Boeing has announced that its Arlington, Virginia campus just outside Washington, D.C. will serve as the company’s global headquarters. The aerospace and defense firm’s employees in the region support various corporate functions and specialize in advanced airplane development and autonomous systems. In addition to designating Northern Virginia as its new headquarters, Boeing plans to develop a research & technology hub in the area to harness and attract engineering and technical capabilities.

“We are excited to build on our foundation here in Northern Virginia. The region makes strategic sense for our global headquarters given its proximity to our customers and stakeholders, and its access to world-class engineering and technical talent,” said Boeing President and Chief Executive Officer Dave Calhoun.

Boeing will maintain a significant presence at its Chicago location and surrounding region.

“We greatly appreciate our continuing relationships in Chicago and throughout Illinois. We look forward to maintaining a strong presence in the city and the state,” said Calhoun.

“We also want to especially thank Governor Youngkin for his partnership, and Senator Warner for his support as we worked through the process.”

Future of Work Enables More Investment in Manufacturing, Engineering, Training

Over the past two years, Boeing has implemented flexible and virtual solutions that have enabled the company to reduce its office space needs. At its Chicago office, less office space will be required for the employees who will continue to be based there. Boeing will adapt and modernize the workspace to better support future work requirements.

“In today’s business environment, we have adopted a flexible work strategy in parts of our company and are taking steps to be more efficient within a reduced footprint. This helps us channel investments toward our critical manufacturing and engineering facilities and training resources,” said Calhoun.

New Boeing Research & Technology Hub

As part of its effort to tap into engineering and technology talent across the U.S and around the world, Boeing plans to establish a research and technology hub in Northern Virginia. The hub will focus on developing innovations in the areas of cyber security, autonomous operations, quantum sciences and software and systems engineering.

“The future of Boeing is digital,” said Greg Hyslop, Boeing’s chief engineer and executive vice president of Engineering, Test and Technology. “Focusing our R&D and talent development in areas that support digital innovation will fuel the introduction of cutting-edge capabilities. This new hub in Northern Virginia will follow the successful implementation of this technology strategy in other regions.”

Boeing’s Footprint and Impact

As the nation’s largest exporter, Boeing employs more than 140,000 people and is hiring as the commercial market recovers and the company invests in production, innovation and product development. The company’s three business units will continue to be based at their current headquarters, which include:

• Boeing Commercial Airplanes in Seattle, Wash.
• Boeing Global Services in Plano, Texas
• Boeing Defense, Space and Security in Arlington, Va.

In addition to the company’s operations, Boeing works with more than 12,000 businesses supporting more than one million supplier jobs across the United States, and located in every state. Globally, the company has operations in more than 65 countries.

As a leading global aerospace company, Boeing develops, manufactures and services commercial airplanes, defense products and space systems for customers in more than 150 countries. As a top U.S. exporter, the company leverages the talents of a global supplier base to advance economic opportunity, sustainability and community impact. Boeing’s diverse team is committed to innovating for the future, leading with sustainability, and cultivating a culture based on the company’s core values of safety, quality and integrity.

Boeing President and CEO Dave Calhoun shared the following message with employees today addressing the company’s first-quarter results:

Team,

First, I want to again acknowledge the loss of those on board China Eastern Airlines Flight MU 5735. Our thoughts and prayers remain with the family members and loved ones of the passengers and crew, and everyone who has been affected by this accident. We will continue to support our airline customer and a Boeing technical team continues to support the National Transportation Safety Board and the Civil Aviation Administration of China, who is leading the investigation.

The first quarter presented new challenges for our world, our industry and our business. As we share an update on our company’s performance today, I want to begin by saying thank you. Despite the current environment, we continue to make important progress together toward our key commitments.

Through our first-quarter results, you’ll see we still have more work to do; but I remain encouraged with our trajectory, and we are on track to generate positive cash flow for 2022. We are a long-cycle business, and the success of our efforts will be measured over years and decades; not quarters. The deliberate actions we’re taking now will drive stability in our operations and position us for long-term, sustainable performance.

We’ve embodied this approach on the 737 MAX program by following a comprehensive and methodical process to safely return airplanes to service.

The 737 MAX is now approved to fly in nearly every country, and since late 2020, the fleet has safely flown more than one million flight hours with schedule reliability above 99 percent. We delivered 81 737 MAX airplanes in the first quarter, including 34 in March. We also steadily increased production and are on track to reach a rate of 31 per month in the second quarter. We’ll continue to prioritize quality, stability and supply chain capacity in determining future production increases.

