Boeing (NYSE:BA) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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View the webcast at https://events.q4inc.com/attendee/564090331
Summary
Boeing Co reported a 14% increase in consolidated revenue to $22.2 billion for the first quarter of 2026, driven by growth in all segments.
The company is progressing with the certification work on the 737.7, 737.10, and 777X, with deliveries expected in 2027.
The commercial airplanes segment delivered 143 airplanes, stabilizing production at 42 per month for the 737 program, with plans to increase to 47 per month this summer.
Boeing Co’s defense and space segment has seen growth, with a record backlog of $86 billion, and is benefiting from increased defense budgets and operational tempo.
Management expressed confidence in achieving positive free cash flow for the year, driven by higher commercial deliveries and operational improvements.
The company is addressing supply chain challenges, particularly in the 787 program, but remains on track to meet full-year delivery targets.
Boeing Co is focused on safety, quality, and disciplined execution, with a strong emphasis on completing certification work for new aircraft models.
Full Transcript
OPERATOR
Thank you for standing by. Good day everyone and welcome to the Boeing Company’s first quarter 2026 earnings conference call. At this time, all participants are in a listen only mode. Please be advised that today’s call is being recorded. The management discussion and slide presentation, plus the analyst question and answer session are being broadcast live over the Internet. To ask a question on today’s call, please press star then one on your telephone. At this time, I am turning the call over to Mr. Eric Hill, Vice President of Investor Relations for opening remarks and introductions. Mr. Hill, please go ahead.
Eric Hill (Vice President of Investor Relations)
Thank you and good morning. Welcome to Boeing’s quarterly earnings call. With me today are Kelly Ortberg, Boeing’s President and Chief Executive Officer, and Jay Mulave, Boeing’s Executive Vice President and Chief Financial Officer. This quarter’s webcast earnings release and presentation, which include relevant disclosures and non GAAP reconciliations, are available on our website. Today’s discussion includes forward looking statements that are subject to risks and uncertainties, including the ones described in our SEC filings. As always, we will leave time at the end of the call for analyst questions. With that, I will turn the call over to Kelly Ortberg. Thank you Eric and good morning everyone. Thanks for joining in. Today’s Call as we reflect on our first quarter performance today, we’re off to a really good start and headed in the right direction. We remain on plan and are building momentum from solid performance across all three of our businesses. Our commercial airplanes team continues to integrate our safety and quality plan into its operations which has enabled us to increase production rates and deliver high quality airplanes to customers around the world. Our defense and space team continues to stabilize operations and after two years of hard work and development, we’re starting to achieve inspiring milestones like the recent Artemis 2 launch that carried NASA astronauts to space on the Boeing core stage rocket. The launch and landing were truly profound moments as humans reached farther into space than ever before. It serves as a great reminder of what Boeing, our industry partners and our country can do in Boeing Global Services. Our team is off to a strong start, adding further orders to its record backlog, meeting customer demand and continuing to deliver solid operating results. While we are seeing some regional instability as a function of the Iran war, we remain confident in the long term future of our industry. We have seen moments like this before. Whether it be recession, pandemic or conflict, the resilience of our industry has always led to a recovery and return to growth trends. Our market remains robust and the Boeing portfolio of versatile, fuel efficient airplanes, defense platforms and services is built for the dynamic environment of our time. So far we have not seen any impact on our airplane deliveries. As always, we stay close to our commercial customers if they make adjustments to their plans, in which case I think the strength and diversity of our backlog gives us a lot of flexibility. And I should note we’re already seeing higher demand in our defense business given the increased operational tempo, which over time will be a good offset to any potential commercial MRO weakness that results from these higher fuel prices. We are confident in our business, customers and markets and our team remains squarely focused on safety and quality, disciplined execution and elevating operational performance so we can profitably deliver on our record backlog of nearly $700 billion. As I mentioned last quarter, one of the biggest focus areas for Our team in 2026 is completing the certification work on our development programs. This is where I’ll spend a few moments before discussing our first quarter accomplishments in BCA. We continue to move forward on certification work for the 737.7 and the 737 10. In the quarter, we began the final phases of the certification and flight test for the 73710 which includes auto throttle, autopilot, enhanced angle of attack as well as engine anti ice solution. We’re pleased with the progress so far and remain on plan for the newest members of the 737 Max family to be certified later this year with deliveries expected to start in 2027. On the 777. 