Boeing (BA.US) Q3 Conference Call: Annual Target of 500 Deliveries Missed, Cash Flow Aiming for $10 Billion by 2029

According to WallstreetCN, Boeing (BA.US) released its Q3 2026 results on Tuesday and held a conference call. The financial report shows Boeing’s Q3 revenue grew by 4% year-on-year to $24.188 billion, beating the market-wide estimate of $23.84 billion. GAAP net loss was $116 million, significantly narrowed from $5.339 billion in the same period last year (mainly due to a $4.9 billion pre-tax charge for the 777X project in the prior year). GAAP per-share loss was $0.26; Non-GAAP per-share loss was $0.34, worse than the consensus per-share loss estimate of $0.21. The company’s backlog reached a record high of $745 billion, including over 6,300 commercial aircraft.

Cash flow was the standout of the quarter. Operating cash flow was $1.496 billion, up 33% year-on-year; free cash flow was $464 million, higher than the market expectation of about $325 million. The company's net debt fell to $25.2 billion, marking a second consecutive quarterly decline.

Management stated during the call that Boeing has completed FAA certification for both the 737-7 and 737-10 models, and focus has now shifted to the 777-9 (first delivery still expected in 2027). The sustained monthly production rate of 47 for the 737 will take longer than expected and will extend into next year, while the target of 52 per month is delayed until the second half of 2027. The 787 remains stable at 8 per month, with transition to 10 per month to begin by year-end. The company introduced multi-year free cash flow targets for the first time: about $2 billion in 2026, $3 billion in 2027, $6 billion in 2028, and $10 billion in 2029, with continued significant growth anticipated after 2030. However, due to 737 deliveries falling short of expectations, total commercial aircraft deliveries for the year will be below the 500 target, and 787 deliveries are expected towards the lower end of the 90–100 range.

The following is a detailed summary of Boeing’s earnings call.

I. Remarks from CEO Robert Ortberg

As we enter the final months of the year, all three Boeing business units continue to make progress, closing out key milestones set for 2026 and further rebuilding stakeholder trust.

In Q3, the company delivered 161 commercial aircraft, the highest quarterly total since 2018. In July, the 737-7 received FAA certification, and last week, the 737-10 was also certified. The company reached a new four-year labor agreement with the union representing engineers and technical staff in the Pacific Northwest, avoiding any work stoppages. The Defense & Space segment won several major contracts, including multibillion-dollar orders for key projects such as the PAC-3 and F-15EX. Furthermore, the US Navy chose Boeing to design, build, and deliver its sixth-generation fighter, making Boeing the exclusive manufacturer of sixth-generation fighters for both the Air Force and Navy.

These achievements reflect the team’s unwavering focus on safety, quality, and performance. There is still work to be done and progress may not always be linear, but overall direction is improving.

On development programs: FAA certification for the 737-7 and 737-10 resulted from nearly 1,500 test flights and over 4,000 hours of ground and flight testing. With both models certified, the primary focus shifts entirely to the 777-9, with flight testing ongoing. Approval is still needed to begin remaining flight tests, including ETOPS. First delivery remains expected in 2027, under the latest EAC (Estimate at Completion) guidance reset last year.

For commercial airplane production: On the 737, the company continues to push stabilization at 47 units per month. Key factory performance metrics are strong, with rework in final assembly improving 40% since early last year. However, time needed to fully stabilize at 47 per month exceeds expectations, now likely achieved only next year. Wing output is improving but needs to show it can be sustained, and prove readiness for a confident ramp to 52 per month. Achieving 52 monthly requires north line certification and launch, stable readiness in downstream shops (including wings), and stable fuselage rates at Wichita. With this year’s experience, financial planning now targets 52 per month in the second half of 2027. The company prioritizes a robust ramp rather than the exact month the rate is reached.