The Commercial Airplanes team is applying that same focus to the 787 program as we complete a comprehensive effort to ensure every airplane in our production system conforms to our exacting specifications. Marking an important step, we have submitted the certification plan to the FAA. We also completed the required work on initial airplanes and are conducting Boeing check flights. We will continue to give our teams the time they need, engage transparently and follow the lead of our regulator on next steps and timing.

We also successfully launched our 777-8 Freighter program in the quarter, with our partner Qatar Airways, as cargo demand continues to grow. And on the 777-9 program, while the team is progressing well in development and testing, delivery of the first 777-9 airplane is now expected in 2025, based on an updated assessment of the time required to meet certification requirements.

To minimize inventory and the number of airplanes requiring change incorporation, we’re also adjusting the 777-9 production rate ramp, including a temporary pause through 2023. This adjustment will also enable us to add 777 freighter capacity starting in late 2023. We remain confident in the 777 program and our customers continue to see the value in its compelling economics and sustainability benefits. Airplane programs serve our market for several decades, and it is important we take the time now to position for long-term success.

Within our Defense, Space and Security business, we continue to see solid and stable demand. Our portfolio is well positioned and our future franchise programs have a long runway ahead. That said, supply chain constraints, COVID-19 disruption and inflationary challenges drove cost pressures and earnings charges on some of our fixed price development programs. We’re navigating through these challenges and are focused on improving our own performance as we mature these programs and transition to production.

At Global Services, our business has largely recovered from the most severe impacts of COVID-19 and the team has demonstrated exceptional resilience and adaptability. As the market recovers, our well-balanced portfolio of both commercial and government services is well positioned for growth.

Across our markets, we’re seeing increasing stability. Notably, the commercial market recovery is broadening and demand is solid as operators look to bring capacity back online and plan for growth, with an eye on sustainability. In fact, we booked 167 gross commercial airplane orders this quarter, including 134 for the 737 MAX.

While many markets stabilize, we also continue to navigate the shifting global landscape, including the impacts of the war in Ukraine. The safety of our employees in Ukraine has our focus, and we are supporting them every way we can. We have also contributed to humanitarian groups offering food, shelter and medical care to displaced Ukrainians. I am proud of our teammates who have made their own donations, which Boeing is matching, and of all those in the region who have opened their hearts and homes to displaced teammates to ensure they have the shelter and supplies they need.

At the same time, we are following the lead of the U.S. government and strictly adhering to export controls and restrictions. We have suspended engineering support, flight training and customer operations, as well as parts delivery and maintenance support services for Russian customers. Separately, we’ve also halted the importation of titanium from Russia.

While these actions had an impact on our business; they are the right thing to do and our operations are well positioned. We have built up a substantial titanium inventory and a diverse supply base. We have sufficient material and parts in inventory for production in the near-term and are working to ensure long-term continuity.

As we navigate today’s environment, we’re also positioning for our future and increasing investments in key areas of safety, producibility, digital transformation, sustainable aerospace as well as in our people. At Boeing, our team has an opportunity to make a meaningful impact on the world — and we are investing in you, in your experience and in our culture. As we hire engineers, mechanics, quality professionals, safety experts and more, we’re also advancing our inclusive culture and ensuring Boeing is a great place for everyone to build rewarding and fulfilling careers.

Thank you for all you continue to do to support our customers, our company and each other. I am confident we are taking the best actions to rebuild trust, strengthen safety, enhance quality and drive stability for our future. I am proud to be on your team and look forward to continuing our progress forward, together.

Dave

Boeing issued this financial report for the first quarter:

First Quarter 2022

• 737 production and deliveries continue to increase; submitted 787 certification plan to the FAA
• Launched 777-8 Freighter; now anticipate first 777–9 delivery in 2025
• Recorded charges on fixed–price defense development programs as well as for impacts of the war in Ukraine
• Operating cash flow of ($3.2) billion; continue to expect positive cash flow for 2022
• Revenue of $14.0 billion; GAAP loss per share of ($2.06) and core (non-GAAP)* loss per share of ($2.75)
• Total backlog of $371 billion; including nearly 4,200 commercial airplanes

The Boeing Company reported first-quarter revenue of $14.0 billion, driven by lower defense volume and charges on fixed-price defense development programs, partially offset by commercial services volume. GAAP loss per share of ($2.06) and core loss per share (non-GAAP)* of ($2.75) also reflect $212 million of pre-tax charges for impacts of the war in Ukraine (Table 1). Boeing recorded operating cash flow of ($3.2) billion.