9, we continue to advance our certification testing. Last month we received approval from the FAA for the next phase of testing called TIA4A. While it’s a smaller package focused on natural ice testing, it’s an important step in moving this development program forward. You’ll recall last quarter we discussed a potential durability issue on the 777X engine that was discovered during an inspection. Since then we worked closely with our supplier. As they’ve said yesterday, they believe they have identified root cause and they’re working on finalizing their modification. We are working together with Aspire and the FAA to pull this into our certification plan and we remain on track for schedule of first delivery in 2027. In the quarter, we also achieved an important milestone on the 787 program. We oBCAined FAA certification for increased maximum takeoff weight for the 787. 9 and the 787 10, enabling those models to fly further or carry more cargo, creating additional value and revenue generating opportunities for our 787 operators in BDS work to reduce risk across our development programs using active management is leading to win win outcomes for our customers and Boeing. This means we’re proactively working challenging programs by looking more closely at risk requirements, schedules and customer needs combined with stronger focus on Program Management RICR, we’re seeing good progress here. For example, on KC46 tanker we recently approached our best ever factory performance going back to pre pandemic levels of productivity and we remain on track this year to deliver the most tanker aircraft since 2019. We also achieved an important milestone on MQ25 with completion of high speed taxi tests and the first flight is imminent. The Stingray is our first unmanned aerial refueler for the US Navy. We are now one step closer to providing this first of its kind capability to further enable the US to project power worldwide. Overall, I’m pleased with the progress our BDS development programs are making and there are no major EAC adjustments. Let’s turn now to the first quarter accomplishments as we start the year. We continue to drive stable operations across our factories enabled by a focus on safety, quality and performance. Our team is more engaged in embracing our values and behaviors which we first shared with our team around this time last year. That increased commitment is helping drive process improvement ideas. As an example, I just reviewed one from Renton where the team developed a new drill jig resulting in more than 30% reduction in defects per 737 wingtip. In BCA, Stephanie and her team are methodically increasing production rates across our key commercial programs. The 737 program has stabilized at a rate of 42 airplanes per month and in the quarter we also delivered the final 737 Max from storage. As previously discussed, some first quarter 737 deliveries slid into the second quarter due to a recent non conformance finding on aircraft wiring as part of our root cause corrective action process. We fully understand the issue and and we have reworked all of the 25 airplanes affected and most of these have already been delivered. Importantly, this is evidence of our safety management system working to identify issues early and drive continuous improvement and avoid these issues in the future. To be clear, the wiring issue will not affect our full year delivery goals or plans to increase production to 47 per month this summer. We believe our internal and external supply chains are well positioned for this next rate increase to support further planned rate ramps above 47 per month. We are readying the new Everett north line. I recently walked the factory where I saw construction complete and tooling in place. Our team setting up the line are eager to get started and we started hiring and training employees for the North Line will complete structured on the job training which will pair new mechanics with experienced teammates from our existing rent and line. On the 787 program, we did see some impacted deliveries in the quarter due to delays of premium seat certifications, but we still expect to meet our full year delivery range of 90 to 100 airplanes. We’re staying close to our customers, suppliers and regulators to work through these seating issues and Jay will talk a little bit more about actions we’re taking to better manage these impacts going forward. On production, the program continues to stabilize at 8 per month as we work through selected supply chain delays including interiors and engines. Overall, the factory is performing well and the program continues preparations to increase production to 10 airplanes per month later this year. Like the 737 program, the 787 team will use the same discipline process guided by our safety and quality plan with data from the six key performance indicators to assess readiness ahead of planned rate increases. Turning now to BDS where our defense platforms are providing unique value and capability to our customers, particularly in the current threat environment. Over the past two months we’ve seen much of our defense portfolio support key missions in theater. For example, the AH64 Apache has proven its potent anti drone capabilities and The Patriot