the Digital Aviation Solutions divestiture.

    Concerns

    3

    • The VC-25B program incurred a $280 million charge due to additional investments to support the build and test schedule.

    • 787 engine deliveries have fallen behind in the first half of the year, requiring a corrective action plan with GE.

    • 787 seat certification delays are expected to continue through the balance of the year, leading to lumpy deliveries.

    Guidance & targets

    18
    CategoryTargetConfidence
    737-7 Certification
    Expected very soon
    low materiality
    High
    737-10 Certification
    Expected following the -7
    low materiality
    High
    737 MAX 7 and 10 Deliveries Start
    Start deliveries in 2027
    high materiality
    High
    777-9 First Delivery
    First delivery in 2027
    high materiality
    High
    737 Production Rate (Factory Rollouts)
    Reach 47 per month
    medium materiality
    High
    737 Production Rate (Next Planned Break)
    52 per month
    medium materiality
    Medium
    VC-25B Delivery
    Deliver this airplane in 2028
    medium materiality
    High
    737 Deliveries
    500 airplanes
    high materiality
    High
    787 Deliveries
    90 to 100 airplanes
    high materiality
    High
    Free Cash Flow
    $1 billion to $3 billion
    high materiality
    High
    DOJ Payment Timing
    Expected to be paid in the third quarter
    medium materiality
    High
    Q3 Free Cash Flow
    Positive and in the low hundreds of millions of dollars
    high materiality
    High
    Free Cash Flow Growth (Beyond 2026)
    Expected to grow
    high materiality
    High
    Free Cash Flow Target
    $10 billion
    high materiality
    High
    737 Program Cash Margins
    Approximate 2018 levels
    medium materiality
    High
    787 Program Cash Margins
    Surpass 2018 levels
    medium materiality
    High
    BDS Operating Margins
    High single-digit
    high materiality
    High
    BDS Cash Flow Contribution
    Low single-digit billions of dollars
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Boeing Commercial Airplanes (BCA)
    Revenue growth driven by higher deliveries and favorable mix. Operating margin improved compared to last year, primarily due to increased delivery volume and mix, with about 150 basis points from other favorable adjustments.
    Deliveries: 171 airplanes737 Deliveries: 129 airplanes787 Deliveries: 25 airplanes (13 in June)Backlog: $597 billion (over 6,200 airplanes)
    		$11.8 billion8%—negative 2.7%
    Boeing Defense, Space & Security (BDS)
    Revenue increased due to higher volume, including growth on classified programs, missiles and weapons, and KC-46A tanker. Operating margin reflects the $280 million loss on the VC-25B program; excluding this, margin was 3.5%.
    Deliveries: 35 aircraftOrders: $7 billionBacklog: $85 billion
    		$7.5 billion13%—negative 0.2%
    Boeing Global Services (BGS)
    Revenue was up 8% year-over-year excluding the impact of the Digital Aviation Solutions divestiture. Operating margin was down from the prior year due to less favorable mix, though both commercial and government businesses delivered double-digit margins.
    Orders: $5 billionBacklog: $33 billionP8 Modification Program Flow Time Reduction: 44%
    		$5.3 billion1%—18.1%

    Operational metrics

    15
    Consolidated Revenue
    $24.6 billionup 8%
    Q2 FY26

    Driven by solid growth across all three segments.

    Consolidated Operating Margin
    0.6%increased
    Q2 FY26

    Primarily reflecting higher segment earnings and lower corporate expense, partially offset by the VC-25B program loss.

    Core Earnings Per Share
    negative $0.76improved
    Q2 FY26

    Primarily reflecting higher segment earnings and lower corporate expense, partially offset by the VC-25B program loss.

    Debt Balance
    $45.9 billiondown $1.3 billion QoQ, down $8.2 billion YTD
    Q2 FY26

    Consistent with debt reduction plans.

    Cash and Marketable Securities
    $20 billion
    Q2 FY26

    Primarily reflecting debt repayments partially offset by cash flow generated.

    Credit Facilities
    $10 billion
    Q2 FY26

    All facilities remain undrawn.

    Spirit AeroSystems Contribution to BDS Sales
    $130 million2 points of growth
    Q2 FY26

    Contribution to BDS sales in the quarter.

    P8 Modification Program Flow Time Reduction
    44%
    Q2 FY26

    Demonstrates impact of process and training initiatives in Jacksonville.

    VC-25B Program Charge
    $280 million
    Q2 FY26

    Resulted from additional investments to support build and test schedule, as a reach forward loss.

    BDS Operating Margin (ex-VC-25B charge)
    3.5%
    Q2 FY26

    Reflects better operating performance across the rest of the business and in line with expectations for steady margin improvement.

    BGS Revenue Growth (ex-DAS divestiture)
    8%YoY
    Q2 FY26

    Excluding the impact of Digital Aviation Solutions divestiture.

    777X Certification Flight Testing Completed
    55%
    Q2 FY26

    Progress on the 777-9 program.

    737 Production Rate
    47 airplanes per monthramping to
    Q2 FY26

    After a successful Capstone review in May.

    787 Production Rate
    8 airplanes per monthstabilized at
    Q2 FY26

    Production was temporarily slowed for several days in April to allow supply chain recovery.

    Working Capital
    net source of cash
    H2 FY26

    Expected for the balance of the year, driven by increased deliveries, BDS advances, order activity, and scheduled PDPs at BCA.

    Industry KPIs

    8
    MetricValueDetails
    Total company backlog$715 billionUSD
    Defense program awardsMilestone C
    Program segment backlog$597 billionUSD
    Aftermarket services split8%%
    Unit deliveries by program129airplanes
    Production rates by program47airplanes per month
    Program margins eac charges$280 millionUSD
    Production capacity expansion$1 billionUSD

    Orderbook & backlog

    5
    Total Company Backlog$715 billionQ2 FY26

    record

    BCA Backlog$597 billionQ2 FY26

    continued to grow

    Includes over 6,200 airplanes

    BDS Backlog$85 billionQ2 FY26

    remained strong

    BGS Backlog$33 billionQ2 FY26
    Market Outlook for New Aircraftnearly 44,000Q2 FY26

    Over the next 20 years

    Deals & partnerships

    2
    Spirit AeroSystemsIntegration of fuselage production operations

    The integration is going as expected, with continuous improvement in the quality of fuselages. Boeing pledged $1 billion investment in Wichita over several years to support this.

    U.S. Air ForceMemorandum of Agreement for KC-46A mission readiness and Remote Vision System 2.0 retrofit

    The agreement allows Boeing to partner on the Remote Vision System 2.0 retrofit, with a successful first phase of flight testing recently completed.

    Capital programs

    1
    Wichita Facility Improvements and Capacity Expansionpledged$1 billion

    Benefit: improve facility, address under-facilitized areas, support 737 and 787 rate ramps

    Investment over the next several years in both people and capital to improve the facility and support future rate ramps.

    Risks & headwinds

    5
    VC-25B program cost growthQ2 FY26

    $280 million charge

    Mitigation: Adding significant resources to support build and test schedule, aligning with the Air Force on moving to a military certification basis, investing to maintain commitment to deliver in 2028.

    787 engine delivery delays from GEH1 FY26, expected recovery in Q3 FY26

    Fallen behind deliveries in H1 FY26

    Mitigation: Working with GE on a corrective action plan and recovery plan; temporarily slowed 787 production for several days in April to allow supply chain to catch up.

    787 seat certification delaysBalance of FY26

    May make deliveries lumpy

    Mitigation: Actively working through seat certifications, acknowledging that they will continue to impact deliveries for the balance of the year.

    Potential work stoppage from SPIA labor negotiationsBy October (current contract expiration)

    null

    Mitigation: Started early negotiations to avoid a work stoppage; tone of talks described as respectful and productive; planning for potential work stoppage scenarios.

