The Boeing Company (BA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents mixed signals. Strong financial performance with 34% revenue growth and improved EPS is positive. However, the delay in 777X delivery and uncertainty in cash flow normalization are concerns. The Q&A reveals management's lack of specificity, which could unsettle investors. Despite operational improvements and strategic investments, the absence of clear guidance and the $1 billion cash impact from Spirit in 2026 temper expectations. Overall, the sentiment is neutral, as positives are offset by uncertainties and execution risks.
Key Financial Performance
Revenue $23.9 billion, the highest quarterly total reported since 2018. Revenue was up 57% year-over-year, primarily driven by improved operational performance across the business, including higher commercial deliveries and defense volume.
Core earnings per share $9.92, primarily reflecting the $11.83 gain associated with closing the Digital Aviation Solutions divestiture.
Free cash flow Positive $375 million, slightly higher than expectations, driven by higher commercial deliveries and improved working capital compared to both the prior year and the prior quarter.
BCA Revenue $11.4 billion, with an operating margin of negative 5.6%. Both metrics improved materially year-over-year, primarily reflecting better operational performance and higher deliveries compared to last year's results that were impacted by the work stoppage.
BCA Deliveries 160 airplanes in the quarter and 600 for the year, the highest annual total since 2018.
BDS Revenue $7.4 billion, up 37% year-over-year, driven by improved operational performance and higher volume.
BDS Operating Margin Negative 6.8%, improved significantly compared to last year, reflecting better operating performance across the business.
BGS Revenue $5.2 billion, up 2% year-over-year, primarily reflecting improved government volume.
BGS Adjusted Revenue $5.1 billion, grew 6% year-over-year, with an adjusted operating margin of 18.6%.
Cash and marketable securities $29.4 billion, primarily due to $10.6 billion in proceeds from the Digital Aviation Solutions transaction, partially offset by debt repayment of $3 billion associated with the acquisition of Spirit AeroSystems.
Debt balance $54.1 billion, slightly up from last quarter, primarily reflecting the retained Spirit debt.
Full year revenue $89.5 billion, up 34% year-over-year, primarily reflecting improved operational performance across the business.
Full year core earnings per share $1.19, up significantly year-over-year, primarily driven by the $12.47 gain on the Digital Aviation Solutions sale and improved performance.
Full year free cash flow $1.9 billion usage for the year, improved significantly year-over-year, primarily driven by higher commercial deliveries and improved working capital.
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Operating Highlights
737 production: Stabilizing at 42 airplanes per month with plans to increase to 47 later this year. New North Line in Everett is ready for higher production rates.
787 program: Stabilizing at rate 8 with plans to increase to 10 airplanes per month later this year. Factory expansion underway to meet demand.
737 MAX derivative and 777-9: Progressing on certification timelines with expected certifications in 2026 for 737-7 and -10, and 2027 delivery for 777-9.
New e-commerce platform: Launched a unified platform for Boeing's distribution portfolios, simplifying customer and supplier interactions.
Commercial airplane orders: Won over 1,100 commercial orders in 2025, including Alaska Airlines' largest order ever and 65 777-9 orders from Emirates.
787 demand: Recorded 395 net orders in 2025, the program's highest annual order total.
Defense contracts: Secured a contract for the U.S. Air Force sixth-generation fighter and a record $85 billion backlog in defense.
Work instruction simplification: Simplified over 5,100 work instruction documents to reduce complexity and improve factory health.
Rework reduction: Reduced average rework hours by nearly 30% in the 787 program.
Spirit AeroSystems acquisition: Completed acquisition to improve safety, quality, and supply chain operations.
Digital Aviation Solutions divestiture: Completed $10.6 billion sale to solidify balance sheet while retaining essential digital capabilities.
Cultural changes: Focused on safety, quality, and performance to strengthen trust with stakeholders.
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Risk or Challenges
737 MAX Derivative Certification Delays: Past delays to the certification timelines for the new 737 MAX derivative and the 777-9 have been challenging. Certification for the 737-7 and -10 is now anticipated in 2026, which could impact delivery schedules and customer satisfaction.
