Pontifications: Analysts overlook Boeing losses for cash flow gain; what’s behind the jump in charges?

By Scott Hamilton

Oct. 31, 2022, © Leeham News: Boeing last week surprised Wall Street aerospace analysts with a huge loss instead of the expected profit for the third quarter.

But positive cash flow was the metric the analysts focused on. The loss was attributed mostly to big write-offs of five defense programs: the KC-46A, VC-25B, MQ-25, T-7A, and Commercial Crew (the Starliner) programs. Boeing wrote off $2.8bn for these programs in the quarter. The company previously wrote off $8.8bn for these programs.

The specifics: Boeing took charges of $1.2bn for the KC-46 tanker, $766m on Air Force One, $351m for the MQ-25 aircraft carrier tanker drone, $285m for the T-7 jet fighter trainer, and $195m for the Commercial Crew.

All are fixed price contracts that have come back to bite Boeing big time.

Boeing also had a loss of $643m in the quarter at Commercial Airplanes. Global Services reported a profit of $733m and Boeing Capital Corp (BCC)—the leasing unit—eked out a $23m profit.

For the nine months, Commercial Airplanes recorded a loss of $1.74bn. Defense lost $3.66bn. Services reported a profit of $2.1bn and BCC barely recorded a profit of $14m.

But cash flow was positive at $2.9bn. And this is what analysts liked. Yet there was a little smoke-and-mirrors involved in this. Boeing said the cash flow was helped by “higher commercial deliveries, favorable receipt timing, and a tax refund,” as analyst Robert Stallard of Vertical Research put it. The tax refund was $1.5bn, a huge chunk of the cash flow touted by Boeing.

Shifting cash flow

A tax refund, of course, doesn’t provide cash flow from operations, which is really the important metric to look for. And “favorable receipt timing” can mean a lot of things. In the past, Boeing routinely worked with customers to advance payments from one quarter to the current quarter to dress up cash flow and the balance sheet. Boeing reported $1.1bn in advances from the Defense Department, though it’s tough to understand how much of this was “favorable receipt timing.”

Boeing’s 10Q quarterly report, filed after the initial analyst reports were issued, contains this important piece of information:

“During the first nine months of 2022, net cash provided by operating activities was $0.1 billion. Our operating cash flows continue to be impacted by lower commercial airplane deliveries. We expect a negative impact on our operating cash flows until commercial deliveries ramp up. Charges recorded on BDS fixed-price development contracts are expected to negatively impact cash flows in future periods.” (Emphasis added.)

“Bears will complain that Boeing’s Q3 FCF beat is low quality, with a disappointing quarter operationally. . . and they will be justified . . . but we’re not sure how much that matters today,” writes Seth Seifman of JP Morgan. “The fact that Boeing struggles operationally, especially in Defense, is not new news….”

Clearing the decks

Why the big spike in charges?

LNA is told there is a bit of “clearing the decks” going on. As Boeing prepares to pay down and refinance debt, and as it prepares to launch a new airplane program, CFO Brian West wants to clean out known charges to present a “clean” case to potential bond buyers and debt providers. The charges taken today are against the actual cash outlays in the next year (which, ironically, will reduce cash flow). More charges are to come.

“Of the $4.5bn of pre-tax charges taken this year, the majority of the cash outlays will be spread out over the next 12-18 months and will likely result in downward cash flow estimate revisions,” wrote analyst Robert Spingarn of Melius Research. “Boeing booked $330m of abnormal production costs on the 787, meaning that $600, remains to be expensed. On the 777X program, Boeing booked $111m of abnormal production costs, leaving $1.3bn still to be expensed through 2023.”

Ramping up production

Stallard writes that Boeing is moving to the right ramping up production, notably of the 737. Spingarn writes that Boeing still will be in the low 30s per month early next year and around 40/mo by year-end. LNA was told by the supply chain that Boeing’s move to the right is by six months.

Spingarn writes that between 8-10 MAXes per month will be delivered from inventory next year. This means clearing the MAX inventory will slip into 2025.


In a case of mixing metaphors, Stallard writes, “Turning around like a supertanker – Boeing management continues to state that the company is in turn around mode, but we’d say that the arc of recovery remains extremely elongated. In whack-a-mole fashion, just as Boeing gets something right (787 restarts), something else goes wrong (Defense charges, China, supply chain). Given the track record to date, particularly on forecasting additional defense charges, we continue to be wary of whatever outlook Boeing provides and think that there are far less risky ways of gaining aerospace and defense exposure.”

244 Comments on “Pontifications: Analysts overlook Boeing losses for cash flow gain; what’s behind the jump in charges?

  1. “As Boeing prepares to pay down and refinance debt, and as it prepares to launch a new airplane program, CFO Brian West wants to clean out known charges to present a “clean” case to potential bond buyers and debt providers.”

    Just what the company needs: more debt, at much higher interest rates.
    It paid $622M in loan interest in Q3, so that amount is soon going to increase even further.

    Current debt:
    BA: $57.2 B
    AB: €14.3 B

    • What other choice do they have? Debt obviously must be refinanced even if it means higher interest rates. They probably don’t have to launch a new program right now since Airbus is pretty content to sit and wait, but they also can’t delay it indefinitely.

      • They don’t have another choice, because their current programs aren’t generating enough margin to be able to start reducing debt (unlike Airbus, which is steadily eliminating debt).
        But paying even more interest on those same programs is going to sink the company’s financial performance even further. I doubt that investors will be impressed by that prospect.

        • hehehehe
          ‘Cash and investments in marketable securities increased to $14.3 billion, compared to $11.4 billion at the beginning of the quarter,’ says Boeing

          It would seem that the cash is earning more than debt is costing them, which they borrowed while interest rates were lower ( but a spread based on the term)
          usually debt repayments are connected to the loan terms, and it doesnt make sense to pay down early now and borrow at higher rates a bit later

          • Had you noticed that 14.3-11.4 = 2.9, i.e. the positive cashflow for Q3?
            In other words: the increase is due to that tax refund, and the fortuitous timing of bookings.
            The increase is not due to the cash “earning” anything.

            Still not enough egg on your face?

          • @Bryce, stop it. you can make your point without being insulting.


          • Airbus statement
            ‘The income tax expense amounts to € -768 million (first nine months 2021: € -676 million)’

            So they too are getting a refund ( thats what – means) like Boeing did this year and last year.
            Yesterday I had a much smaller tax refund amount for both, that was only for 3 months

          • Scott:

            You can only be insulted if the person doing so is respected. So, go with Leeham policy in insulting people in general and not me specifically.

            And as an added note, here are the numbers for 2021 and 2021 first 9 months.

            “There were 437 aircraft delivered by the end of September, compared to 424 in 9m 2021. Showing just how vital the single-aisle segment is to Airbus, there were 340 A320-family deliveries, followed by 42 A350s, 34 A220s and 21 A330s. ”

            340 divided by 9 = 37.78

            So, rate 38 (we can give Airbus a bit of credit for ramp up here) and that is a far cry from rate 45 or 50 or 60 or 75. It also is exactly in line with Av Week when they listed Airbus at rate 37 earlier in the year (from memory that was the first half). Hard to square that with statements and so called rate 65 a year and 3+ months away when its listed as early 2024 (and whats the plan for 2023? ) Inquiring mind would like to know.

