Boeing issued this financial report:

Fourth Quarter 2021

• Continued global return to service of 737 MAX, including progress in China
• Revenue of $14.8 billion; operating cash flow of $0.7 billion
• 787 program recorded $3.5 billion pre-tax non-cash charge; focused on actions required to resume deliveries
• GAAP loss per share of ($7.02) and core (non-GAAP)* loss per share of ($7.69)

Full-Year 2021

• Revenue of $62.3 billion; operating cash flow of ($3.4) billion; cash and marketable securities of $16.2 billion
• GAAP loss per share of ($7.15) and core (non-GAAP)* loss per share of ($9.44)
• Total backlog of $377 billion and added 535 net commercial orders
• Focused on safety, quality and operational stability

The Boeing Company reported fourth-quarter revenue of $14.8 billion, reflecting higher commercial volume and lower defense revenue. GAAP loss per share of ($7.02) and core loss per share (non-GAAP)* of ($7.69) reflect lower charges and higher commercial volume (Table 1). Boeing recorded operating cash flow of $0.7 billion.

“2021 was a rebuilding year for us as we overcame hurdles and reached key milestones across our commercial, defense and services portfolios. We increased 737 MAX production and deliveries, and safely returned the 737 MAX to service in nearly all global markets. As the commercial market recovery gained traction, we also generated robust commercial orders, including record freighter sales. Demonstrating progress in our overall recovery, we also returned to generating positive cash flow in the fourth quarter,” said David Calhoun, Boeing President and Chief Executive Officer. “On the 787 program, we’re progressing through a comprehensive effort to ensure every airplane in our production system conforms to our exacting specifications. While this continues to impact our near-term results, it is the right approach to building stability and predictability as demand returns for the long term. Across the enterprise, we remain focused on safety and quality as we deliver for our customers and invest in our people and in our sustainable future.”

Operating cash flow improved to $0.7 billion in the quarter, reflecting higher commercial volume, higher advance payments, and lower expenditures (Table 2).

Cash and investments in marketable securities decreased to $16.2 billion, compared to $20.0 billion at the beginning of the quarter, primarily driven by debt repayment partially offset by operating cash flow. Debt was $58.1 billion, down from $62.4 billion at the beginning of the quarter due to the prepayment of a term loan and repayment of maturing debt.

Total company backlog at quarter-end was $377 billion.

Segment Results

Commercial Airplanes

Commercial Airplanes fourth-quarter revenue increased slightly to $4.8 billion primarily driven by higher 737 deliveries, partially offset by lower widebody deliveries and less favorable mix. Fourth-quarter operating margin was primarily driven by a charge on the 787 program.

Boeing is continuing to make progress on the global safe return to service of the 737 MAX. In December, the Civil Aviation Administration of China issued an airworthiness directive outlining changes required for Chinese airlines to prepare their fleets to resume service. Since the FAA’s approval to return the 737 MAX to operations in November 2020, over 300,000 revenue flights have been completed, and the reliability of the 737 MAX fleet remains above 99 percent (as of January 24, 2022). The 737 program is currently producing at a rate of 26 per month and continues to progress towards a production rate of 31 per month in early 2022. The company is evaluating the timing of further rate increases.

The company continues to perform rework on 787 airplanes in inventory and is engaged in detailed discussions with the FAA regarding required actions to resume deliveries. In the fourth quarter, the company determined that these activities will take longer than previously expected, resulting in further delays in customer delivery dates and associated customer considerations. Accordingly, Commercial Airplanes recorded a $3.5 billion pre-tax non-cash charge on the 787 program. 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 now anticipates 787 abnormal costs will increase to approximately $2 billion, with most being incurred by the end of 2023, including $285 million recorded in the quarter.

Commercial Airplanes secured orders for 164 737 MAX and 24 freighter aircraft. Commercial Airplanes delivered 99 airplanes during the quarter and backlog included over 4,200 airplanes valued at $297 billion.

