Boeing Company (The)

Thank you for standing by. Good day, everyone, and welcome to the Boeing Company's fourth quarter 2025 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 1 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.

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 Malave, Boeing's Executive Vice President and Chief Financial Officer. This quarter's webcasts, 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 risk and uncertainties, including the ones described in our SEC filings. As always, we'll leave time at the end of the call for analyst questions. With that, I will turn the call over to Kelly Ortberg.

Thanks, Eric. Good morning, everyone. Thanks for joining in today's call. As we start this year, we've set the foundation for our turnaround with stronger performance and record-breaking backlogs across our businesses. We haven't fully turned the corner, but we're making real progress and getting back to the Boeing everyone expects of us. When we spoke a year ago, we were just in the early stages of our four-point plan to stabilize our business, execute on our development programs, change our culture, and build a new future for Boeing. Today, our customers and stakeholders are seeing the difference in how we work together, to uphold our commitments and deliver high-quality products and services. Before discussing the work ahead of us and our plan to meet the 2026 goals, I'll first touch on some important accomplishments in the quarter and the year that positioned us well for moving forward. In 2025, we methodically increased commercial production guided by our safety and quality plan. This enabled our team to deliver the most commercial airplanes since 2018. We delivered 600 airplanes and won more than 1,100 commercial orders for the year, making this one of our highest order totals ever as our portfolio continues to win in the market. Earlier this month, I joined Alaska Airlines as they announced their largest order ever. This was a clear reminder that our customers placed their trust in us with every order, and we must keep earning that trust by delivering safe, high-quality airplanes on time. To do this, the fundamental changes we've made this past year will serve as a base for continuous improvement as we look to increase commercial production. For example, we've simplified more than 5,100 work instruction documents. These are the instructions that the mechanics and inspectors use each day to do their jobs. These type of activities reduce complexity, support consistent performance, and strengthen factory health. On 737, production is stabilizing at 42 airplanes per month, and we're continuing to see improvement in the program as its on-time delivery performance has improved threefold compared with the previous year. We also continue to get positive customer feedback on the quality of the airplane. As we look to move to higher rates, we'll use the same process as previous rate breaks, monitoring factory health and following our safety and quality plan. For production above 47, we'll add our new north line in Everett, where facility and tooling investments are now complete and we're executing a deliberate staffing plan to support production there. In Charleston, the 787 program continues to progress well and is stabilizing at rate 8. I'm pleased with the operational metrics we're seeing in the factory. As an example, during the 2025, the program reduced average rework hours nearly 30%. And going forward, as with the 737, we use the same discipline processes, including monitoring our KPIs to assess readiness for the next planned rate increase to 10 airplanes per month, which is targeted for later this year. As previously announced, we're also investing in the future, breaking ground on our factory expansion to support higher rates and meet the exceptional demand for the 787. We also made progress in our defense business and scored a transformational win to build the US Air Force sixth generation fighter. Over the past year, we've also focused on reducing the risk profile of our BDS development programs by driving improved performance and leveraging active management to deliver better outcomes for our customer. In the quarter, our defense business also hit several key milestones. The U.S. Navy's MQ-25 successfully completed its inaugural engine run, moving it closer to first flight. We also delivered the first operational T-7A Red Hawk to the U.S. Air Force at Joint Base San Antonio Randolph. These milestones are just a few where our programs are progressing and meeting our customer commitment. Importantly, we also ratified a new five-year labor agreement with our IAM representative workforce in St. Louis during this past quarter. Our team there is back to work, focusing on delivering and supporting our customers. Before the year end, we took another important step forward, supporting our production stability by completing the acquisition of Spirit Aerosystems. Bringing together our companies reinforces our efforts to improve safety and quality throughout our factories, operations, and supply chain. There's a lot of work ahead of us with an integration of this magnitude, and we have thoughtful, detailed plans in place to help enable a smooth transition for our new teammates while maintaining continuity for our customers and suppliers. We also successfully completed the $10.6 billion Jefferson sale, solidifying our balance sheet while retaining essential digital capabilities for our customers. With a streamlined portfolio, our service business is well positioned to support our global commercial and defense customers. BGS secured Boeing's largest ever commercial component services deal, and our government services business received its highest orders ever in 2025. including a contract with U.S. government in the quarter to support C-17 modernization. BGS also launched a new unified e-commerce platform, which brings together Boeing's distribution portfolios of products and services into one streamlined digital destination, simplifying how customers and suppliers connect, transact, and grow with the company. Across commercial defense and services, we've built a strong foundation for the year ahead. And while I'm proud of what we accomplished in 2025, we also know expectations are rising and we must continue to elevate the performance that we've demonstrated over this past 12 months. As important, I am pleased with the progress we're making on culture that will ensure these improvements become a critical part of our success and further strengthen trust with our stakeholders. I remain confident in our team and our plan to deliver on the opportunities and address the challenges in front of us in the year ahead, particularly on our development programs. Past delays to the certification timelines for the new 737 MAX derivative and the 7779 have been challenging, but we are making steady progress in performing on our revised schedules. The 737-10 recently gained Type Inspection Authority 2, or TIA2, to expand flight testing. This final TIA opens up the majority of the certification flight testing, which is focused on validating the airplane's avionics, propulsion, auto flight capabilities, and other airplane functions. In addition, as we've previously shared, we have a final set of design changes to permanently address the engine anti-ice issues on the 737-7 and 737-10. We're following the lead of the FAA as we work to certify the suite of design changes. We still anticipate certification for both the 737-7 and 737-10 in 2026. On 777-9 in the quarter, we received approval for TI-83 and continue to perform certification flight testing. TI-83 is a major phase of testing focused on avionics, environmental control systems, and the auxiliary power unit. And as I've said before, overall, the aircraft and engine continue to perform well. We have identified a potential durability issue during a recent inspection on the 777X engine, and we're working with GE to better understand that issue and finalize root cause and corrective actions. Importantly, as we work through this issue, we continue our certification flight testing, and we don't expect this to impact our delivery in 2027. Demand for the airplane remains strong, and we remain confident that the 777X will be the next flagship airplane for our global customers. Moving now to KC-46 Tanker. As we came through our quarterly process, we revised cost estimates for elements including the production support and supply chain, which Jay will cover in more detail. While it's disappointing to recognize another impact on this program, we are seeing encouraging operational performance trends, which, if sustained, shouldn't enable us to meet our customer delivery commitments and set us up well for the next tanker order beyond the current program of record. You've heard me say you're never done until you're done on any of the development programs, but across defense and commercial, we are making progress, clear-eyed on the work remaining and committed to delivering better performance in the year ahead. As I finish my prepared remarks this morning, I want to thank all of our employees, including our newest teammates from the former Spirit Aerosystems. From our frontline mechanics to our engineers and our management team, we're all committed to continuous improvement guided by our culture with a sharp focus on safety, quality, and performance to deliver for our customers and other stakeholders. We know there's more work ahead in 2026, but the strong foundation we're building by stabilizing the business, executing these development programs, building our future, and changing our culture will position us to put our recovery behind us and restore Boeing to the company we all know it can be. With that, I'll now turn it over to Jay to discuss the results in more detail.