          • Can @DoU remind us how much “cash” did GM have on hand when it filed for bankruptcy??🤣

            -> On February 26, 2009, General Motors announced that its cash reserves were down to $14 billion at the end of 2008.

            In less than four months GM filed for bankruptcy!

          • @TW

            No need to continue your disinformation campaign to mislead others. Didn’t I reply you in another thread proving how wrong you were with BA’s own 2018 delivery# Oct Nov & Dec vs. first three quarters?? 🙄

          • @ TW, @ Scott

            @DoU was repeatedly calling the rest of us “clowns”, etc., in the previous article on BA finances. Strange behavior from someone with (evidently) a very meager grasp of balance sheets.
            I’m not the originator of this problem.

          • @TW don’t Airbus take long summer holidays which aren’t figured in the official rate claims? Probably more like 7.5 months & 45 per month. Airbus rate 65 will only be 700 per annum. Still a lot.

      • > What other choice do they have?

        According to recent press reports, Boeing’s sitting on a “$ 13,000,000,000 goldmine” of inventory. Why not tap into that (or not)?

      • Boeing say the have $12 bill of pre-arranged borrowing untouched.

        The tax refund last year was $1.3 bill so this years $1.5 bill is only an
        $200 mill increase not a ‘windfall’

        Im sure Airbus has a tax refund of some size hidden in their reports too

        • 1.5B (tax refund) is more than half of 2.9B (positive cash flow)
          Most people would call that a windfall 😏

          As regards the revolving credit facility, want to guess why that hasn’t been tapped? Hint: prohibitive (daily) interest rates.
          “The credit agreement is scheduled to end on March 19, 2023, Boeing said in a filing.”

          • For those who went thru BA’s filing, they noticed BA say the tax refund wouldn’t happen next year. Hahahahha

          • They get one every year .
            last year was a bit less ( $1.3 bill), who knows what next years refund will be ?
            But keep up with the cultural show, that doesnt involve numbers, music movement , clapping hands , it will work on tik tok

            BTW Airbus says
            ‘The income tax expense amounts to € -768 million (first nine months 2021: € -676 million)’
            Kaching… its a refund too

          • From the horse mouth

            -> Myles Walton — Wolfe Research — Analyst

            OK. And then, just clarification on the tax refund, you had one last year this year. Do you anticipate another one next year, no?

            Dave Calhoun — President and Chief Executive Officer


            No doubt our posters won’t question their master

          • According to AB:
            “The income tax expense amounts to € -768 million (first nine months 2021: € -676 million) *and corresponds to an effective income tax rate* of *23.7%*!!!

            No doubt our poster 1) can’t shoot straight 2) can’t read a sentence properly and 3) failed basic accounting miserably!! 😂😂😂

          • “They get one every year .”

            Yes — because they make a loss every year (since 2019).
            They prepay corporate tax based on a yearly profit estimate — and they get tax back when it transpires that the estimate was too rosy.

    • “..CFO Brian West wants to clean out known charges..”

      Need to clean out the bored of directionless, the power point rangers, and the
      Welch acolytes. The coming oil and fuel shortages in a few months is going to do more than hurt, its going to effectively ground most of the air travel.

      Just my .00002 cents

  2. Out of the past 14 quarters, BA has only had positive cash flow on 2 occasions, namely Q4 2021 ($494 M) and Q3 2022 ($2.906 B).
    As the article above explains, the Q3 figure can hardly be termed “operating” cash flow, when it contains one-offs like a $1.5 B tax refund, and other items arising form “fortuitous timing”.



    Incidentally, the text “higher commercial deliveries, favorable receipt timing, and a tax refund” doesn’t come from Robert Stallard himself: it’s a direct quote from the BA financial results press release, below table 2:

    “Operating cash flow improved to $3.2 billion in the quarter, reflecting higher commercial deliveries, favorable receipt timing, and a tax refund (Table 2).”


    • ‘favorable receipt timing’

      Deposits. Unearned revenue. An increase to the tune of $1.1 billion, IIRC.

      Look at it this way:

      BCA had a loss of over $643 million in the quarter, on revenues of ~$6.2 billion, while they delivered 112 aircraft.

      Those 112 aircraft also had deposits on them, like the X number of aircraft orders they got in Q3, which gave them that increase.

      When they backed out the total amount of deposits from Advances and Progress Billings, then added the Cash they received from customers as final delivery payments – they came up with a number.

      Then they came up with another number; they calculated all of the expenses associated with the manufacturing of those planes. It looked like this:

      Revenues: …………………………………$6,263,000,000
      Expenses: …………………………………$6,906,000,000
      Profit (loss):……………………………….($643,000,000)

      The 9 months of Q3/2022 has so far cost them $1.744 billion on 328 deliveries.

      2021 they lost $6.475 on 340 deliveries.

      2020 they lost $13.847 billion on 157 deliveries.

      2019 they lost $6.657 billion on 380 deliveries.

      In those 3 years and 3 quarters, Boeing Commercial has lost $28.723 billion while delivering 1,205 aircraft. (that’s an average of ~23.5 million a delivery, btw)

      All of those aircraft had cash deposits at time of order. All of those aircraft received progress payments. All of those monies were put in the bank and increased Cash, during the years leading up to their delivery.

      It also cost them $28.723 billion to hold that money.

      (Here’s another number: $84.553 billion. That’s the amount of revenue BCA generated over that time period. With $113,276 in expenses.)

      You can kick the can down the road for awhile, but eventually, you have to pay the Piper.

      • Thanks for all this clear, well-presented info on Boeing’s financials, Frank.

      • BCA talked all day they “aim” NB production rate at low 30s and took predelivery payments from customers accordingly though in reality they were only able to produce at 20s.

        Air Lease have been very vocal about this.

        • Very good point.
          The advance payments from these unsuspecting/deceived customers have effectively been a free loan for BA — a loan long since squandered, per @Frank’s comment above.

    • @Bryce

      You may ask why I bring up the Advances thing (again).

      There is a time component to money. Money is an asset and has value and it will cost you, if you have to borrow it.

      Let’s say that you own an airline and want to order aircraft. You want them in 3 years. 50 aircraft and you have the cash lying around. $50 million a pop costing you a total of $2.5 billion.

      Normally, BA asks for 10% down, 40% during the time leading up to delivery as progress payments and 50% when you take possession.

      So your accountants sit down and say “OK, that $250 million we give them to start things, WE could put into safe investments and get 5% a year (we’ll leave compounding out of it) and we could have made $37.5 million on it. So make sure they’re worth it.”

      But you know that BA is hurting for cash and you’re flush with it. What do you tell them?

      “Hey – we’ll give you 25% down, 40% in progress and 35% at closing…but we’re gonna pay $2.2 billion, instead of $2.5 billion for those planes. Here’s a cheque for $625 million (instead of $250 million) – you wanna do the deal?”

      Boeing kicks the can down the road, will recognize a loss on the deal in 3+ years (like they have been for the past ~4 years) and takes your deposit to shore up Cash on hand…


      BA has $53.177 billion in advances and PDP’s.

      They’ve spent that money – it’s gone. It’s gone so bad, that they’ve had to borrow another $52 billion, to cover the costs of making the aircraft that they took all those deposits on.