Regarding the 787, monthly production remains stable at 8 units. Factory performance is solid, though monthly delivery rates have been uneven due to previously discussed seat certification challenges. Supply chain stability is improving, but engine deliveries remain the key constraint for ramping to 10 per month. Transition to 10 per month is still expected to begin this year, with Charleston expansion progressing well and supporting future growth.

On long-term positioning: Last month, Boeing secured the US Navy F/A-XX bid, another transformational win. The Defense & Space segment also demonstrates robust demand: a seven-year PAC-3 Seeker contract will eventually triple production; this quarter Boeing won a contract for 22 F-15EXs for the US Air Force, taking the fleet toward 120 units and with further growth potential. On the Starliner program, Boeing teamed with NASA to roadmap future flights and reduce program risk, including securing an extra $359 million from NASA.

Free cash flow targets: Over the past two years, the company has made substantial progress rebuilding trust, mitigating risk, transforming culture, and strengthening safety and quality foundations. The range of possible outcomes continues to narrow. Looking ahead, Boeing’s backlog stands at a record $745 billion, pricing environments are improving, the production system is more stable, development projects are being underwritten more conservatively, and airplane certification continues on schedule. Based on these factors, the company is confident to communicate multi-year free cash flow targets:

2026: Projecting about $2 billion

2027: Projecting about $3 billion (includes additional capex to support F/A-XX development)

2028: Projecting about $6 billion, as some negative factors abate and growth accelerates

2029: Targeting $10 billion

The company continues to see significant growth opportunities above $10 billion post-2030.

II. Remarks from CFO Jesus Malave

Consolidated Q3 performance: Revenue was $24.2 billion, up 4% year-on-year, driven by growth in Defense and Services, partially offset by a less favorable commercial airplane delivery mix. Operating margin increased to 1.5%, with core per-share loss narrowing to $0.34, reflecting improved profitability in each segment and lower company expenses.

Free cash flow positive at $464 million, an improvement year-on-year, mainly driven by working capital gains, partially offset by the $700 million US Department of Justice settlement payment and capex related to the Charleston and St. Louis expansions.

Commercial Airplanes (BCA): Delivered 161 aircraft in Q3, revenue of $10.7 billion, down 3% year-on-year, mainly due to delivery mix. Operating margin was -6.5%, a large improvement from last year (impacted by 777X charges), partially offset by lower accrual rates due to rate adjustments and higher supply chain costs. BCA’s order backlog increased to a record $612 billion with over 6,300 aircraft, and orders from Turkish Airlines, Ethiopian Airlines, and Lufthansa were secured this quarter.

737: 124 delivered in Q3. Due to delays in stabilizing at 47 per month, full-year deliveries will fall short of the 500 target. Pre-certification -7 and -10 units built will begin deliveries early next year. The pace of future rate increases will be more gradual, consistent with company history.

787: 22 delivered in Q3. Full-year deliveries expected at 90–100, likely closer to the low end due to the transition to 10 per month being delayed. Most Charleston expansion capacity comes online in the second half of next year, with a second assembly hall adding a third line.

777 freighter & 767 tanker: This quarter, wing component suppliers interrupted both the 777 freighter and 767 tanker lines. Supplier shipments have resumed but backlog will be gradually cleared over the next few quarters. Costs were not material this quarter but will be recognized as abnormal costs in coming quarters.

777X: First delivery is still expected in 2027. Current output is around 1 per month, expected to hold for most of 2027. The program will be a significant cash drag in 2027, improve in 2028, and turn cash flow positive in 2029.

Defense, Space & Security (BDS): Delivered 30 aircraft and 3 satellites in Q3. Revenue was up 15% year-on-year to $7.9 billion, mainly driven by classified project and missile growth. Spirit contributed about $160 million in sales and two percentage points of growth. Operating margin was 6.2%, including a $252 million gain from selling HRL Laboratories. The company remains confident in raising BDS operating margin to high single digits before 2030. BDS booked $23 billion in orders this quarter, with a record $101 billion backlog. F/A-XX orders are not included for Q3 due to source selection and evaluation still in progress.

