Boeing Company (The)

Thank you for standing by. Good day, everyone, and welcome to the Boeing Company's fourth quarter 2023 earnings conference call. Today's call is being recorded. The management discussion and the slide presentation, plus the analyst question and answer session, are being broadcast live over the internet. To ask a question on today's conference, please press the digit 1, followed by the digit 0 on your touchtone phone. Again, it's 1. then zero for questions. After pressing one, then zero, you will hear that you have been placed in queue. Pressing one, zero again will take you out of queue and may prevent you from being able to ask a question. At this time, for opening remarks and introductions, I'm turning the call over to Mr. Matt Welch, Vice President of Investor Relations for the Boeing Company. Mr. Welch, please go ahead.

Thank you, and good morning, everyone. Welcome to Boeing's quarterly earnings call. I am Matt Welch, and with me today are Dave Calhoun, Boeing's President and Chief Executive Officer, and Brian West, Boeing's Executive Vice President and Chief Financial Officer. As a reminder, you can follow today's broadcast and slide presentation at Boeing.com. As always, detailed financial information is included in today's press release. Furthermore, projections, estimates, and goals included in today's discussion involve risks, including those described in our SEC filings and in the forward-looking statement disclaimer at the end of the web presentation. In addition, we refer you to our earnings release and presentation for disclosures and reconciliation of certain non-GAAP measures. Now I will turn the call over to Dave Calhoun.

Thank you, Matt. Good morning, everybody, and thanks for joining us. While we report on our fourth quarter results today, my focus is on Alaska Airlines Flight 1282 and the actions we are taking as a company to strengthen quality and earn the confidence of our customers, the confidence of our regulators, and the flying public. Brian will cover the financials. I will keep my comments strictly to the issue at hand. I'll start up front by apologizing again to Alaska Airlines, to their crew, and to their passengers, and more broadly to all of our customers who were affected by the 737 MAX 9 grounding. The NTSB's investigation into the accident is ongoing. I have an amazing amount of confidence in the work that they do. They bring experts to the investigation and they take all the time that's necessary to draw accurate conclusions. And we intend to be there with them. As part of that NTSB process, I cannot comment on any specific root cause or speculate a root cause. As a participant in the process, I do believe the investigation will narrow quickly. Whatever conclusions are reached, Boeing is accountable for what happened. Whatever the specific cause of the accident might turn out to be, an event like this simply must not happen on an airplane that leaves one of our factories. We simply must be better. Our customers deserve better. I want to remind everybody what a great job the pilots and the crew at Alaska Airlines did in responding to a desperate moment. I also want to remind everybody what a terrific job the leadership at Alaska Airlines did, grounding the airplanes and ensuring safety. Alaska Airlines did exactly what companies like Boeing would hope that they do at a moment like that, and that is why the airline industry is as safe as it is. We caused the problem, and we understand that. Over these last few weeks, I've had tough conversations with our customers with our regulators, congressional leaders, and more. We understand why they are angry, and we will work to earn their confidence. There is no message, no slogan that will accomplish that. It's all about real, demonstrated action and absolute transparency every step of the way. So let's talk about those steps. Our team has worked diligently to help our customers restore their 737-9 airplanes to service. The FAA approved the detailed inspection protocol last Wednesday. And today, all 737-9 operators are safely returning their airplanes in service. More broadly, we are taking immediate and comprehensive action to strengthen quality at Boeing and within our supply chain. We instituted additional quality controls and inspections at Boeing and at our supplier. We issued bulletins to suppliers to strengthen the focus on conformance and reducing the risks of quality escapes. We opened our factories to 737 operators for additional direct oversight. And we appointed an expert quality advisor to conduct a comprehensive and independent review of our commercial airplane quality management system. And they will remain with us for many years. Most importantly, last week we paused 737 production for the day as more than 10,000 teammates across Renton, Seattle and Moses Lake stopped to focus on safety and quality and only safety and quality. This was a quality stand down at a scale we have never done before. And we're going to keep doing them across our commercial factories. In addition to our internal actions, The FAA has announced new oversight of our 737 manufacturing. We will cooperate fully and transparently with the FAA at every turn. We respect their role as our regulator, and we will follow their direction in every step on production. Today we're producing 737s at a rate of 38 per month, and we will remain at that rate until the FAA and Boeing is satisfied with our quality and manufacturing process. This increased scrutiny, whether it comes from us, from our regulator, or from third parties, will make us better. It's that simple. Over the last several years, we've taken close care not to push the system too fast. And we have never hesitated to slow down, to halt production, or to stop deliveries, to take the time we need to get things right. Nobody knows that better than our investors. As you know, we stopped delivering 787s for over a year to ensure that each conformed to our exacting specifications prior to delivery. And on the 737 line, we have regularly slowed rate breaks to support the stability of the overall production system and to correct non-conformances when identified. But this accident makes it absolutely clear we have more work to do. I know that these moments that impact delivery schedules can frustrate our customers and our investors. But quality and safety must come above all else. And our customers and our investors know that and are in there with us. On that note, as you will see, we are not issuing financial outlook for 2024 today. Now is not the time for that. We won't predict timing. We won't get ahead of our regulator. We will go slow to go fast. And we will encourage and reward employees for speaking up to slow things down if that's what's needed. We will simply focus on every next airplane and ensuring we meet all the standards that we have, all the standards that our regulator has, and that our customers demand. As we go about that work, we remain confident in our recovery. Since day one, we've been focused squarely on inculcating safety and quality to everything that we do, and getting back to our legacy of having engineering excellence at the center of our business. That focus and commitment is unwavering, and we will continue to strengthen our processes and our execution every step of the way. Most importantly, we will be transparent every step of the way. And with our 170,000 employees in mind, I'd like to close with a message directly to our team. We have confidence in you, and we have confidence in Boeing. We have confidence in our airplanes. I know how seriously you take your work. Our men and women on the manufacturing floor and in our engineering offices know exactly what we must do. You know your work better than anyone else on the planet. Use your voice. Speak up. Focus on every next detail. We will seek out and act on your feedback. We're in a challenging moment. We will earn trust back through demonstrated action and a commitment to total transparency. I'm confident in you, I'm confident in our company, and that together we will do just that. Brian, over to you.