      • @ Frank
        Yes, that’s how it works: those with resources can always drive a hard bargain from those who don’t have them.

        Those advances are effectively loans in the case of aircraft that can be cancelled without penalty: so BA has to repay them if such cancellations materialize. Ouch!

        Amazing that some are unable/unwilling to see/admit how degenerate the situation is.

  3. Regarding Boeing cash flow, I would add in addition to an increase of advance and predelivery payment, “accrued liability” increased from 17,752 M to 21,217M. This simply means that Boeing has just not yet received receipt from its suppliers for billion $ worth of spares.

    Another remark is “account receivables” slightly decreased from 2,996 M to 2,673 M. One would actually expect an increase of account receivables with an increase of production and delivery. Meaning that Boeing is apparently accelerating final payments from its customers.

  4. This short term cash flow focus, combined with ignoring long term debt remains amazing to me.

    It’s what got Boeing in trouble in the previous decade but apparently many investors still prefer to live with rosy alternative realities.

    It seems the company is now so busy managing perceptions, stock value and doing short term damage control, there’s no room for the real revitalization it needs so badly. If only to keep/get the best people onboard.

    • @keesje – Exactly.

      Boeing needs to address the root cause of its problem. In the 90’s, Phil Condit boasted of 3 core competencies – system integration, project management, and product development. Condit figured that those competencies would persist as he pivoted Boeing to his new short term investor-centric business model. It was a blind hope then, and has proven to be a crushing mistake – repeatedly – in the decades since.

      Turning that metaphoric super-tanker has not begun, and is incomprehensible to the current leadership team.

      • Stan:

        I could not agree more. In part (see below) its a good move but dealing with the core stupidity that got them there is the key.

        I love the turning the Super Tanker visual. I think it takes 10 miles to do so (that point of land that was 10 miles ahead, well Captain we are on top of it now!)

        One other good one was from the Clipper ship era. They never turned around to try to recover someone over board. Keeping in mind they were not heavily manned like a warship, it took a lot of time to drop the sails and come to a halt, let alone all the time spent beating back up wind and course variations that made it zero chance to find a person gone overboard.

      • Let’s call it like it is Boeing has lost it tribal knowledge on how to design and build commercial aircraft. The 7E7 outsourcing model did Boeing in If you looked at Conduit PhD dissertation in the 1990’s it laid out the 787 business model.

        Remember the Boeing VP for 7e7 program…three day assembly “Bair said that’s about the right size work force for a plane that can be assembled in three days.”

        Boeing will most likely never launch a new clean sheet commercial aircraft again! The engineering and mfg talent will age out and retire

    • Keesje:

      Yes Boeing mgt got them there and no excuses. But the 57 billion will not go away until you deal with the short and medium term issues.

      Its what they do with (or to) the company in the longer term that counts, but a write-off is not in and of itself wrong and in fact is a good move if linked to the other changes (and yes that is an open question under Calhoun and his ilk.)

      • The same old same old would only continue the malaise. The patient needs more than a breath of fresh air.

    • Exact….investors will put more resources for futur well established programs …product line offer to start with
      they already were punished by poor management decades loosing stock value (thanks Mr Stone cifer !!)
      they do not care to pay more for the past

  5. Another remark is that “account receivables” slightly decreased from 2,996 M to 2,673M, and “unbilled receivables” slightly decreased from 9,394 M to 9,316 M. One would expect an increase of account receivables with an increase of aircraft delivery, which suggest that Boeing is also accelerating final payment from its customers.

    • It’s a well-known BA trick to dress-up the balance sheet by bringing forward incoming payments / deferring outgoing payments. It’s the “favorable receipt timing” referred to above.

  6. Motley Fool: “57 Billion Reasons to Avoid Boeing Stock”

    “Nevertheless, Boeing’s debt load remained unchanged at $57.2 billion during the third quarter: up from $11.9 billion just four years ago. With the global economy weakening, supply chains in tatters, and previous mistakes still costing Boeing billions of dollars, the company’s weak balance sheet makes Boeing stock look extremely unattractive.”

    “In short, a combination of self-inflicted wounds, bad luck, and macroeconomic headwinds will partially offset the benefit of clearing out excess 737 MAX and 787 inventory in 2023 and 2024. That will keep free cash flow well below historical levels.”

    “Boeing’s subpar outlook makes its weak balance sheet particularly unfortunate. Boeing had a $250 million debt maturity in recent days and has another $9.5 billion maturing in 2023 and the first quarter of 2024. While Boeing should continue to generate cash over the next year and a half, free cash flow probably won’t fully cover these upcoming maturities due to the company’s slow recovery. That would force Boeing to tap into its $14.3 billion of cash and investments to pay down debt. Even after making these scheduled debt repayments, Boeing will still have over $47 billion of debt. The company will likely have to devote all of its free cash flow to debt reduction until at least 2026 to fix its balance sheet. As a result, Boeing shareholders shouldn’t expect the company to resume dividend payments or buy back stock in a meaningful way anytime soon.”

    “By the time Boeing gets its debt back to a manageable level, the company will need to begin its transition away from its most important product — the 737 MAX — to a next-generation narrow-body jet. Boeing has no choice but to develop an all-new narrow-body given the 737 MAX’s technical limitations relative to the competing Airbus A320neo family. But doing so could be extremely costly. Initially, Boeing will need to ramp up R&D spending to design a brand-new jet family. It will then need to spend money to build a production system while offering bigger discounts on the outgoing 737 MAX to sell its remaining delivery slots. And once the new plane is ready, it could take years to bring production costs down to make the program profitable.”

    “Boeing hopes to use cutting-edge design and production processes to dramatically reduce the cost of transitioning to next-generation jets. If it’s successful, Boeing stock could eventually pay off for shareholders who are willing to hold the stock for more than a decade. However, there’s no guarantee that this ambitious plan will work — particularly in light of Boeing’s frequent miscues in recent years. With $57 billion of debt and numerous external headwinds to manage, anything short of perfection could lead to continued underperformance for Boeing stock.”


    • Typical catch 22 and BA has no good solution. Are we witnessing the beginning of the end of an aerospace titan?? Don’t forget Calhoun had a front row decade for like a decade and he never accepted any responsibility!!

    • Is Boeing even capable (financially, technically, industrially) of developing a new aircraft at this point? Or in 5-10 years? Their last successful new aircraft launch was the 777 family in 1995. The 787 is an excellent airplane but remains a financial black hole. They seem to have nothing but trouble with their military and space divisions.

      Is it possible that we are witnessing the terminal decline of a once great aerospace company. I certainly hope not but that seems at least plausible. What will the Federal government do?

      It amazes me that the financial markets still value BA at $85B.

      • https://simpleflying.com/boeing-doesnt-plan-to-launch-a-new-airplane-any-time-soon/

        Looks like it’s not going to be an issue as the CEO has finally said ‘nah’ to the Boeing fiction of a 797. I never saw it happening – it’s been too late (for many years) to make any impact on AB’s current lines, which are further expandable/improve’able.
        Don’t think Boeing is going to disappear, more because AB can’t produce enough products, but it’s going to be #2 from now on. They’ve just totally lost it as a company. Financially… Good god… Is anything making money when you include costs and debt? Sad eh.