Global Services (BGS): Revenue up 4% year-on-year to $5.6 billion; excluding the digital aviation solution divestiture, up 11% year-on-year, mainly driven by government and commercial modification growth. Operating margin was 18.3%, up year-on-year, benefiting from higher volumes and favorable mix, partially offset by divestiture impact. Both commercial and government businesses achieved double-digit margins this quarter. BGS booked $5 billion in orders, ending the quarter with a $33 billion backlog.

Cash and debt: Cash and securities totaled $20.7 billion, mainly reflecting cash generated during the quarter. Debt remained flat from last quarter at $45.9 billion. The company maintains access to a $10 billion undrawn revolver and continues to strengthen the balance sheet and investment grade rating.

Free cash flow outlook: Projecting about $2 billion in 2026, including assumed early recognition for the 13th KC-46A tanker batch and other seasonal working capital benefits. For 2027, projecting about $3 billion, driven by rising commercial aircraft deliveries, modest improvements in 737 and 787 cash margins, ongoing BDS improvement, and steady BGS growth; these are partially offset by unfavorable working capital—including lower BCA deposits year-on-year—and about $1 billion higher capex. Free cash flow in 2027 will still be significantly affected by historical cash headwinds. These headwinds will fade further in 2028 and 2029, and the path to the $10 billion target will be underpinned by higher 737 and 787 deliveries, improved cash margins, positive 777X cash contribution, BDS and BGS profit growth, and elevated but declining capex. The plan assumes 777X is certified by mid-2027.

III. Q&A Session

Wolfe Research — Myles Walton: Free cash flow in 2027, apart from DOJ payments, only rises a few hundred million. Can you size the abnormal cost impact for 2027? How much does 777X contribute to the $3 billion increase in 2028?

Jesus Malave: In 2027, the DOJ payment won’t recur, which adds $700 million. Volume growth in BCA and improved cash margins contribute as well; BCA margins are roughly break-even in 2026, with further improvement in 2027. Continued growth in BDS and BGS helps too. However, 2026 is a record deposit year; 2027 will still be strong but not to the same extent, costing several billion dollars. Capex rises to ~$5 billion, about $1 billion higher than 2026. The logic is similar for 2028/2029: legacy headwinds keep fading, Airbus deliveries up, and higher positive cash margins. Volume in 2029 will be even higher—737 close to low/mid-50s per month, 787 nearing 12 per month, and 777X will be a positive free cash contributor. Growth is still expected beyond 2030.

JPMorgan — Seth Seifman: On aircraft unit returns, you’ve called out supply chain and rate increases as cost factors. Can you elaborate? How does this affect future unit cash profitability? Does the staged rate ramp affect the timeline for overcoming past cash drag?

Jesus Malave: Q3 BCA margin was impacted by rate adjustments and increased supply chain costs, which have now flowed through EAC and affect booking rates. 777 current freighter and 767 projects will show abnormal costs from Q4 into the first half of next year, putting pressure on running margins but fading in H2. With highly priced backlog flow-through and higher volumes driving cost improvements, we expect a step-change in H2, and a return to break-even in early 2028. These assumptions are baked into cash flow guidance, and are not materially impactful to cash flow. We have high confidence in margin improvement for 737 and 787 based on the backlog price points.

Jefferies — Sheila Kahyaoglu: What is the impact of persistently high oil prices on the airline industry? How is customer feedback? Are there any changes in orders, service, lease rates? What oil price is assumed in FCF guidance?

Robert Ortberg: We maintain close dialogue with our customers. Impact differs by airline. Much of the backlog is for replacement, with new aircraft being more fuel-efficient; higher oil prices actually make customers want faster delivery. The airline industry’s total growth rate may soften, but so far, no customers are requesting revised growth profiles, and with backlog oversubscribed, we can manage delivery order. Airlines mostly pass along high oil prices to fares; we’ll watch how this evolves. On macro demand, even if growth slows, there are many customers pushing for faster replacement delivery.

