The operator introduces the Boeing Company's Fourth Quarter 2023 Earnings Conference Call and hands it over to Matt Welch, Vice President of Investor Relations. Dave Calhoun, Boeing's President and CEO, apologizes for the recent issues with the 737 MAX 9 and focuses on the actions being taken to regain the confidence of customers, regulators, and the flying public. The financials will be covered by Brian West.

The NTSB is currently investigating the accident and Boeing is cooperating with them. Boeing takes responsibility for the accident and is working to regain the trust of customers, regulators, and congressional leaders. They have taken steps to restore the 737-9 airplanes to service and are implementing measures to improve quality within the company and supply chain.

Boeing has implemented additional quality controls and inspections, including a quality stand-down and increased scrutiny from the FAA, to ensure the safety and quality of their 737 production. They have also slowed down production in the past to address any issues and will continue to do so until the FAA and Boeing are satisfied with the quality and manufacturing process. This increased scrutiny will ultimately make the company better.

The speaker acknowledges that there is still work to be done in terms of ensuring quality and safety in their aircraft. They will not be issuing a financial outlook for 2024 and will prioritize meeting all standards and regulations. The company remains confident in their recovery and will continue to focus on safety and quality in all aspects of their business. The speaker encourages employees to speak up and emphasizes the importance of transparency. They have confidence in their team and the company's ability to regain trust through action and transparency.

In the financial performance for the quarter, Boeing saw a 10% increase in revenue, with growth being driven by higher commercial volume and favorable mix. The core loss per share was $0.47, an improvement from last year due to increased commercial volume and better mix. BCA booked 611 net orders, delivered 157 airplanes, and had a backlog of over 5,600 valued at $441 billion. The 737 program delivered 110 airplanes in the quarter and began FAA certification flight testing for the 737-10 in December. Boeing will maintain production at 38 per month and work with the FAA for future increases.

In the quarter, Boeing is prioritizing the master schedule to avoid supply chain disruptions. They have 10 737-9s in production and are supporting customers' return to service activities. There are 200 MAX airplanes in inventory, with most expected to be delivered by year-end. The 787 program delivered 23 airplanes in the quarter and plans to steadily increase production to 10 per month by 2025-2026. They have approximately 60 airplanes in inventory, with 50 requiring rework. Boeing booked $77 million in abnormal costs and expects to finish rework and shut down the shadow factory by year-end.

In the fourth quarter, Boeing resumed production on the 777X and remains on track with the program timeline. The Emirates order for 90 777Xs increased the backlog to over 400 airplanes and extended the accounting quantity. They are following the lead of the FAA in the certification process and have booked $71 million in abnormal costs. In the defense and space sector, Boeing booked $8 billion in orders and the backlog is now at $59 billion. Revenue increased by 9% due to the tanker award and improved volume. Operating margin was still negative but showed improvement from the previous quarter. Boeing plans to return to high single-digit margins by 2025-2026. The core business remains strong and demand for their products is high. Operational performance on fighter and satellite programs stabilized in the fourth quarter, with expectations to return to strong historical levels by 2025-2026 with tighter underwriting disciplines on new contracts.

In the last paragraph, the speaker discusses the company's cash and debt. They ended the quarter with $16 billion in cash and marketable securities, while their debt remained at $52.3 billion. They plan to pay down $4 billion of their $5 billion in maturities using available cash on hand. They also have access to $10 billion in revolving credit facilities, which are currently unused.

Boeing's liquidity position remains strong and they are prioritizing their investment-grade credit rating. They plan to invest in the business and pay down debt. Full year revenue was $77.8 billion, up 17% year-over-year, driven by improved commercial volume. The core loss per share was $5.81, better than prior year, and free cash flow was $4.4 billion. While they are not issuing 2024 guidance, they expect steady free cash flow, driven by 737 production, 787 execution, and liquidation of inventory. They are focused on quality and stability for long-term success, as demand remains strong and their backlog is growing.

The paragraph discusses Boeing's 2025-2026 guidance and their efforts to achieve stability and fix issues with the 737 MAX. The team is confident in their goals but it may take longer than expected. The CEO, Dave Calhoun, is impressed with the dedication and commitment of their employees and believes that Boeing will recover and learn from the recent accidents. The questioner asks about the progress of the MAX program and Calhoun acknowledges the improvements since last fall and their long-term outlook.