“While the first quarter of 2022 brought new challenges for our world, industry and business, I am proud of our team and the steady progress we’re making toward our key commitments,” said Dave Calhoun, Boeing president and chief executive officer. “We increased 737 MAX production and deliveries and made important progress on the 787 by submitting our certification plan to the FAA. Despite the pressures on our defense and commercial development programs, we remain on track to generate positive cash flow for 2022, and we’re focused on our performance as we work through certification requirements and mature several key programs to production. Leading with safety and quality, we’re taking the right actions to drive stability throughout our operations, deliver on our commitments to customers and position Boeing for a sustainable future.”

Operating cash flow was ($3.2) billion in the quarter due to unfavorable receipt timing (Table 2).

Cash and investments in marketable securities decreased to $12.3 billion, compared to $16.2 billion at the beginning of the quarter, primarily driven by operating cash outflows and debt repayment (Table 3). The company has access to credit facilities of $14.7 billion which remain undrawn.

Total company backlog at quarter-end was $371 billion.

Segment Results

Commercial Airplanes

Commercial Airplanes first-quarter revenue of $4.2 billion decreased slightly, primarily due to timing of wide-body deliveries, partially offset by higher 737 deliveries (Table 4). Operating margin of (20.6)% also reflects abnormal costs and period expenses, including charges for impacts of the war in Ukraine and higher research and development expense.

Boeing has nearly completed the global safe return to service of the 737 MAX and the fleet has flown more than one million total flight hours since late 2020. The 737 production rate continues to increase and is expected to increase to 31 airplanes per month during the second quarter.

On the 787, the company has submitted the certification plan to the FAA. Rework has been completed on the initial airplanes and the company continues to work closely with the FAA on timing of resuming deliveries. The program is producing at a very low rate and will continue to do so until deliveries resume, with an expected gradual return to five per month over time. The company continues to anticipate 787 abnormal costs of approximately $2 billion, with most being incurred by the end of 2023, including $312 million recorded in the quarter.

During the quarter, the company launched the 777-8 Freighter with an order from Qatar Airways. Delivery of the first 777-9 airplane is now expected in 2025, which reflects an updated assessment of the time required to meet certification requirements. To minimize inventory and the number of airplanes requiring change incorporation, the 777-9 production rate ramp is being adjusted, including a temporary pause through 2023. This will result in approximately $1.5 billion of abnormal costs beginning in the second quarter of this year and continuing until 777-9 production resumes. The 777 program is also leveraging the adjustment to the 777-9 production rate ramp to add 777 Freighter capacity starting in late 2023.

Commercial Airplanes delivered 95 airplanes during the quarter and backlog included nearly 4,200 airplanes valued at $291 billion.

Defense, Space & Security

Defense, Space & Security first-quarter revenue decreased to $5.5 billion and first-quarter operating margin decreased to (16.9) percent, primarily driven by lower volume and charges on fixed-price development programs, including VC-25B and T-7A Red Hawk. The VC-25B program recorded a $660 million charge, primarily driven by higher supplier costs, higher costs to finalize technical requirements and schedule delays. The T-7A Red Hawk program recorded $367 million in charges, primarily driven by ongoing supplier negotiations impacted by supply chain constraints, COVID-19 and inflationary pressures.

During the quarter, Defense, Space & Security captured an award for 6 MH-47G Block II Chinook rotorcraft for U.S. Army Special Operations. Defense, Space & Security completed mission profile flights on the SB>1 DEFIANT and completed the 400th test flight on the T-7A Red Hawk. Also in the quarter, Defense, Space & Security began build of the first P-8A for the Royal New Zealand Air Force and delivered 41 aircraft.

Backlog at Defense, Space & Security was $60 billion, of which 33% percent represents orders from customers outside the U.S.

Global Services

Global Services first-quarter revenue increased to $4.3 billion and first-quarter operating margin increased to 14.6 percent primarily driven by higher commercial volume and favorable mix.

During the quarter, Global Services secured a fuel-saving digital solutions contract for Etihad Airways’ 787 fleet and was awarded a contract for KC-135 horizontal stabilizers from the U.S. Air Force. Global Services captured a 767 converted freighter order from Air Transport Services Group and also announced plans to create additional capacity for 767 converted freighters.

Additional Financial Information

At quarter-end, Boeing Capital’s net portfolio balance was $1.6 billion. Earnings from operations at Boeing Capital decreased primarily due to a provision for losses related to the war in Ukraine. The change in loss from other unallocated items and eliminations was primarily due to decreased share-based plan expense and deferred compensation expense as compared to the first quarter 2021. The first quarter effective tax rate primarily reflects the tax benefit of pretax losses and realizable R&D tax credits.