  7. Boeing also raided the piggy bank again:

    Short-term and other investments 1,358 – Q2

    Short-term and other investments 763 – Q3

    Another ~$600 million drained from there.

    At the end of 2021, they had $8.2 billion in investments.

    At the end of 2020, they had $17.8 billion.

    Not a good trend…

    • According to the Motley Fool link that I posted above:
      “Boeing had a $250 million debt maturity in recent days and has another $9.5 billion maturing in 2023 and the first quarter of 2024”

      So there was/is a need to liquidate investments in order to pay off maturing debt.

      Note to Duke: paying off debt using cash doesn’t change the net debt amount — it only changes gross debt.

      • I wonder how on earth BA is able to repay debts due from cash generated from operations.
        Now the piggy bank is almost empty (from almost $18 billion down to pennies 🙁 ).

  8. “Boeing Finally Faces Investors in Seattle After Years of Setbacks”

    “This week, analysts and investors finally head to Seattle to tour Boeing’s 737 plant and meet with executives. And the situation at the US planemaker is anything but normal.”

    “Boeing startled the market last week by disclosing its defense business won’t make money this year or next, even as rising defense budgets boost other military contractors.

    “But for Robert Spingarn, an analyst with Melius Research, the real shock was the revelation that Boeing is only building about 21 or 22 of its 737 jets each month, about one-third fewer than analysts had modeled. He expects investors to stew over this discrepancy between production and delivery rates ahead of Boeing’s Nov. 2 presentations.

    ““They very quietly and confusedly move the goal posts to the low 20s,” he said of the 737 monthly output in an Oct. 28 interview. “That’s one of the key focus points going into next week.””


    That’s interesting regarding MAX build rates in the “low twenties” per month.
    As of today, deliveries for October:
    B737-8: 23 (roughly half of which were whitetails)
    A320neo + A321neo: 20 + 35 = 55

    • Thanks @Bryce

      -> The thinking behind Boeing Co.’s investor meeting, first floated six months ago, was that by now the planemaker would be through the worst of its years of tumult, settling into a steady operating cadence and ready to offer a long-term strategy and financial targets. This week, analysts and investors finally head to Seattle to tour Boeing’s 737 plant and meet with executives. And the situation at the US planemaker is anything but normal.

      -> Even after restarting long-halted 787 Dreamliner deliveries in August, the beleaguered titan is still racking up losses. It’s no closer to resuming 737 Max deliveries to China, a milestone critical to improving its finances. The final two Max models still haven’t won regulatory approval.

      -> “Right now, investors don’t believe them,” said Ron Epstein, an analyst with Bank of America. “There’s a crisis of credibility in the investment community that they have to bridge.”

      Boeing didn’t miss Wall Street’s consensus earnings estimates from July 2016 through January 2019 — but has only met or exceeded them three times since then. The planemaker’s finances and operations were battered when the Covid pandemic flattened airplane sales shortly after Calhoun took over as CEO in 2020, and more recently it has grappled with shortages of engines and skilled workers.

      The company’s shares have dropped 29% this year, compared with an 18% drop in the S&P 500 index. The stock is headed for its third consecutive year of declines. Since the end of 2019, Boeing’s market value has dropped by more than half, to $85.7 billion — just below its archrival Airbus SE.

      Last week, the company revealed a surprise, $2.8 billion defense charge and lowered its 737 delivery target. The CEO has been criticized for his hands-off management approach, and frustrations have grown as rival Airbus widens its market lead.

      For analyst Rob Stallard of Vertical Research Partners, the company’s woes are like a “whac-a-mole” game, with fresh problems cropping up as others are resolved. “*Given the track record to date, particularly on forecasting additional defense charges, we continue to be wary of whatever outlook Boeing provides*,” Stallard wrote to clients last week.

    • “..As of today, deliveries for October:
      B737-8: 23 (roughly half of which were whitetails)”

      BCA are clearly “slaying”, as the young people say. 😉

  9. Haven’t we been told for quite some time now that they’ve been building 31 MAXs per month?

  10. Wish to thank Scott for peeling the onion on these detailed financials, especially the cash flow. It’s not the rosy picture Boeing always tries to spin. Friends that still work there tell me Boeing presented to the employees that sure we’re losing money, but hey look at that great cash flow!
    I also appreciate the many great commenters providing good factual data. Especially the difference between BA and AB.

    But the elephant in the room is that Boeing is losing their ass on fixed price bids for one simple reason…. Their productivity is lousy and waste is too high with rework on all products and programs. They’ve become extremely inefficient. For example, FOD, this has been a problem forever, yet they still continue to experience major rework in this area and spending millions to mitigate.

    No one is writing about this specific rework cost or admitting to the root cause of the obvious problems. Bryce mentioned that investors are going to be visiting Boeing production facilities, but they won’t be privy to any of these issues…. Just more smoke and mirrors.

    How’s that PC + D&I work force working out for them now?

    • “How’s that PC + D&I work force working out for them now?”

      What does that have to do with the current situation in which Boeing finds itself? Any attribution to issues with the workforce that led to Boeing’s current predicament should focus on senior management hostility to the rank and file purely as a negative to the mantra of shareholder value and leadership’s failure to develop and execute a long term plan to ensure workforce capability for future airplane development.

  11. As noted before, I worked for a Financial Institution that got caught up in a AK bust that was Prime Mortgage like (they were a victim as were many other entities like them, it should be noted none of those Local Financial outfits up here were hit with Prime Mortgage debacle, they had learned the lesson)

    Upshot was that the House Loans portfolio was dragging the financial down each quarter. They made the decision to write all the problem loans off once and for all and get it over with. The still recovered some of those loans over time (some paid and some re-possessed they sold as the market got better).

    So Boeing writing that off is a good move and at least their financial guy gets it. Chronic bad news is depressing. It gets that part of the pain done.

    Its what Boeing does with the situation going forward that counts. In that regard I have negative faith in Calhoun.

    And I too tip my hat to Scott for the explanation. I was a tech/engineer (and a grunt laborer early on) as lot of the financial area might as well be Klingon for me.

  12. What happened to the young talented Russian Boeing engineers? Are they, unemployed, emigrating to the US, or conscripted for processing into burgers?

    • @Grubbie

      Good question. Boeing closed the Moscow design center after the Ukraine war started. Putin no doubt closed all emigration. Your point about conscription is sadly correct.
      I’ve been to that center, there was many good people employed there.

      • You are a bit wrong.

        Almost everyone who wants to leave Russia and has enough money can leave Russia.

        Border control does not let out of Russia only those who have already been called to arms but is hiding from the authorities. There are thousands of such people but not hundreds of thousands.

        The main problem is immigration. Now hundreds of thousands of such Russians who left their country in 2022 live in countries like Turkey, Armenia, Kazakhstan simply because they can enter there without a visa.

    • Can they get a visa?
      Aren’t many airlines forced to withdraw from serving Russian flights due to all those sanctions??

      • @Pedro

        No visas. US closed the embassy and consulants.
        Yes, most airlines, on their own, have sanctioned operations to/from Russia.

        • And the Baltic countries like Lithuania have closed their borders to Russians even those with Schengen visas

  13. What does this have to do with anything about their current situation you should ask?

    When companies focus solely with hiring/promoting based on gender and/or race but not experience or skill set, it has EVERYTHING to do with their current situation.