Wells Fargo — David Strauss: What are the delivery assumptions for MAX and 787 in 2027? How many prebuilt -7 and -10 in inventory will be absorbed? If 777X slips from 2027 to 2028, what is the impact on the $3 billion cash flow guide?

Jesus Malave: About 30 of the prebuilt -7s and -10s will deliver next year. For 777X, if certification slips only a month or two, deliveries next year should be 10–15, with any delays absorbable within the $3 billion guide. Total BCA deliveries should be up over 10%; further clarity in January by model.

Melius Research — Scott Mikus: The 2029 targets assume 737 rates above 50/month and 787 at 12/month, but 737 only hits 52/month in 2H next year and 787 won’t reach 10/month until year-end. Why does it take nearly two years to accelerate further? Are you seeing deterioration in the supply chain outlook?

Jesus Malave: Deliveries usually lag production. This creates upside for 2029: if we can deliver at even higher rates, there’s further headroom on the $10 billion target.

Scott Mikus: What are the assumptions for cash tax and cash interest in 2029?

Jesus Malave: Basically steady from now. Tax will not materially impact until the early 2030s, and cash interest will come down gradually as maturities roll, but not sharply.

Bernstein — Douglas Harned: On the 737, you called rates stable at 47/month in August, then cited wing drilling challenges in September. Has this issue been resolved? How is Wichita performing? How do you ensure hitting 52/month next year?

Robert Ortberg: Engines are not the issue. We’ve taken a series of process improvements to ramp from 42 to 47/month, though some didn’t deliver as expected so we adjusted and expanded in some areas. Early signs are encouraging, but we haven’t stabilized wing production at 47/month yet. We’ll hold at that rate to ensure stability. The transition from 42 to 47 was less smooth than from 38 to 42. Before moving to 52/month, we’ll fully validate every supporting process. Everett line is progressing well, first -10 just rolled out. Wings are the main challenge; we’ll learn lessons and fully prove improvements before the next ramp.

Douglas Harned: Other concerns aside from wings? Is the Wichita fuselage or other supply chain at major risk?

Robert Ortberg: Current wing instability is the main issue. There are inventory buffers on fuselages, but once wings are sorted, the fuselage pace becomes the next focus. We plan to incrementally ramp fuselage pace up to 52 over the rest of this year and into early next, underpinned by existing buffer. No systemic supply chain issues at this time; episodic issues like GKN windows are being managed.

Baird — Peter Arment: How is Spirit (Wichita) integration progressing? BCA margin break-even in 2027—can it return to historic levels by 2029?

Robert Ortberg: Integration is on track. While Wichita runs at lower rates, our focus is rolling out the safety and quality plans proven at Renton, so pacing lags a bit and fuselage inventory may be used a little fast versus base plan. We have a ramp plan, and that’s partly why we are holding at 47 longer before moving up.

Jesus Malave: 737 margin will improve, but not back to 2018 levels in percentage or dollars; 787 will exceed 2018 levels by 2029. Net-net, 2029 will deliver positive returns.

Goldman Sachs — Noah Poponak: Some of the free cash flow track discrepancy versus market expectations comes from capex. You gave guidance for $5 billion in 2027; what about 2028/2029? What percentage of revenue is normalized? If there’s another 777X delay, why is it absorbable? Does this mean the guidance is conservative and there’s upside?

Robert Ortberg: When 777 was reset, we built in management reserves to handle schedule pressure. This doesn’t mean we’ve already delayed 777 to mid-year; the team is still pushing for earlier certification. Financially, we’re prepared for a slip to mid-year inside the EAC. With 737-7 and -10 now certified, FAA and test teams can focus resources on 777 testing. The airplane is flying and test work is progressing, with additional FAA test authority (TIA 4B extension). In this regulatory environment, we know what’s needed for certification and have built that into our plans.