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

As we share our fourth-quarter results, I want to thank you for your hard work and resilience. 2021 was a key rebuilding year for us, and together, we overcame significant hurdles. While we have more work to do, I am confident that we are well positioned to accelerate our progress in 2022 and beyond.

The industry’s mounting recovery has spurred solid commercial airplane demand. Order activity picked up significantly, particularly for the 737 MAX. In total, we booked over 900 gross commercial airplane orders including approximately 750 orders for the 737 family.

The 737 MAX is now safely flying in nearly every jurisdiction around the globe and the fleet is performing very well. With about 1,600 flights daily and more than 300,000 revenue flights completed since late 2020, the fleet is delivering reliability equal to or better than any fleet flying. And with over 800,000 total flight hours since late 2020, the fleet has now flown more flight hours than it had prior to the initial grounding. We also delivered 245 737 MAX airplanes in 2021, and we’ve steadily increased production with a focus on safety and quality. We began 2021 at very low production rates, and today, are producing at 26 airplanes per month on our way to 31 per month early this year. Looking back at where we started, 2021 was a pivotal year for the 737 team.

We’re now applying that same disciplined and detailed focus to the 787 program. As you know, we are progressing through a comprehensive effort to ensure every airplane in our production system conforms to our exacting specifications. This effort continues to impact our deliveries and our financial results – but we are fully confident it is the right thing to do. I view the financial impacts of this work as a long-term investment in a program that has significant runway ahead. We are taking the time now to ensure we’re positioned well as widebody demand recovers. We’ll continue to keep you updated as we progress toward returning to 787 deliveries.

As cargo demand expands, we also booked record orders for new and converted Boeing freighters, including 84 orders for our 767, 777 and 747 freighters. Our Global Services team also announced 10 new converted freighter lines to meet the growing demand. Overall, our Global Services business showed great resilience, in part due to our well-balanced portfolio of both government and commercial offerings. This quarter, the team delivered our 50^th 767-300 converted freighter and captured new commercial and government business valued at $6 billion. As the commercial market recovers, BGS is well positioned for growth in 2022.

In our defense and space business, we secured key orders and delivered on critical customer milestones. We completed the first carrier tests with the U.S. Navy for the MQ-25, started flight testing on the second uncrewed Loyal Wingman aircraft, and delivered 47 total aircraft including the first KC-46 for Japan and Norway’s first P-8A Poseidon. We also generated $7 billion in orders in the quarter, extending our BDS backlog to $60 billion.

We took another key step in our overall recovery, notably in our financial performance, by generating positive cash flow in the fourth quarter, which represents our first positive cash quarter since early 2019. At the same time, the ongoing 787 activities resulted in financial charges that significantly impacted our earnings. While we never want to disappoint our customers or miss expectations, the work we’re putting in now will build stability and predictability going forward.

And looking to our future, we’re sustaining and expanding key investments, including in our people, in sustainability, advanced manufacturing, digital engineering, supply chain capability, technology development and partnerships.

We’ll stay squarely focused on safety, quality and transparency as we strengthen our culture and rebuild trust each day. While challenges remain, I am confident in our future. Our market is resilient, our team is world-class and we are taking the right, tough actions today to position ourselves for success. Thank you for all you continue to do to support our customers, our communities and each other.

Dave

(Boeing Photo)

Boeing will showcase its market-leading portfolio of commercial, defense and services products at the 2021 Dubai Airshow this month, including the international debut of its newest fuel-efficient widebody jet, the 777X, along with the company’s growing autonomous capabilities such as the Boeing Airpower Teaming System.

During the event, a Boeing 777-9 flight-test airplane will soar in the airshow’s flying program and appear in the static display. Building on the best of the industry-leading 777 and 787 families, the 777-9 will be the world’s largest and most efficient twin-engine jet, delivering 10% better fuel use, emissions and operating costs than the competition.

