Boeing Company (The)

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.

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 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 risk 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 Orkberg.

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 defensive space team continues to stabilize operations, and after two years of hard work and development, were starting to achieve inspiring milestones, like the recent Artemis II launch that carried NASA astronauts to space on the Boeing Delta 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. Aviation has 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 BTA, 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 tests for the 737-10, which includes autothrottle, 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 work closely with our supplier. As they said yesterday, they believe they have identified root cause and they're working on finalizing their modification. We are working together with the supplier and the FAA to fold 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 obtained 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 77 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 record, we're seeing good progress here. For example, on KC-46 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 MQ-25 with completion of high-speed taxi tests and the first flight is imminent. The Stingray is our first unmanned aerial repeller for the U.S. Navy. We are now one step closer to providing this first-of-its-kind capability to further enable the U.S. 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 for 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 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 Renton line. On the 787 program, we did see some impacted deliveries in the quarter due to delays of premium seat certifications, but we'll 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 eight per month as we work through selected supply chin 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 AH-64 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 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 winds like the recently announced agreement to expand PAC-3 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, 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 history with Singapore Airlines. That agreement will provide landing gear exchanges for more than 75 airplanes across Singapore's 737 MAX and 787 fleet. 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.