    Boeing requires a drug/alcohol test for getting hired, but once in, the testing is no longer valid. Of course this has nothing to do w/gender or race but has everything to do with safety and quality.
    Something to think about.

    I appreciated your points about the executives/sr management and you are spot on.

  14. -> “During the first nine months of 2022, net cash provided by operating activities was $0.1 billion.”

    Oops. Where’s the poster who pretends BA is head and shoulders above AB in operating cash flow & FCF?? The emperor has no clothes although some still insist otherwise.

    • Well at least the commenter who claims AB are overstating
      their production and delivery numbers is here, though he still
      (typically) has not supported those claims.

      • Bill7:

        Actually I have and then when the echo chamber starts it matters not, the echo chamber rules all.

        So question is if we don’t go by facts then its merely opinions and you can get 7 billion or so of those. Shrug.

        • No, the “echo chamber” does not rule all.

          You made claims in a recent thread you have not supported- period. If you can support your repeated claims that Airbus is overstating their production and delivery numbers, please provide links to solid sources for the readership here, so we can all be the wiser.

      • Yes I do . Its obvious for those who can do simple arithmetic, maybe some cultures its not important

        the ‘target’ is around 700 for full year. so that means say 260 over 3 months when the previous average quarterly delivery has been 145 (based on official results of 437 for 9 months)
        Thats means 115 more planes in the ’13th month’ inspaite of the CEO saying the supply chain challenges arent getting better. Not to mention financial headwinds which impact the closing deals for airlines to take delivery…on time !

        I dont care whether Airbus meets its numbers of not, Im not the one throwing rose petals around their ‘targets’ but prepare for custard in face in another 3 months time

          • Duke:

            I will add in a take from the Airbus 3d quarter where they continue to talk about 2024 rates but not 2023.

            My take is if you have to lie about your numbers by using the wing join point vs delivered, is there something going on that is being hidden.

            I would hope Airbus would not stoop to Calhoun’s level but the overall number is absurd and the A320 series production keeps calculating out as 37-38 a month delivered.

            So, Boeing deserves its knocks but honesty says Airbus should be held to the same standard.

          • Forgetting your own comments again Bill?
            ‘ One commentator ….AB are overstating their production and delivery numbers is here, though he still (typically) has not supported those claims.’

            Thats why I provided my lucid answer on the famous ’13th month’

            But Im happy to repeat my previous claims when others comprehension is lagging. I see that not every country uses the Gregorian calendar so we must allow for more cultural diversity too.

          • Looks like certain commenters never heard of a non-linear function…😏

          • They probably have no idea what the rate of change is about

  15. Factually for the 9 months Boeing has delivered 30 x 737 per month. That of course (factually) factors in the ones being brought out of storage so it would be wrong to call it rate.

    Equally, for the quarter, delivered x 737 is 29.333. That puts it at a very close to rate 30 delivered.

    Factually in the last 3 months Boeing has delivered 9 x 787s. Again for the factually impaired, that is not rate its delivered as there is maybe rate 1 off the line and the stored 120.

    But also factually it was stated (by a good source) that they would deliver 4 and then nothing. Obviously that was incorrect though a reporter is only as good as their sources and not all those are reliable or accurate for whatever reasons.

    On the other hand, Airbus also has non delivered and supposedly built but are missing engines (about 10 x A320 series) and an unknown number for other parts. So Airbus can also have deliveries that are not rates.

    • Dont forget 737 production also includes about 1 P8 per month so makes it more like 31 pm.
      monthly totals vary slightly depending how how many weekends per month and holidays etc. Much better to consider the production rates for a 3 month period which some say is 90 tops and can be just under

    • There are lots of MAXs in inventory that are more than 3 years old.
      I doubt that any A320/A321 gilders are more than 2-3 months old.

      Which of these 2 groups is easier to deliver?

      • Both have near zero airframe and engine hours whether parked 2 months or 2 years.
        Many airlines are bringing their own planes out of storage now that their traffic has picked up. Are they too worth a lot less because they had 2 years plus in storage . Dont think so.

        They are business assets not supermarket staples

        • Airframes go by cycles and hours (cycles tend to the single aisle and the hours to the widebody)

          No issue that rates vary a bit, but by the time you are into the 3rd quarter, that gives you 273.5 days of data (is it a leap year?)

          And the adder is, I continue to list delivered and that is where the numbers for the financial returns are based on, not how many you would like or were assembled to the wing box.

          So not, it makes zero difference if they are white tails, Chinese ordered or off the assembly line as far as delivered.

          That applies to Airbus as well when they had something like 30 of the A320 type sitting there without engines (down to 10 supposedly)

          In theory its possible Airbus can get to 50 a month before the end of the year (right Mel). But Homey don’t think so.

          • @Bryce posted an article it took thousands of engineer hours just to get a parked aircraft able to fly to a shop for a thorough maintenance that would take weeks to complete.

            Who should I believe? A poster with zero experience??? 🤣

          • @ Pedro
            That was indeed my point.
            Looks like some read very selectively.

          • The money shot

            -> Weirdly, after spending 30 minutes talking about quality, safety and culture, Boeing’s CEO David Calhoun ends with: “I want nothing more than to return money to you.”

          • -> Boeing’s Deal notes that it takes *MORE hours to inspect and rework a stored 787 than it takes to assemble each one the first time around*.

        • @Duke

          You’re ABSOLUTELY wrong on this statement of near zero hours/cycles.
          We in the airplane business don’t use this ‘engine hours’
          Cycles is what’s very important in the engine world life limited components.

    • No sources from TW as usual, while he yammers on about “factually”..

      Please provide sources from your claims.

      • Bill7:

        Nope, I have previously and I am not going to repeat it for you. Either read the posts when the info is provided or look it up.

          • Pedro:

            Its easy to post a link but when someone refuses to read a submitted link and then asks you to do so again, its a waste of time.

            I grew up in a world where you were expected to exert the effort before asking for help and if you did not, you got no help.

            So now I won’t enable Bill7, or you or ……..

            Others yes as the actually value a discussion and data.

          • @ TW
            Translation: you have no link, and you’re fudging your way out of it.

    • This comment is bafflegab, with that commenter deliberately
      conflating production rates with delivery numbers.. muddying the
      waters with care, he is.

    • @ TW said:
      “But also factually it was stated (by a good source) that they would deliver 4 and then nothing. Obviously that was incorrect though a reporter is only as good as their sources”

      Depends on what Jon Ostrower was referring to. Most of the delivered 787s were whitetails — we haven’t yet reached 4 new-production frames delivered (the current number is 3, the youngest of which is 0.3 years old)

  16. “It’s difficult to get a man to understand something when his salary depends on not understanding it.” -Upton Sinclair

    Let’s have a look at those paid aircraft deliveries 2022 for Airbus v Boeing in two months, shall we?

    Adding: I wonder what Boeing’s making on those 737 white-tails and 787 re-works, myself. “$13 Billion goldmine!”- or something else?

  17. I’m closing comments. Too many of you are violating Reader Comment rules prohibiting personal attacks.


    • @ Scott
      It looks like you forgot to actually close the comments after your post…

        • To me, it looks like a firm intention, rather than a warning…but you could be right.