The company’s static display will also feature the 2021 Boeing ecoDemonstrator, an Alaska Airlines 737-9 that is flight testing about 20 technologies to reduce fuel use, emissions and noise and further improve safety.

In addition, Etihad Airways will display a 787-10 Dreamliner that showcases the airline’s collaboration with Boeing to advance sustainable aviation. Etihad’s program researches and tests innovative technologies, products and practices on its fleet of 787s and within its operations to further reduce carbon emissions. Also on display, flydubai – the region’s largest 737 operator – will feature a 737 MAX 9 that reduces fuel use and CO₂ by 14% compared to its predecessors.

Copyright Photo: Joe G. Walker.

Boeing issued this financial statement:

• Continued progress on global safe return to service of 737 MAX and focus on operational stability
• Revenue of $15.3 billion, GAAP loss per share of ($0.19) and core (non-GAAP)* loss per share of ($0.60)
• Operating cash flow of ($0.3) billion; cash and marketable securities of $20.0 billion
• Commercial Airplanes backlog of $290 billion and added 93 net orders

The Boeing Company [NYSE: BA] reported third-quarter revenue of $15.3 billion, driven by higher commercial airplanes and services volume. GAAP loss per share of ($0.19) and core loss per share (non-GAAP)* of ($0.60) primarily reflects higher commercial volume (Table 1). Boeing recorded operating cash flow of ($0.3) billion.

“We are driving stability across our operations, investing in our future and positioning our teams to deliver for our customers as the market recovers,” said Boeing President and Chief Executive Officer David Calhoun. “Commercial market demand continues to gain traction with broad-based vaccine distribution and border protocols beginning to open. Going forward, supply chain capacity and global trade will be key drivers of our industry and the broader economy’s recovery. Our portfolio across commercial, defense, space and services is well positioned, and we’re focused on improving performance, while advancing technologies and digital manufacturing capabilities to drive our next generation of products and a sustainable future.”

Operating cash flow improved to ($0.3) billion in the quarter, reflecting higher commercial deliveries, higher order receipts, and lower expenditures (Table 2). Operating cash flow was also favorably impacted by a $1.3 billion income tax refund in the quarter.

Cash and investments in marketable securities decreased to $20.0 billion, compared to $21.3 billion at the beginning of the quarter, primarily driven by debt repayment and operating cash outflows (Table 3). Debt was $62.4 billion, down from $63.6 billion at the beginning of the quarter due to the repayment of maturing debt.

Total company backlog at quarter-end was $367 billion.

Segment Results

Commercial Airplanes

Commercial Airplanes third-quarter revenue increased to $4.5 billion primarily driven by higher 737 deliveries, partially offset by lower 787 deliveries. Third-quarter operating margin improved to (15.5) percent primarily due to higher deliveries (Table 4).

Boeing is continuing to make progress on the global safe return to service of the 737 MAX. Since the FAA’s approval to return the 737 MAX to operations in November 2020, Boeing has delivered more than 195 737 MAX aircraft and airlines have returned more than 200 previously grounded airplanes to service. 31 airlines are now operating the 737 MAX, safely flying over 206,000 revenue flights totaling more than 500,000 flight hours (as of October 24, 2021). The 737 program is currently producing at a rate of 19 per month and continues to progress towards a production rate of 31 per month in early 2022, and the company is evaluating the timing of further rate increases.

The company continues to focus 787 production resources on conducting inspections and rework and continues to engage in detailed discussions with the FAA regarding required actions for resuming delivery. The current 787 production rate is approximately two airplanes per month. The company expects to continue at this rate until deliveries resume and then return to five per month over time. The low production rates and rework are expected to result in approximately $1 billion of abnormal costs, of which $183 million was recorded in the quarter.

Commercial Airplanes secured orders for 70 737 MAX, 24 freighter, and 12 787 airplanes. Commercial Airplanes delivered 85 airplanes during the quarter and backlog included over 4,100 airplanes valued at $290 billion.