777X Engine Durability Issue: A potential durability issue was identified during a recent inspection on the 777X engine. Boeing is working with GE to finalize root cause and corrective action, but this could pose risks to the program's timeline and costs.
KC-46 Tanker Program Costs: Revised cost estimates for the KC-46 Tanker program, including higher production support and supply chain costs, have led to additional financial impacts. Sustained investments are required to stabilize the program.
Supply Chain Challenges: Higher estimated supply chain costs, including those related to Spirit AeroSystems, are impacting production and program costs, particularly for the KC-46 Tanker and other programs.
Integration of Spirit AeroSystems: The acquisition of Spirit AeroSystems presents integration challenges, with detailed plans required to ensure a smooth transition while maintaining production stability and quality.
Delayed 777X Program Cash Flow Impact: Delayed certification and first delivery of the 777X program to 2027 are resulting in higher production expenditures and lower pre-delivery payments, negatively impacting cash flow.
Customer Considerations for Delays: Customer considerations for prior delivery delays on the 737 and 787 programs are impacting financials, though Boeing is working to stabilize production and improve on-time delivery.
Fixed-Price Development Program Risks: Significant charges across five fixed-price development programs, including the KC-46 Tanker, continue to pose financial risks. Successful completion without additional charges is critical.
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Guidance & Outlook
737 Production: Production is stabilizing at 42 airplanes per month, with plans to increase to 47 later this year. Investments in a new North Line in Everett are complete, and staffing plans are being executed to support higher production rates.
787 Production: Production is stabilizing at 8 airplanes per month, with plans to increase to 10 later this year. Investments in factory expansion are underway to support higher rates and meet demand.
777X Program: Certification flight testing is ongoing, with first delivery planned for 2027. Production system expenditures will be higher than pre-delivery payments, but net cash use is expected to improve over the next few years before turning positive in 2029.
737-7 and 737-10 Certification: Certification for both models is anticipated in 2026, with ongoing flight testing and design changes to address engine anti-ice issues.
Free Cash Flow Outlook: Positive free cash flow of $1 billion to $3 billion is expected in 2026, driven by higher commercial deliveries, better performance at BDS, and steady growth at BGS. Temporary impacts from delayed certifications and delivery delays are expected to improve over time.
Capital Expenditures: CapEx is expected to increase to $4 billion in 2026, supporting future products and growth, particularly in St. Louis and Charleston.
Defense Business: Operational performance is improving, with a focus on stabilizing fixed-price development programs and transitioning to new contracts with tighter underwriting standards. The business is expected to return to historical performance levels over time.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Could you clarify the excess advances in customer considerations, their quantum, and the duration by which they normalize?
A:The total quantum goes from low single digit to high single digits. Excess advances will burn down quicker than considerations, which will take longer, especially for the 737 and 787 programs. Improvements are tied to production rates and delivery plans, with 2026 being a pivotal year. More specific quantification and timing will be provided in the future.
Q:Can normalized free cash flow a few years out be much higher than $10 billion?
A:The first priority is achieving $10 billion, which is deemed very attainable. While there is potential for cash flow to exceed $10 billion, the focus remains on reaching the initial target before discussing further increases.
Q:What are the bottlenecks and challenges in production ramps for the 737 and 787 programs?
A:The 737 MAX program has successfully ramped from rate 38 to 42, with no major supply chain issues expected for the next ramp to 47. However, the ramp from 47 to 52 will require improved supply chain performance. For the 787, the focus is on stabilizing at rate 8 and moving to rate 10, with no significant supply chain constraints identified. Investments in additional capacity for both programs are underway.
Q:How do we think about BCA margins and the impact of Spirit on cash margins?
A:737 and 787 cash margins are currently depressed but are expected to improve over time. The $1 billion negative cash flow impact from Spirit in 2026 is not expected to materially affect long-term cash flow expectations. Pricing improvements will also boost margins in the future.