The speaker discusses the progress of returning -9s into service and mentions the one exception of the escape. They express confidence in the progress and mention plans to improve quality systems and inspections. They also mention taking a pause and using this opportunity to make improvements.

Dave Calhoun, CEO of Boeing, discusses the company's progress and challenges, including supply chain shortages and the resumption of MAX deliveries in China. He also mentions his confidence in the certification process and the potential for accelerated recovery. In response to a question about the MAX 10 and MAX 7, Calhoun says they are still committed to both models and will continue to work with customers to ensure deliveries. The withdrawal of the MAX 7 exemption may impact the certification timeline, but they are still planning to ramp up production to 50 a month.

Dave Calhoun explains the decision to impose a time-limited exemption for the 737 MAX and credits Senator Duckworth for presenting a compelling argument. He also mentions that the fix for the issue could take up to a year, but the impact on deliveries is relatively small.

In response to a question about the certification process for the -10 model of their airplane, the speaker prefers not to speculate and states that the current demand for the aircraft is strong. They also mention that 2024 is expected to be a steady year for free cash flow, with growth in BCA volume and less of a drag from BDS, but also a significant investment in the 777X and a need to closely manage the supply chain. They will provide more specific guidance as appropriate.

Seth Seifman of J.P. Morgan asks about the cost of the shadow factories in 2023 and 2024 and Brian West responds that the impact will not be seen in 2024 but it is an important factor in BCA profitability. Dave Calhoun adds that the shadow factories require more hours to produce an airplane than the actual production process. Seth Seifman also asks about advances in 2024 and Brian West responds that they are not expecting it to be as significant as in 2023, but they are still working to secure orders. Jason Gursky from Citi then asks a question.

Doug Harned from Bernstein asked for clarification on the production rate of 38 per month and whether the company is still firing blanks. Brian West clarified that they are not firing blanks and the rate of 38 per month has been achieved. He also discussed the performance of the company's defense portfolio, with the 60% of the portfolio performing well and the remaining 40% expected to improve in the future.

In this paragraph, Doug Harned asks about the impact of delays in the certification of the MAX 7 and MAX 10 on Boeing's product mix and operational challenges. Dave Calhoun responds that they have a good handle on managing the product mix and any potential changes can be identified early. He also mentions that the FAA is making progress on the certification and the issue with the factory is being separated from the certification efforts.

During a recent conference call, Boeing executives discussed the current state of the company's production ramp and the impact of the 737 MAX grounding on their supply chain. They stated that the supply chain is still the main constraint on production, but the pause in production could be beneficial in allowing suppliers to catch up and improve their processes. They also provided updates on the 787 program, which is running smoothly, and addressed the question of how the company got to where it is today, with the 737 MAX grounding and production issues.

The speaker, Dave Calhoun, is addressing a question about why the recent incident with the 737 MAX engine had to happen now. He states that it should never happen and that the company is taking steps to ensure it doesn't happen again. He also mentions that they have accelerated the timeline for designing a new system for the engine anti-icing, which is expected to be the longest part of the certification process for the MAX 7 and 10. They will be dedicating more resources and testing to this project in order to inform the FAA.

During a discussion about Boeing's financial outlook, Cai von Rumohr asks Brian West about the impact of the supply chain running at the master schedule but delivering fewer units. West mentions the 777X investment and the need to work through the situation, but cannot give specifics due to the ongoing FAA process. Matt Welch notes that there is time for one more question, which comes from Noah Poponak. Poponak asks about the MAX units for the year, but West cannot give a specific answer due to the ongoing FAA process.

The speaker promises to provide more specific numbers at a later time. They do not believe there is a cap on the monthly inventory unwind and are focused on meeting targets and shutting down shadow factories. China is officially taking deliveries. The defense margin has improved but is still not where they want it to be. The cash burn for defense was worse than expected last year but is expected to improve this year.

The speaker discusses the company's performance, stating that it was worse due to some factors but offset by others. They expect margins to improve over time and are focused on a specific portion of the portfolio. The team is working towards getting margins back to high single digits, with an aim for double-digit margins in the defense sector. The call ends with a thank you to participants.

This summary was generated with AI and may contain some inaccuracies.