advanced Capability 3 interceptor with its Boeing built Seeker has intercepted ballistic missiles and drones threatening civilians and military forces. Boeing systems remain central to air superiority, precision strikes and electronic warfare, while long range strike and airborne command and control extend reach and situational awareness. Our aerial refueling, reconnaissance and strategic airlift sustain high tempo operations and we’re proud that our Combat Survivor Evader Located system and the Little Bird helicopter played a key part in the heroic mission that safely returned downed pilots. We continue to make investments in our people and facilities to meet the evolving need of the United States and our allies. Those investments help secure wins like the recently announced agreement to expand PAC3 seeker production in our Huntsville factory. The framework agreement with the Department of War enables a massive increase in the supply of seekers needed to expand the protection provided by the world’s most advanced air defense system. The current demand environment for defense extends into services as well as and BGS has had several notable wins including Boeing Defense UK’s largest ever maintenance and support contract for the UK’s Rotary Wing enterprise, which was announced last week. Our Global Services team also signed the largest landing gear exchange contract in Boeing’s history with Singapore Airlines. That agreement will provide landing gear exchanges for more than 75 airplanes across Singapore, 737 Max and 787 fleets. With these recent program wins and operational improvements in all of our segments, we’re well on our way to fully putting the recovery behind us. So before I wrap up my prepared remarks, I want to thank all of our employees for delivering another quarter of improved performance as we continue to turn the corner. Their dedication to safety and quality, embracing our values and behaviors, and continuous improvement have enabled a solid start to the year. While there’s more to do in 2026, we’re making measurable progress. We’re restoring trust with our customers, we’re increasing production rates and we’re on track to generate full year of positive cash flow. And our commercial, defense and service portfolios are well positioned to meet the market demands and restore Boeing to the iconic company we all know. So now I’ll turn it over to Jay to discuss our operating results before we move on to questions.
Jay Mulave (Executive Vice President and Chief Financial Officer)
Thanks Kelly and good morning everyone. As Kelly mentioned, a good start to the year and a clean quarter. Consolidated revenue was up 14% to $22.2 billion, driven by solid growth across all three segments of note, The revenue impacts from last year’s Spirit acquisition and Digital Aviation Solutions divestiture largely offset each other in the quarter. Operating margin was 2%, down primarily from lower fast cash pension adjustment as compared to last year, partially offset by higher segment earnings. The core loss per share of $0.20 improved from last year on segment growth and other non operating earnings improvements. Free cash flow was a usage of $1.5 billion in the quarter, driven by seasonal corporate expenditures in addition to planned capex increases as we continue to make progress on our growth investments in St. Louis and Charleston. Free cash flow was notably better than expectations I shared last month, largely driven by the solid recovery from the 737 wiring issue and favorable collection timing late in the quarter. Turning to BCA on the next page, BCA delivered 143 airplanes in the quarter. Revenue of $9.2 billion was up 13% as Stephanie and her team continuously drive quality improvements while increasing delivery volume. Operating margin of negative 6.1% improved compared to last year, primarily driven by higher delivery volume and a favorable accounting adjustment, partially offset by dilutive impact of the Spirit Aerosystems acquisition that we highlighted last quarter regarding our customers in the Middle East. As Kelly noted, at this time we have not seen any requests for delivery deferrals, nor have we encountered material supply chain disruptions that would impact our delivery or production rate plans. In fact, we delivered four airplanes as planned to customers in that region since the conflict began. That said we will continue to monitor the situation. Importantly, backlog continued to grow and remains at an all time high of $576 billion including over 6,100 airplanes. Now clicking down to the commercial programs, starting with the 737 program where we delivered 114 airplanes in the quarter which included the final Shadow factory airplane built prior to 2023. As Kelly mentioned, we completed the rework on all 25 airplanes and impacted by the wiring noe and we remain on track to deliver 500 airplanes this year. In the quarter, production stabilized at a rate of 42 per month and a team drove a nearly 20% reduction in final assembly rework hours as compared to the first quarter of 2025. We continue to expect a production increase to 47 per month in rent this summer and will benefit from buffer inventory during the transition. As we discussed previously, Production rate increases above 47 per month will be enabled by activating the 737 North Line in Everett. The North Line is expected to begin operations later this year at a low rate …
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