Defense, Space & Security

Defense, Space & Security third-quarter revenue decreased to $6.6 billion and third-quarter operating margin decreased to 6.6 percent, primarily due to a $185 million earnings charge on the Commercial Crew program driven by the second uncrewed Orbital Flight Test now anticipated in 2022 and the latest assessment of remaining work.

During the quarter, Defense, Space & Security secured awards for five P-8A Poseidon aircraft for the German Navy and four CH-47F Block II Chinook helicopters for the U.S Army, as well as a Joint Direct Attack Munition contract for the U.S. Air Force. Defense, Space & Security also conducted the MQ-25 unmanned aerial refueling of a U.S. Navy E-2D and F-35C, and delivered a total of 37 aircraft during the quarter, including the first CH-47F Chinook to the Royal Australian Army.

Backlog at Defense, Space & Security was $58 billion, of which 33 percent represents orders from customers outside the U.S.

Global Services

Global Services third-quarter revenue increased to $4.2 billion and third-quarter operating margin increased to 15.3 percent primarily driven by higher commercial services volume. Operating margin was also favorably impacted by lower severance costs and mix of products and services.

During the quarter, Global Services captured orders for 12 additional 737-800 converted freighters for BBAM, an award for performance-based logistics support of the global C-17 fleet, and a modification award for Chinook infra-red suppression systems for the U.K. Armed Forces. Global Services also announced a partnership to expand capacity for 767-300 Boeing Converted Freighters and was selected to provide training to the United Aviate Academy.

Additional Financial Information

At quarter-end, Boeing Capital’s net portfolio balance was $1.8 billion. The earnings from FAS/CAS service cost adjustment primarily reflects an increase in the CAS discount rate driven by pension relief provisions in the American Rescue Plan Act of 2021. Interest and debt expense increased due to higher debt balances. The change in other income was driven by a pension settlement charge recorded during the quarter. The third quarter 2021 effective tax rate primarily reflects a lower pre-tax loss compared to the prior period, as well as benefits from R&D tax credits.

Non-GAAP Measures Disclosures

We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:

Core Operating Earnings, Core Operating Margin and Core Earnings Per Share

Core operating earnings is defined as GAAP earnings from operations excluding the FAS/CAS service cost adjustment. The FAS/CAS service cost adjustment represents the difference between the Financial Accounting Standards (FAS) pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Core operating margin is defined as core operating earnings expressed as a percentage of revenue. Core earnings per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of the FAS/CAS service cost adjustment and Non-operating pension and postretirement expenses. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to Commercial Airplanes and BGS businesses supporting commercial customers. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude non-service pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on pages 13-14.

Free Cash Flow

Free cash flow is GAAP operating cash flow reduced by capital expenditures for property, plant and equipment. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation of free cash flow to GAAP operating cash flow.

Boeing will require all employees to be vaccinated.

From the Seattle Times:

https://www.seattletimes.com/business/boeing-aerospace/despite-wary-labor-unions-and-conservative-opposition-boeing-will-require-all-employees-to-be-vaccinated/

In other news, Boeing released its third quarter deliveries:

The Boeing Company announced major program deliveries across its commercial and defense operations for the third quarter of 2021.

“We made important progress driving stability throughout our operations in the third quarter, as we prioritized safety and quality and worked to deliver for our customers,” the company said.

“Our defense and services teams delivered across several key programs. In our commercial business, we increased 737 MAX deliveries in the quarter, and progressed in safely returning the 737 MAX to service in more international markets.

We are also continuing to complete comprehensive inspections across the 787 production system and within the supply chain, while holding detailed, transparent discussions with the FAA, suppliers and our customers. Production resources remain focused on inspections and rework and the 787 production rate remains lower than five airplanes per month. We will continue to take the time needed to ensure the highest levels of quality. While these efforts continue to impact deliveries, we’re confident this is the right approach to drive stability and first-time quality across our operations and to position the program for the long term as market demand recovers.”

Major program deliveries during the third quarter were as follows: