Boeing Company (The)

Thank you for standing by. Good day everyone and welcome to the Boeing Company's second quarter 2024 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 one followed by the digit zero on your touch tone telephone. Again, it's 1-0 for questions. After pressing 1-0, you will hear that you have been placed in queue. Pressing 1-0 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, Lois, 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. Projections, estimates, and goals included in today's discussion involves risk including those described in our SEC filings and in the forward-looking statement disclaimer at the beginning of the presentation. We also refer you to the additional disclaimers related to the Spirit Aerosystems transaction at the beginning of the presentation, as well as the disclosures relating to non-GAAP measures in our earnings release and presentation. Now, I will turn the call over to Dave Calhoun.

Thanks, Matt. Good morning to all, and thanks for joining us. First, you saw the news that the company has announced the appointment of Kelly Ortberg as my successor, commencing August 8th of this calendar year. As you know, the board conducted an extensive search process. It was led by Steve Malenkov. I am incredibly grateful to the way in which he conducted it and the extent to which he conducted it. And I'm extremely confident in their selection of Kelly as the next leader for Boeing. He's had more than 35 years of experience in aerospace and is tremendously respected in the industry. I look forward to working with him to ensure a smooth transition. I want to focus my upfront comments on the progress that we are making on our recovery as we strengthen our quality management systems and position the company in the best possible way as we move forward. Brian will cover the financials following my remarks. As a company, we've been on a multi-year path to strengthen our safety and quality management systems. We've stressed our commitment to transparency every step of the way. The January accident obviously sharpened this focus, leading us to take multiple additional steps to improve the stability of our operations, including major elements of our supply chain. First among our actions was to slow things down and control travel work, allowing our supply chain to catch up and provide the buffer we need to improve quality and stabilize deliveries going forward. Our second quarter financial results reflect the reality of that continuing recovery post the Alaska accident. We're committed to doing all of the work necessary to ensure Boeing is the company the world needs it to be safe and predictable. Over the last seven months, we've made meaningful progress toward that goal. At the end of May, we provided our comprehensive safety and quality plan to the FAA, which continues to provide strong oversight of the delivery process. The plan notes our key performance indicators by which we and our regulator will monitor the health and the quality of our production system. These measures include employee proficiency, notice of escapes, supplier shortages, rework hours, travelers at factory rollout, and ticketing performance. All of these key performance indicators, KPIs, are established and operationalized across our BCA airplane programs, and they provide real-time insight to support stability, quality, and safety. We are seeing improved performance across the majority of the metrics and remain confident in our ability to meet these KPIs as we expand production. An important element of this plan is the control limits we've established by which the FAA and more importantly, our own team hold ourselves accountable. Furthermore, our plan doubles down on four key investments, workforce training, simplification of manufacturing plans and processes, eliminating defects and elevating our safety and quality culture. We continue to seek feedback from our employees, from our customers, our regulators, policy makers, shareholders, and many others as we move forward. One of the most important actions we took was the transfer of our Renton fuselage inspection process to Wichita. On-site Boeing inspectors at Spirit increased by almost three times the number that we had before January. And defects we initially caught and reworked in Renton are now caught and reworked in Wichita. While this dramatically reduced the number of clean fuselages coming from Spirit in the first few months, we have seen steady improvement ever since. The improvements in quality have significantly improved our rent and flow times over that same period. While our focus remains on our factories to ensure we can meet our customer commitments, we are also making important progress on our development programs, including the 737-7, the 737-10, and our 777X. Most notably, this month we received Type Inspection Authorization, TIA, for the 777-9 and began CERT flight testing with FAA personnel on board the aircraft. Our team has put the 777-9 test fleet through more than 1,200 flights, 3,500 flight hours across a wide range of regions and climate conditions. And the certification of flight testing will continue validating the airplane's safety, reliability, and performance. In addition, we've identified an engineering solution for the engine anti-ice system for in-production aircraft that will be implemented and certified in 2025 to support the first delivery of our Dash 7 and Dash 10 in the MAX family. A comment on Boeing defense space and security performance. Clearly the results this quarter are disappointing. Brian and I have mentioned before that we expected the fixed price development programs to remain bumpy until we complete the development phase and transition to mature long-term franchise programs. Based on the lessons that we've learned in taking on these fixed price development programs, we have maintained contracting discipline for all future opportunities. We remain cautiously optimistic about the long-term prospects of our defense business, and we believe we can progress toward a more historical level of performance over time. Finally, global services remains a bright spot and continues to deliver solid results. We have a strong franchise, and the team remains dedicated to supporting our commercial and defense customers. Before turning it over to Brian, let me touch on the recently announced agreement to acquire Spirit Aerosystems. This is an important shift in strategic direction and it would course correct the decision made decades ago. This planned acquisition is a very significant demonstration of our resolve to invest heavily in quality and safety and to take the additional actions needed to reshape our company. As we have said, we believe this proposed deal is in the best interest of the flying public, in the best interest of our airline customers and the employees of Spirit and Boeing and the country more broadly. By bringing in critical manufacturing work back within our four walls, we can unify our safety and quality management systems and ensure our engineers and mechanics are working together as one team day in and day out. I'll close with a comment to our employees. Thank you for all that you do every single day. You care deeply about our mission, about our company, and about each other. Your passion, your resilience, and commitment are inspiring. This is a challenging period of time for all of us. There is no doubt. But I am confident, maybe more confident than I've ever been in our future because of you. And thank you. And Brian, I'll turn it over to you.