Jesus Malave: 2027 capex is around $5 billion, and $4 billion each for 2028 and 2029. The impact of a 777X slip by a month or two is quantified within the guidance.

Noah Poponak: $4 billion is still about 3% of revenue, whereas the long-term norm was 2% or below. Is capex structurally higher or will it come back down over time?

Jesus Malave: It will exceed 2% but should moderate over time. A normalized 3–4% is reasonable.

Citi — John Godyn: It seems total free cash flow numbers have shifted downward and parallel. Is the “North Star” target for post-2029 changed? How should we model 2030 and 2031?

Jesus Malave: No change. There’s still significant anticipated growth after 2029, with margin improvement and volume increases driving further cash flow. The 2029 assumption is 737 at 63/month, 787 at 14/month, supporting compounded gains post-2029.

John Godyn: Should we see this as a steeper curve with the same endpoint?

Robert Ortberg: It’s more like a one-year right shift—the slope and endpoint remain intact.

BofA — Ronald Epstein: Boeing has won the F-47 and F/A-XX; with the future of US tactical aviation in Boeing’s hands, how does BDS’s growth and margin outlook develop?

Robert Ortberg: Defense business growth will be higher than forecast a year ago—previously expected low single-digit revenue growth, now poised for mid-single digits or higher. Importantly, all projects are under the right contract types—not only are orders rising, but new challenges are being avoided. In addition, MQ-25 and T-7 have both reached Milestone C, F-15EX has won large orders with more ahead, and PAC-3 Seeker output is rising. We have MOUs with all customers on large fixed-price development contracts, and Starliner was brought under control last quarter. I’m more confident in both growth and margin prospects. Not all development is complete, but the team has done well negotiating win-win solutions. Defense demand is strong; budgets support further growth—this is arguably an undervalued portfolio.

Ronald Epstein: Are F/A-XX or F-47 fixed-price contracts?

Robert Ortberg: F-47 is a cost-plus contract; I can’t disclose F/A-XX details, but the contract type is appropriate.

UBS — Gavin Parsons: Any update on thoughts for new single-aisle aircraft? Does 2029 FCF guidance include associated R&D and capex?

Robert Ortberg: No change to the new aircraft outlook. Product development is focused on defining the right solution and market timing. Associated investment is factored into cash flow guidance.

Jesus Malave: There is no large-scale outlay at present—investment is mostly in R&D and tech development.

Robert Ortberg: As the 737 and 777 projects complete, resources can pivot from current to new development programs.

TD Cowen — Gautam Khanna: What is the trend for deferred production balance for the three programs? How much does the overall balance rise next year? When and by how much does it decline in 2028/2029?

Jesus Malave: We don’t disclose specifics. Deferred production costs for 737 and 787 will basically flatten next year, reducing cash usage; in 2028 and 2029, they will be a material cash source, meaning working capital becomes a net cash contributor. For 777X, with deliveries still ramping, balances will increase in the next few years. Key cash drivers are improved profitability on 737/787 and lower deferred cost balances.

Vertical Research Partners — Robert Stallard: What gives Boeing the confidence to issue FCF guidance now? How has the outlook changed?

Robert Ortberg: Over the past two years, we’ve addressed issues one by one, with overall portfolio risk much lower. Two years ago, all fixed-price development programs were challenged—now, under control. We hadn’t won the next-gen fighter then—now we’ve secured two programs. Defense contract structuring is much improved. Two years ago, following a strike, commercial production was at zero—now, we’re at 38/month, and though 47/month took longer than expected, we’re maintaining discipline. We have much better risk management and can offer achievable guidance. Expectations are rising, and so are our standards; the team is prepared. There are still matters to resolve, but uncertainty is much reduced. It’s the right time for guidance.