    • Yes Scott, the desire to “crush” someone on line is incredibly tiresome.
      Also remember that you don’t know the state of mind of your victim, they could well be in a really bad place mentally. That might also be the reason that you got an aggressive response in the first place.
      Rise above it chaps and be better people

  18. The Starliner program is now a completely meaningless thing.

    Once it looked logical to have two independent crew ships, Crew Dragon and Starliner. Now Boeing loses a lot of money just to fulfill the government contract.

    No one can just stand up and say it’s time to end this tragedy.

    After the retirement of both the ISS and the Atlas V rocket, there will be neither the target nor the vehicle to launch the Starliner. This will happen very soon in terms of the space industry.

    • Calhoun is not the only one delusional though I admire how Lockheed threw in the towel.

  19. From Dominic Gates

    -> Ahead of Boeing’s investor conference on Wed., three MAX 7s parked lakeside at the Renton plant
    13 completed MAX 7s are parked around the factory
    Certification delayed until at least next year, so no deliveries


    -> Some of those stored -7s had already rolled out in April/May timeframe. Some already got painted all white and flown out to Moses Lake.

    -> Part of Boeing’s ploy: Build it and they will come…around. Absolutely sickening.

    • Wouldn’t it be wiser to put more effort into building -8s and -9s, so as to generate actual revenue?
      BA evidently thought that certification of the -7 was a done deal.

      • @ Bryce,

        Maybe Boeing just does not have the choice, as customers have made pre-delivery payments to reserve the production slots.

    • ‘Some of those stored -7s had already rolled out in April/May timeframe. Some already got painted all white and flown out to Moses Lake.’

      Painted white?

      IIRC it was LUV and Westjet that had ordered the Max 7 (I also see Allegiant has 30 on order now, in Jan 2020)

      I wasn’t aware that anyone else had ordered the Max 7. Who were those white aircraft built for? This is a very short list…


      Planespotters has the first bunch exclusively going to LUV (and one private).

      Has LUV decided not to take the Max 7? Why wouldn’t you just put them in their colours?

      • Maybe Westjet has also canceled in the meantime? After all, that airline has also ordered -8s and -10s (just recently). Its first order for the MAX stems from 2013 — and the world has changed a lot since then.

        Allegiant may be biding its time and waiting for a super-duper bargain on whitetails: after all, who else might be interested in them?

  20. Some interesting oddballs in the 787 production list.

    For instance, LN 893: Originally allocated to Hainan (NTU), then re-allocated to Vistara (NTU), and finally delivered in October to Lufthansa. Age: 3.3 years.



    Then there’s LN 752: Originally delivered to Hainan in Oct. 2018, returned to lessor GECAS in Mar. 2020, transferred to lessor to AerCap in 2021, initially allocated to Bamboo (NTU), and finally delivered to Vistara yesterday (Nov. 1). Age: 4.1 years.


  21. I’ve been following the investor day over the last hour.

    I’ve seen David Calhoun passionately, close to emotionally, trying to convince the public Boeing will be all right, has learned and has a good future.

    The CFO basically promising free cash flow will be positive next year, in 5 different ways, ignoring debt, losses and investment requirements. It seems he’s decided, or hopes, investors forget easily and are aware of anything but future cashflow.

    CCO, is a salesman. Saying his portfolio is best, nothing else is needed and recovery is around the corner. Credibility? … Who does he think he’s talking too? (get a trainer & lose 50lbs Stan)

    All together (I left when Defense was presenting) I see a board under pressure, sending out positive messages, but realities showing in their faces.

    Calhoun looking most credible in my opinion.

      • @ Scott
        Please tell us that there’ll be an LNA article with all the news/analysis from the investor day 🤔

        • @Bryce: There will be a series of articles in the coming weeks based on investor’s day.

    • Those who are holding their breathes have no choice but to pick between the expensive 787 and lower cost A330neo?

    • Calhoun is focused on returning cash to shareholders ASAP …. thru’ share repurchases, to pump the shares higher, not long-term competitiveness (it’s gone) or survival.

      • @Pedro: I watched the same talk you did, and I disagree that Calhoun’s was a “focus” on shareholders. End game: yes, but lots comes before that, which was his focus.

        • Scott:

          Speaking out of turn a bit here, I think the intent is what did Calhoun actually mean?

          While I speak only for myself, I do think the conclusion pretty much all have come to is the trust in Calhoun is down around the bottom of the Marianna Trench (hugely negative and like the Titanic, never to get to sea level again)

          This is the guy who was on the board and supposedly did not know what was going on. He was on the board for the fixed priced military contracts and he blames it on fixed price vs execution (most of the KC-46A is execution failures as is the Space Capsule)

          If you can’t do a fixed price tanker you might as well pack it up and go home, and that is reflected in the MAX, 787 and the 777X (all recent, I am not going back to 787 early history)

          I don’t think Calhoun has any choice other than to try to right the ship but once its on an even keel, the history says he will go right back to what caused those issues in the first place. He has a 57 billion dollar millstone he and his like put around Boeing’s neck.

          A company performance is almost 100% based on what the management is. If you have garbage management, you have incompetent execution. And while Calhoun is the latest in a string of bad or worse, based on his past, I expect that out of him.

      • -> The planemaker expects to generate $3 billion to $5 billion in free cash flow next year as it delivers more of its 737 Max and 787 Dreamliner jets, Chief Financial Officer Brian West said. That’s less than the $5.3 billion than analysts had projected, according to estimates compiled by Bloomberg.

        -> “Ultimately, what heavy lifting has been done to change the company to assure what happened before does not happen again?” Epstein wrote


        • How does BA expect to generate this cashflow?
          Looking at BCA:
          – A quarter with 85 deliveries produced a loss of $690M;
          – A quarter with 112 deliveries produced a loss of $650M.

          So, what number of deliveries will produce a profit rather than a loss?
          Remember: $621M per quarter in loan interest…and, if new debt is taken on at higher interest rates, the total interest amount will increase further…

          • Hey, they’re so far net-losing money on every delivery,
            but they’ll make it up in volume. 😉

            One commenter here said that that works (not me).

          • @ Bill7
            It was Bubba2 who gave us that prize quote 😅

        • The company said it expects to secure certification of MAX 10 planes by late 2023 or early 2024.

          Reality is BA’s mgmt can talk, not execute:
          The company last month predicted it would deliver 375 MAX planes this year, lower than a July target of “low 400s.” At the start of the year, it had planned to deliver about 500 of the single-aisle aircraft.

          If the mgmt missed their own short-term target so badly, why should anyone take their pie in the sky plan at face value??

          • So BCA started out saying they’d deliver 500 MAXs
            this year; let’s see if they actually get to, say, 350. Maybe they will.

            The other guys anticipate delivering around 700 aircraft this year, I think.

          • Current prediction is to deliver (not mfg) 375 by the end of this year.

            The caveat of course is production usually is deliveries but as we are seeing, that is not true between Airbus dubious rate data and Boeing with a backlog of built but not delivered MAX, 787 and of course 777X (though the values of what is in which pot is not even).