Q:What are the 2026 delivery expectations for the MAX and 787 programs?
A:For the 737 MAX, around 500 deliveries are expected, with production rollouts increasing significantly. Approximately 30 aircraft will be built but not delivered until 2027. For the 787, 90 to 100 deliveries are expected, depending on production rollouts. Overall, BCA deliveries are expected to increase by approximately 10%.
Q:How is the KC-46 program turning the corner, and what is the state of BDS?
A:The KC-46 program faced a charge due to increased costs but is focused on meeting delivery targets (19 in 2026). The Air Force's decision to go sole source for follow-on contracts provides an opportunity to reprice. Investments in PAC-3 and F-47 programs are ongoing, with no significant additional CapEx expected for PAC-3.
Q:Can the profitability of the aerospace industry improve, particularly for airplane manufacturers?
A:Profitability can improve by better managing risks, pricing contracts appropriately, and participating more in the value chain. A new airplane program offers an opportunity to address these issues and improve margins.
Q:Are there concerns about tariff risks and a shift to local procurement in Europe?
A:While geopolitical volatility and trade barriers are concerns, the U.S. administration has been supportive of the aerospace industry. The company is monitoring trade negotiations and working to avoid major disruptions. Investments in Europe and other regions are being managed strategically.
Q:What is the total of the pieces contributing to normalized free cash flow, and is BCA cash generating in 2026?
A:The total contributing to normalized free cash flow is between $6 billion and $7 billion. BCA cash margins are expected to improve and are key to achieving the $10 billion cash flow target.
Q:Has the CFO been able to review all BDS programs, and what is the approach?
A:The CFO has started reviewing BDS programs, focusing on strategic, operational, and financial elements. The reviews aim to understand program capabilities, delivery profiles, and financial assumptions. Any issues identified will be addressed through the regular EAC process.
Q:Review of Unclear Management Responses
A:Management avoided providing specific quantifications for the excess advances and customer considerations, as well as detailed breakdowns of normalized free cash flow components. Responses often included vague language about future improvements and potential changes, without committing to precise figures or timelines.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AeroSystems company
AeroSystems frontline
Air Force
BGS
Boeing
Mr Vice
President Chief
President Investor
Spirit AeroSystems
TIA
Vice President
airplane month
avionics
capability
certification flight
commitment
culture
customer
day
defense
design change
detail
development program
engine
factory health
flight testing
foundation
instruction
mechanic
plan production
product service
quality airplane
quality plan
record
risk
safety quality
teammate
trust
BA Transcript
The Boeing Company (BA) Q4 2025 Earnings Call Transcript
Unknown1-27
The earnings call presents mixed signals. Strong financial performance with 34% revenue growth and improved EPS is positive. However, the delay in 777X delivery and uncertainty in cash flow normalization are concerns. The Q&A reveals management's lack of specificity, which could unsettle investors. Despite operational improvements and strategic investments, the absence of clear guidance and the $1 billion cash impact from Spirit in 2026 temper expectations. Overall, the sentiment is neutral, as positives are offset by uncertainties and execution risks.
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The earnings call summary presents a mixed picture. Positive aspects include increased production rates for 737 and 787, a $2.8 billion contract with the U.S. Space Force, and expected positive free cash flow by 2025. However, delays in 737 MAX certification, reliance on a favorable global trade environment, and potential production impacts due to lower-grade stockpiles next year temper enthusiasm. The Q&A section reveals management's lack of clarity on several issues, further contributing to a neutral outlook. Given these factors, the stock price is likely to remain stable in the short term.
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The earnings call highlights a mix of positive and negative factors. The $4.9 billion charge for the 777X program and delays in certification are significant negatives. The Q&A reveals further concerns about cash flow and certification delays. While there are positive elements like improved operating margins and strategic production increases, the financial burden and uncertainties weigh heavily. The lack of clear guidance on cash flow targets and production challenges further dampen sentiment, leading to a negative outlook for the stock price over the next two weeks.
BA Report
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
