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    BA
    Earnings call· Sep 2025(Q3 FY25)

    BOEING CO BA

    Oct 29, 2025 Source

    Executive summary

    The Boeing Company Q3 FY25 — 777X Delay Overshadows Strong Commercial Deliveries and Positive Free Cash Flow

    Boeing reported a mixed Q3 FY25, marked by significant progress in commercial airplane deliveries and a return to positive free cash flow, signaling a recovery trend. However, these gains were overshadowed by a substantial delay in the 777X program's first delivery to 2027, leading to a $4.9 billion charge. The company continues to focus on disciplined production rate increases for the 737 and 787, while navigating supply chain constraints and ongoing certification challenges for its development programs.

    Highlights

    5

    • Generated positive free cash flow of $238 million in the quarter, the first since Q4 2023.

    • Delivered 160 commercial airplanes in the quarter, the highest quarterly total since 2018.

    • Successfully ramped 737 production to 38 airplanes per month and received FAA approval to increase to 42 per month.

    • BDS backlog grew to a record $76 billion, securing key contracts like the $2.8 billion Evolved Strategic SATCOM program.

    • BGS delivered strong financial results with revenue up 10% and operating margin at 17.5%.

    Concerns

    4

    • Delayed 777X first delivery to 2027, resulting in a $4.9 billion noncash charge due to certification delays and reassessed production costs.

    • Anticipate a $2 billion cash flow headwind in 2026 for the 777X program due to delivery timing shifts.

    • 787 production ramp to 10/month faces challenges, particularly with seat certifications.

    • IAM-represented workforce strike in St. Louis continues, though contingency plans are in place.

    Guidance & targets

    15
    CategoryTargetConfidence
    737 production rate
    42 airplanes per month
    high materiality
    High
    737 production rate increases
    not earlier than 6 months apart
    medium materiality
    High
    787 production rate
    8 per month
    medium materiality
    High
    787 production rate
    10 per month
    medium materiality
    Medium
    777X first delivery
    2027
    high materiality
    High
    737-7 and -10 certification
    2026
    medium materiality
    High
    Jeppesen sale close
    later this quarter
    low materiality
    High
    Spirit AeroSystems transaction close
    this year
    high materiality
    High
    Free cash flow
    positive
    high materiality
    High
    Free cash flow usage
    $2.5 billion
    high materiality
    High
    Capital expenditures
    closer to $3 billion
    medium materiality
    High
    777X cash flow headwind
    $2 billion
    high materiality
    High
    777X cash flow neutrality
    closer to neutral
    medium materiality
    Medium
    777X cash flow positive
    positive free cash flow
    medium materiality
    Medium
    Charleston 787 expanded facility utilization
    2028
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Boeing Commercial Airplanes (BCA)
    Revenue primarily reflects higher deliveries compared to last year. Operating margin impacted by the 777X program charge. Backlog includes more than 5,900 airplanes, with 737 and 787 sold firm into the next decade.
    Deliveries: 160 airplanesNet orders: 161 airplanesBacklog: $535 billion
    		$11.1 billionnearly 50%—negative 48.3%
    Boeing Defense, Space & Security (BDS)
    Revenue driven by improved operational performance and higher volume. Operating margin up significantly compared to last year, including immaterial impacts from IAM work stoppage. Backlog grew to a record $76 billion.
    Aircraft deliveries: 30Satellite deliveries: 2Orders booked: $9 billionBacklog: $76 billion
    		$6.9 billion25%—1.7%
    Boeing Global Services (BGS)
    Continued strong financial results, primarily reflecting improved commercial and government volume. Operating margin up 50 basis points compared to last year on favorable commercial volume and mix. Both commercial and government businesses delivered double-digit margins.
    Orders booked: $8 billionYear-to-date book-to-bill: 1.2
    		$5.4 billion10%—17.5%

    Operational metrics

    13
    Total Revenue
    $23.3 billionup 30%
    Q3 FY25

    Primarily driven by improved operational performance across the business.

    Cash and marketable securities
    $23 billion
    Q3 FY25

    Ended the quarter with this balance.

    Debt balance
    $53.4 billion
    Q3 FY25

    Ended the quarter with this balance.

    Revolving credit facilities
    $10 billionundrawn
    Q3 FY25

    Company maintains access to these facilities.

    Cash balance (post Jeppesen sale)
    $28 billion
    future

    Expected cash balance after the completion of both Jeppesen and Spirit transactions, correcting analyst's $33 billion estimate.

    777X loss provision
    $4.9 billionnoncash charge
    Q3 FY25

    Net of a cost-based extension benefit to reset the development and production schedule.

    777X cash flow headwind
    $2 billionvs prior expectations
    2026

    Expected due to delivery timing shifts as deliveries move to the right.

    737 traveled work reduction
    75%
    Q3 FY25

    Reduction in traveled work on 737 program.

    Traveled work reduction
    60%
    Q3 FY25

    Reduction across all airplane programs.

    737-8 inventory (built prior to 2023)
    5down 15 from Q2
    Q3 FY25

    Completed rework on the last of these airplanes and shut down the shadow factory.

    737-7 and -10 inventory
    35stable
    Q3 FY25

    Inventory levels were stable.

    787 inventory (built prior to 2023)
    10down 5 from Q2
    Q3 FY25

    Still expect to deliver these airplanes through 2026, aligned with customer fleet planning requirements.

    DOJ payment
    $700 million
    Q4 FY25

    Potential DOJ payment shifting to the fourth quarter.