        • -> West said he expects that to enable Boeing’s commercial airplanes division to return to being a “cash juggernaut,” generating $6 billion in free cash flow. Together with Boeing’s defense division swinging back to positive cash flow as it works through costly problems with fixed-price government contracts, the company expects to generate roughly $10 billion a year in free cash flow by the 2025-26 time frame

    • From the article:

      ‘Given that Boeing is still sitting on an abnormally high number of aircraft—270 finished 737 MAX planes and 115 787s worth roughly $23 billion—handing them over to customers to hit its free cash flow goal will be “easy . . . even if everything else goes wrong,” analyst Ronald Epstein of Bank of America wrote in a note earlier this week questioning the company’s decision to emphasize the metric.’

      Easy. Yes. Absolutely. Aircraft just flying off the shelves. Easy breezy…

      • Frank:

        And I thought airplanes were supposed to fly off the runways?

        Yea its a good laugh, fixing already built aircraft let alone unpickeling, hmmm

        Last I heard it was better to build them and deliver them but…..

      • “..handing them over to customers to hit its free cash flow goal will be “easy . . . even if everything else goes wrong,” analyst Ronald Epstein of Bank of America wrote..”

        I about lost my lunch reading that quote from Mr. Epstein.
        How has that little project he mentions been going, so far?

        Paid to Not Understand

    • From the article:

      ‘Given that Boeing is still sitting on an abnormally high number of aircraft—270 finished 737 MAX planes and 115 787s worth roughly $23 billion—handing them over to customers to hit its free cash flow goal will be “easy . . . even if everything else goes wrong,” analyst Ronald Epstein of Bank of America wrote in a note earlier this week questioning the company’s decision to emphasize the metric.’

      Easy. Yes. Absolutely. Aircraft just flying off the shelves. Easy breezy…

      • Poor Mr. Epstein is evidently unaware of all the effort/costs involved in getting inventory ready to deliver…

      • Another observation is that Boeing probably already received 30-50% of the inventory values as progress and pre-delivery payments. Reconstructing the 787s will be probably expensive and putting back stored 737MAX into service will also cost some money. On top of that, customer compensations will likely result in significant discount, resulting in lower final delivery payments. Such that, Boeing will likely only received a fraction of the 23 Billion worth of inventory as free cash flow.

        • I would say the net free cash flow will be only 30-40% of that figure…

          • Jacques:

            A translation error on reconstructing ? Fixing would be accurate.
            IE fix the shim issues and the rest is good to go.

            You are spot on that its no where near all free lunch. There was the original mfg costs in materials and labor and there are possible penalties as well as cost to fix (more on the 787) as well as the get out of storage costs (you don’t have to pickle a plane if you deliver it after is made of course so add a pickle cost in and the un-pickle cost)

            The MAX has paid a lot of penalties, I don’t know about the 787 as at the time it worked out for a lot of airlines to not take them.

            As I understand it, Airbus forced airlines to take them.

            But Boeing had no choice though it may have worked out in that aspect of no foul penalty wise.

      • Previously Ron Epstein mentioned:
        -> “Boeing (NYSE:BA) was once a darling brand in the A&D [aerospace and defense] sector, but it is now largely considered as a turnaround tale, a probable value play, or perhaps a value trap.”

        -> [Epstein] highlighted fourteen areas in which Boeing (NYSE:BA) might enhance its operations, one of which was a shift in the corporation’s culture to reemphasize the significance of engineering.

        -> “The corporation needs to show to the world and the industry that it is an engineering powerhouse.” “Maintaining consistent levels of research and development is the cornerstone for producing industry-leading aircraft ahead of competitors and recruiting excellent people,”

  22. I’m interested in hearing much more about Boeing’s “potentially autonomous” aircraft;
    perhaps it will be nuclear fusion-powered, as well.

    • Well, the company already has experience with aircraft that could fly “autonomously” — though, unfortunately, the flights in question weren’t level…

      • Good point, Bryce! Too bad the pilots and crew and (especially) 346 passengers didn’t know- alas.

  23. I am interested in why there is reports for 2024 for the -10 , or more accurately why the -10 is taking so long, its not that much changed.

    Or is it simply failure to supply the paperwork they are supposed to.

    • The FAA is asking for lots of SSAs — which suggests that the FAA is not satisfied that the plane is safe…

      • Bryce:

        Dang, if I could just get someone to put a million in my bank account cause I thought so.

        Or maybe its just proving its safe ? Nahhhhh

        • “Or maybe its just proving its safe”

          Well, the recent NBA article showed us that the -8 appears to be far from “safe”, so why should the -7 be any different?

      • The gap between Boeing’s soaring rhetoric (today’s, for example) and its realities like the pedestrian one you pointed to really makes one wonder..

  24. A few notes from the BA Investors Day:

    No new aircraft until there is an engine that can deliver 20% savings. 2030.

    So they are sticking with the Max, 777X & 787.

    Financial results like those pre-pandemic, will be achieved by 2025-26.

    I’m guessing they are talking about a return to 2018, when they had record results and had $13.6 Billion in FCF. Incidentally:

    “For the full year, the company repurchased 26.1 million
    shares for $9.0 billion and paid $3.9 billion in dividends.”


    I’ve looked through a few of the posted articles in here and what struck me was the focus and mention about Cash Flow multiple times (I guess it’s the buzz word Investors want to hear) but not too much about profitability.

    Yes, they’ve talked about paying down debt, but the past ~4 years at BCA has cost them more than $28 billion in losses, which was covered by taking on debt.

    That debt has to be repaid and then they expect to make more money, to be able to return cash to shareholders.

    BA needs a good 4 years of 2018 levels to cover the losses of the 737Max, 787 & 777X (not even touching Military & Space). They have huge debt liabilities, some of which are starting to come due.

    As soon as (if) they hit that point, you know what they’re going to do? Payouts to shareholders.

    • I think the 777X will get axed : too much cost, delay and uncertainty for too little return.
      Better and more cost-effective to concentrate on the 787, and introduce the HGW and F versions.

      I also wouldn’t be surprised if the MAX-7 and -10 don’t survive: makes much more sense to concentrate on what is already certified, and (try to) convert -7/10 orders to -8/9.

      • Well we get to see if you are a prophet or not!

        Or to quote that most famous of Americans, Its Tough To Make Predictions Especially About the Future.

      • “I think the 777X will get axed : too much cost, delay and uncertainty for too little return..”

        They’re sure slow-walking that thing, and I have doubts that
        that’s purely because of certification issues. An interesting

      • Jesus @Bryce

        That would leave the Max 8 & 9, plus the 787 against everything that Airbus has. Huge gaps in the product line up. Lower revenues and the clean up on the balance sheet would take even longer.

        Less pressure on the competition. This would be absolutely terrible, all around.

        • Beggars can’t be choosers.
          BA’s finances, and the state of its programs, point toward a much more modest future.

          The company is in a debt pit, and three planned models are in a certification pit.

          • As I stated 2 month after Ethiopian MAX the end of the story is “chapter 11” despite being too big to fail an due to other mishaps :=((

            EX GE Calhoun is familiar with this and inherited a similar situation

    • Frank:

      My take is the fear is they will not only do that but sooner.

      If I recall the discussion right, they paid a dividend into the loss period (and or borrowed 13 billion to do so).