    Starliner (commercial crew) program uncertainty

    null

    Mitigation: Working with NASA to align on launch sequence (both crewed and uncrewed launches) and address Starliner deficiencies; no cost problem anticipated at this time.

    What to watch in Q3 FY26

    5

    737 MAX production rate

    This summer
    CurrentRamping to 47 airplanes per month
    TargetReaching 47 airplanes per month factory rollouts

    Why it matters

    Verifies execution of planned production ramp, crucial for commercial delivery targets and cash flow.

    On 737, we're now ramping to 47 airplanes per month after a successful Capstone review in May and expect factory rollouts to reach 47 per month this summer.

    Q&A highlights

    7

    Can you elaborate on the strong Q4 cash flow implication and the shape of the cash flow curve for out-years, especially regarding 2027 pricing/concessions?

    Q4 free cash flow is expected to be strong due to rising BCA deliveries, BDS improvements, and seasonal advances like the KC-46. The company is confident in reaching $10 billion in free cash flow by the end of the decade, with further growth beyond. Clarity for 2027 will come after the current planning cycle.

    “We're confident in the $10 billion figure. We're confident that we're going to get there, and we're on the right track.”

    asked by Seth Seifman · answered by Jesus Malave

    2 min read5 chapters

    Detailed Narrative

    01

    Commercial Certification Progress

    Boeing made significant strides in commercial certification programs during Q2 FY26. Testing for the 737-7 is complete, with an amended type certificate from the FAA expected very soon. The 737-10 completed its final test flight, with certification anticipated after the -7, paving the way for deliveries of both variants to begin in 2027. The 777-9 program remains on track for first delivery in 2027, having completed over 55% of certification flight testing and receiving FAA approval for TIA 4B, unlocking a major portion of the flight test schedule.

    02

    Production Rate Ramps and Supply Chain Management

    The company is actively ramping 737 production to 47 airplanes per month following a successful Capstone review in May, with factory rollouts expected to reach this rate by summer. Low-rate MAX production has commenced on the North Line in Everett, which will enable the next planned rate break of 52 per month. While no immediate supply chain constraints are noted for the ramp to 52, management anticipates increased challenges for rates beyond 52 to 57 airplanes per month, particularly concerning engine deliveries for the 787 program, where a recovery plan with GE is critical for achieving rate 10 timing.

    03

    Defense Portfolio Management and VC-25B Charge

    Boeing Defense, Space & Security (BDS) achieved Milestone C for both the T7 and MQ-25 programs, securing approval for low-rate initial production. A memorandum of agreement was reached with the U.S. Air Force to strengthen KC-46A mission readiness and accelerate the Remote Vision System 2.0 retrofit. However, the VC-25B program incurred a $280 million charge in the quarter due to additional investments and alignment with the Air Force on military certification, aimed at mitigating risks and maintaining the 2028 delivery commitment despite being a reach-forward loss.

    04

    Labor Negotiations and Workforce Investment

    Boeing initiated early contract negotiations with its Puget Sound engineering union, SPIA, ahead of the October expiration, describing the talks as respectful and productive. The company aims to reach an agreement that supports employees and business stability, while also preparing for potential work stoppages. Concurrently, Boeing pledged a $1 billion investment over several years in its Wichita facilities, including capital and people, to improve the site, address under-facilitized areas, and support future production rate ramps.

    05

    Financial Performance and Cash Flow Outlook

    Consolidated revenue grew 8% to $24.6 billion, with an operating margin of 0.6% and a core EPS loss of $0.76. Free cash flow was positive $631 million, exceeding expectations due to favorable receipt timing. The company remains on track for its full-year free cash flow outlook of $1 billion to $3 billion. Despite a $700 million DOJ payment expected in Q3, Q3 free cash flow is projected to be positive in the low hundreds of millions. Boeing is confident in achieving $10 billion in free cash flow by the end of the decade, driven by increased commercial deliveries and improved performance in BDS and BGS.

    AI-generated summary of the company’s earnings call. Not investment advice.