Boeing outlines $4.9B 777X charge and sets 2027 delivery target while advancing 737 and 787 production

Earnings Call Insights: The Boeing Company (BA) Q3 2025

MANAGEMENT VIEW

* President and CEO Robert Ortberg welcomed new CFO Jay Malave and highlighted a renewed focus on safety, quality, and culture change, noting that “by August of this year, we have delivered more commercial airplanes than all of last year.” The company achieved positive free cash flow for the first time since 2023 and reached a significant agreement with the FAA to increase 737 production to 42 airplanes per month.
* Ortberg detailed a 75% reduction in traveled work on the 737 and a 60% reduction across all airplane programs, stating that the 737 factory stabilized at 38 per month and is now moving to 42 per month. He emphasized, “we expect rate increases beyond 42 per month, will go in increments of 5. And while rate increased breaks won't be earlier than 6 months apart, we will remain disciplined and we won't move to higher rates until we achieve stability and readiness.”
* Ortberg announced a delay in the 777X program, with first delivery now expected in 2027 and a $4.9 billion noncash charge. He explained, “we have delayed our expectations for certification and first delivery, resulting in a $4.9 billion noncash charge during the quarter.”
* The FAA granted Boeing limited delegation to issue airworthiness certificates for some 737 MAX and 787 airplanes.
* Ortberg referenced strong demand across segments, including a growing backlog of more than $600 billion, and highlighted defense wins such as a $2.8 billion U.S. Space Force contract and $2.7 billion for PAC-3 seekers.
* Ortberg noted progress in the BGS segment with strong aftermarket performance and digital services agreements, and described continued culture and values initiatives within the company.
* CFO Jay Malave stated, “revenue was up 30% to $23.3 billion, primarily driven by improved operational performance across the business, including higher commercial deliveries and defense volume.” He acknowledged the $4.9 billion charge on the 777X program and reported positive free cash flow of $238 million for the quarter.

OUTLOOK

* Management updated the 2025 outlook to a free cash flow usage of about $2.5 billion, barring a prolonged government shutdown, with expectations for positive free cash flow in Q4 before any DOJ payment.
* Ortberg commented on production plans: “we will exit the year very soundly at the 42 a month rate... the next would be the 47. I mentioned in the prepared remarks, not earlier than 6 months because we need time to go to the new rate, demonstrate stability.”
* Certification for the 737-7 and 737-10 is anticipated in 2026, and the 787 is expected to move to 8 per month “in the near future,” with a pathway to 10 per month next year.

FINANCIAL RESULTS

* Revenue for the quarter was $23.3 billion, up 30%. Core loss per share was ($7.47), reflecting the $4.9 billion 777X charge. Free cash flow was positive $238 million.
* BCA delivered 160 airplanes in the quarter, with revenue rising to $11.1 billion. Operating margin was negative 48.3%, impacted by the 777X charge. The quarter closed with a $535 billion BCA backlog and more than 5,900 airplanes.
* The 737 program delivered 121 airplanes; the 787 saw 24 deliveries. The 777X program’s loss provision was $4.9 billion, resetting development and production schedule with first delivery now in 2027.
* BDS delivered 30 aircraft and 2 satellites, with revenue of $6.9 billion and an operating margin of 1.7%. BDS backlog grew to $76 billion.
* BGS revenue was $5.4 billion, with an operating margin of 17.5%.
* Cash and marketable securities ended at $23 billion; debt balance was $53.4 billion.

Q&A

* Myles Walton, Wolfe Research: Asked about 777X cash flow impact and timing of breakeven. Malave responded, “next year will be a heavy use year. The year after that will be better in 2027. And then we would expect ourselves to get closer to neutral in 2028.”
* Ronald Epstein, BofA: Questioned what changed on the 777X. Ortberg explained, “there's no new issues with the airplane itself or the engines… The issue is solely around getting the certification work complete.”
* Robert Stallard, Vertical Research: Queried the $4.9 billion charge. Malave detailed, “the scheduled delay simply had a broad impact through the elements of the production system... the longer period of performance... adds substantial carrying cost.” Ortberg discussed supply chain adjustments required by the new schedule.
* Noah Poponak, Goldman Sachs: Asked about 737 production ramp cadence and FAA process. Ortberg confirmed the 42 rate would be sustained at year-end, with 6-month intervals for further increases and noted the same process and metrics for future FAA approvals.
* Peter Arment, Baird: Inquired about -7 and -10 certification. Ortberg stated, “the anti-ice is still the critical path for both certifications... we're still planning on getting that done here in '26.”
* Seth Seifman, JPMorgan: Asked about 787 rate increases and supply chain. Ortberg noted, “our next rate increase will be from this 8, which we should be at 8 by the end of the year and then we'll move to 10 next year.” Seats remain a supply constraint.
* Sheila Kahyaoglu, Jefferies: Asked about cash flow drivers and BCA rates. Malave explained, “right now, we're holding anywhere to slightly down from the third quarter in terms of deliveries to maybe flat. But more importantly... we will see lower receipts because we've got a kind of just a mix headwind.”
* Additional questions covered M&A, CapEx for Charleston expansion, supply chain pinch points, and CFO priorities.

SENTIMENT ANALYSIS

* Analysts pressed on the size and drivers of the 777X charge, certification delays, and cash flow timing, signaling a slightly negative to neutral tone, particularly around risk, with multiple follow-ups on the 777X program and supply chain constraints.
* Management maintained a confident tone in prepared remarks, emphasizing “we remain confident that the 777X will be the next flagship airplane for our global customers” and “we're well positioned to build on the momentum,” but acknowledged disappointment with the 777X delay.
* Compared to the previous quarter, analyst sentiment shifted from cautious optimism to more skepticism regarding certification and program delays. Management’s tone was less celebratory and more focused on addressing setbacks and risk mitigation.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for free cash flow usage improved to about $2.5 billion from prior usage of $3 billion, with positive free cash flow achieved in the current quarter versus usage last quarter.
* The 777X program shifted from expected 2026 delivery to 2027, with a new $4.9 billion charge this quarter. The previous quarter reported ongoing progress without new technical issues.
* Commercial deliveries rose from 150 to 160 airplanes quarter-over-quarter.
* Analysts in the current quarter focused more on 777X delays and cash flow timing versus the prior quarter’s emphasis on delivery rates and trade environment.
* Management’s confidence moderated, with more discussion of contingencies and risk management, particularly regarding certification and supply chain.

RISKS AND CONCERNS

* Major risk is the delayed 777X certification, resulting in a $4.9 billion charge and delivery now expected in 2027.
* Ongoing certification process complexity with the FAA, especially for the 737-7, -10, and 787 programs.
* Supply chain constraints, especially seating for the 787 and engine demand across programs, remain challenges.
* IAM workforce strike in St. Louis noted, with contingency plans in place.
* Cash flow headwinds expected in 2026 due to delayed deliveries; DOJ payment in Q4 also highlighted as a risk to free cash flow.

FINAL TAKEAWAY

Management underscored progress in production ramp-ups and achieving positive free cash flow, while openly addressing the significant setback on the 777X program with a $4.9 billion charge and a reset delivery timeline to 2027. The company continues to prioritize safety, quality, and disciplined production increases, supports robust demand with a sizeable backlog, and remains focused on long-term recovery, risk management, and supply chain stabilization as key drivers for future performance.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ba/earnings/transcripts]

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