    Industry KPIs

    8
    MetricValueDetails
    Book to bill ratio1.2
    Total company backlog$600 billionUSD
    Defense program awards$2.8 billionUSD
    Program segment backlog$535 billionUSD
    Aftermarket services split$5.4 billionUSD
    Unit deliveries by program160airplanes
    Production rates by program38airplanes per month
    Program margins eac charges$4.9 billionUSD

    Orderbook & backlog

    3
    Total company backlog$600 billionQ3 FY25

    Includes more than 5,900 airplanes.

    BCA backlog$535 billionQ3 FY25

    Includes more than 5,900 airplanes, with the 737 and 787 both sold firm into the next decade.

    BDS backlog$76 billionQ3 FY25

    record

    Product announcements

    6
    ProductTypeDetails
    KC-46 Tankermilestone
    Evolved Strategic SATCOM programmilestone
    PAC-3 seekersmilestone
    F-18 landing gear and outer wing panels repairmilestone
    T-7A programmilestone
    Digital diagnostic tools and advanced analyticsmilestone

    Deals & partnerships

    2
    UndisclosedSale of Jeppesen and other portions of digital business.

    Still on track to close the sale of Jeppesen and the other portions of our digital business.

    Spirit AeroSystemsReintegration of Spirit AeroSystems.

    EU approval received, waiting for U.S. approval. Expected to close this year, followed by an integration phase.

    Capital programs

    1
    Charleston 787 facility expansionunderway

    Benefit: double the manufacturing footprint for rates higher than 10 per month

    Investing in the expansion of our South Carolina site to ensure we're prepared to meet exceptional market demand. Will double the manufacturing footprint, providing more flexibility for storage space. Facilities will help at rate 10, but are primarily for rates higher than 10 per month.

    Risks & headwinds

    4
    777X certification and first delivery delaythrough 2027

    $4.9 billion noncash charge; first delivery delayed to 2027; $2 billion cash flow headwind in 2026.

    Mitigation: Rebaselined the program to incorporate learnings from TIA approval process; focused on a higher confidence plan; completing dry run flight tests for technical risk burn-down.

    IAM-represented workforce strike in St. Louisongoing

    Immaterial impacts to BDS operating margin.

    Mitigation: Executing contingency plans; building JDAMs at about the same production rate; progressing on MQ-25 and T-7A development programs.

    787 seat certifications constraining production rampa little bit longer

    Will continue to be a constraining item for 787 production.

    Mitigation: Specific actions with suppliers; working to get actual seat installations certified on the aircraft.

    Potential DOJ paymentQ4 FY25

    $700 million

    Mitigation: Factored into Q4 FCF outlook.

    What to watch in Q4 FY25

    5

    737 Production Rate Stability

    next quarter
    Current38 airplanes per month, increasing to 42 per month
    TargetSustained stability at 42 airplanes per month

    Why it matters

    Demonstrating sustained stability at the new production rate is crucial for future rate increases and overall commercial airplane delivery targets.

    Once we were satisfied with the sustained health and stability of the production system, we then presented our disciplined plan to the FAA to increase production to 42 airplanes a month.

    Q&A highlights

    5

    Asked about the negative cash flow in 2026 for the 777X program and when it could reach a neutral cash position.

    Management stated a $2 billion headwind in 2026, with overall usage potentially higher. Expects to get closer to neutral in 2028 and positive free cash flow by 2029, driven by improving payments from aircraft deliveries and advances.

    “next year, we'll build up inventory. There'll be limited advances and delivery payments. But in 2027, we'll start to see those benefits, and those will continue to ramp up in '28 and beyond. So I would expect starting in 2029, neutrality will go to a benefit, positive free cash flow for the program.”

    asked by Myles Walton · answered by Jesus Malave

    2 min read6 chapters

    Detailed Narrative

    01

    Culture Change and Stakeholder Trust

    Boeing is actively working on culture change, focusing on safety and quality, which has led to improved performance and re-earning stakeholder trust. Employee feedback is used to shape new values and behaviors, with a voice of employee survey planned before year-end to assess progress. The company observes teams using these values in daily work, strengthening relationships with customers and improving internal collaboration.

    02

    FAA Collaboration and Delegation

    The company is working closely with the FAA on certification processes, acknowledging collective learning on the new TIA (Type Inspection Authorization) process for the 777X. The FAA has allowed delegation to Boeing for issuing airworthiness certificates for some 737 MAX and 787 airplanes, indicating renewed confidence. Management views this limited delegation authority as a responsibility taken very seriously.

    03

    737 MAX Engine Anti-Ice Resolution

    Boeing has finalized design changes to permanently address the engine anti-ice issue for the 737-7 and -10 programs after over 3,000 hours of lab testing and analysis. This effort remains on the critical path for certification, which is anticipated in 2026. The modifications involve both hardware and software updates to the test aircraft, followed by a straightforward certification process with the FAA.

    04

    Defense Program Stabilization

    The Defense business continues an active management approach to derisk development programs, demonstrating stability on EACs (Estimates at Completion). Proactive engagement with customers and suppliers has led to revised contract baselines, lowering execution risk and creating win-win outcomes. The defense portfolio is well positioned for the future, supported by a record backlog and a focus on returning to historical performance levels with new contracts and tighter underwriting standards.

    05

    IAM Strike Management

    In St. Louis, Boeing is executing contingency plans during the ongoing IAM-represented workforce strike. Despite the work stoppage, the team continues to build JDAMs at approximately the same production rate as before the strike and is progressing on MQ-25 and T-7A development programs. The company remains focused on supporting its customers through this period.

    06

    Digital Business Strategy

    Boeing is on track to close the sale of Jeppesen and other digital business portions later this quarter. Simultaneously, the BGS team continues to secure deals for digital capabilities that will be retained, specifically those related to fleet maintenance, operations, and repair. An example is a recent agreement with EVA Air for digital diagnostic tools and advanced analytics to improve efficiency.

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