      I don’t think Red Flag covers it. So yea its a fair issue/question or even convicted of guilt to question Calhoun.

      What he says that can be taken two ways and a responsible CEO would mean it, but Calhoun? Nope. (granted he is the last in line (so far) of those who did the same that put Boeing where it is today.

    • What would FedEx pick since there’s no NMA?? I bet on A330F rather than an expensive (and uncertain) 787F.

      • Wasn’t it just a few weeks ago that there was a “NMA-F” getting lots of press? Confusing.

        The A330F is a likelier candidate for FedEx- cheap, reliable, efficient enough, and available- than a 787F; the latter seeming to be vaporware until shown otherwise, given its fuselage construction.

  25. I’ve said it before, but it’s the breezy complacency from Boeing “leadership” flying into the face of reality that’s truly stunning.
    The “analysts'”, too..

    My sketchy hypothesis about a bigger, well-coordinated event occurring, post-1Q 2020, might not be wrong in all respects.

  26. Wouldn’t it make sense for BCA to develop, say, a single-aisle
    that’s ready for a more efficient later engine, concurrently
    with a ramp-up of today’s best available propulsion?

    Boeing needs to show they can effectively implement *any* relatively simple project- let alone a Digital-Design, VR Multi-Sourced, Autonomous Aircraft..

    smoke and mirrors / not buyin’ it, but mebbe carbon-fiber AI™ robots will prove me utterly wrong.

    • Boeing knows what the engine choices look like and what the efficiency is.

      But GE and PW are not going to build an engine unless there is a commitment. Not sure GE could make anything better than LEAP but PW has the experience with GTF to build a next gen one that is an improvement.

      I don’t see 20%, at a guess maybe 10% so a phenomenal amount of improvement would be required from the airframe.

      Ironically the MAX matches up well with the A320NEO. Is it worth 15 billion to match Airbus? (and that does not count the current debt)

  27. Actually, TW has informed us that since he “reads hundreds of industry articles every month”, he can’t be bothered to post
    links, or accurate quotes with their sourcing. Most everyone else
    does as a *matter of course*- including myself. It’s the basis of honest online discourse.

    • I also “read hundreds of industry articles per month”…and my posts here are replete with links 😏
      Do you recall how “a certain commenter from the past” referred derogatorily to “linkers”?

      • ..often including a juicy, money-shot quote, which is appreciated. 😉

        Yes, we all read many articles each month- which
        makes it super-easy to paste a snippet and link, for the *reality-based* community.

      • “..Do you recall how “a certain commenter from the past” referred derogatorily to “linkers”? ”

        Ah, it took me a minute. They resemble one another in certain ways, do they not?

        Gish-gallopers, both:

        > The Gish gallop is a rhetorical technique in which a person in a debate attempts to overwhelm their opponent by providing an excessive number of arguments with no regard for the accuracy or strength of those arguments. <


  28. TransWorld said, on November 2, 2022:

    > Current prediction is to deliver (not mfg) 375 by the end of this year.The caveat of course is production usually is deliveries..<

    Why do you bring in "mfg" here, when everyone else in the thread is talking
    about one thing only: Paid Deliveries of Aircraft.
    And no, production is *not* "usually deliveries”; they are two separate things.

    Production = Production, only.

    Deliveries = Deliveries, only.

    I look forward to seeing Airbus’s paid deliveries for 2022 as compared to their estimate of 700 aircraft,
    and the same metric for Boeing. The latter company claimed they were going to deliver 500 MAXs this year.. then around 400.. then 375.. We’ll know in less than two months.

    Please stop muddying the waters, TW. Thank You.

  29. > The CEO also squelched talk that Boeing is working on a so-called “clean sheet” design similar to the midrange jetliner that he canceled soon after taking the top job in 2020. “They’re not typically invented to fill a niche or some of the product gap you have relative to portfolios,” Calhoun said of all-new jet programs. Airbus has claimed about 60% of the narrowbody market due to the success of its A321neo …

    -> While US planemaker doesn’t have an offering that matches the Airbus jet’s range and passenger capacity, *Calhoun indicated he isn’t angling for the 50-50 split* that the two manufacturers traditionally shared.


      • > Dominic Gates
        Boeing leadership “coming-out party”:

        * Back to building 800 planes a year and gushing cash by 2026

        * No all-new airplane until mid-2030s

        * Still clearing stored MAXs and 787s thru 2025 <

        Good to know.

        • Haven’t we been recently told that Boeing was “preparing
          to launch” a NBA (choose your own acronym) ? It sounds to me like that program’s launch- if it happens- is at least ten years away.

      • -> Boeing on Wednesday lowered Wall Street expectations on jet deliveries and the cash Boeing will generate in the next couple of years while offering hope of a full recovery in three to four years.
        In an attempt to steady the expectations of Wall Street, Boeing CEO Dave Calhoun on Wednesday projected that recovery from the company’s challenges won’t come until 2025 or 2026 — and that only then Boeing will generate the full gusher of cash it’s been projecting but that has been slow in materializing.

        -> It was left to Boeing Chief Financial Officer Brian West, speaking after his boss, to lay out some of the nearer-term pain before that promised recovery. West said free cash flow next year will be between $3 billion and $5 billion, considerably below Wall Street expectations, which before the most recent quarterly results projected a result in the range from $5 billion to $8 billion. And he said Boeing’s defense and space unit, which in the third quarter wrote off a massive $2.8 billion on troubled fixed price contracts — most substantially on the KC-46 tanker and Air Force One programs — will continue to be a heavy cash drain in 2023, on the order of $0.5 billion to $1 billion.

        -> “At the last moment, our quality management system caught two defects in the fuselage,” Deal explained. He said the defects were discovered at Spirit AeroSystems, which makes the 737 Max fuselages in Wichta, Kan.

  30. ” *Calhoun indicated he isn’t angling for the 50-50 split* that the two manufacturers traditionally shared.”

    thank you for the link, and quotation. 😉

    That’s quite an interesting admission from Mister Calhoun I think. One that fits with my unusual hypothesis, for now, though
    I’d like to hear his exact words.

    Adding: so why does Mr. Calhoun one day talk about a “NMA Family”- including a freighter- then a short time later say there will be no
    NBA (or whatever- I lost track of the acronyms) until 2035 at the soonest?


  31. A new company with Embraer (Embraer 49.9%/Boeing 50.1%) could be an E3 with
    120/150/180 PAX pilot until 2031.

    Development and final production remains completely in Brazil. Suppliers from the USA and worldwide. Maybe also for LEAP.

    Each quarter gives Boeing 250 million US dollars from 2032. Makes $ 9 billion. A production of 30 units is sought per month.

    With a possible profit per aircraft of $ 10 million, $ 5 million remain for Boeing. Profit will be made from the 2000 plane. Service is made via the global Boeing network.

    Such an aircraft would be better costs compared to a MAX7 at 12 to 18%. We see on the A223 how well this plane is accepted.

    The certification is made in Brazil.

    Would you do this?

  32. “….But positive cash flow was the metric analysts focused on….
    That right there is the source of Boeing’s disease. How does one maximize cash flow NOW….cut costs to the bone, cut R&D, cut employees, outsource work to cheapest least qualified vendors, etc, etc.
    The downside of the cheaper is better mentality: about once per decade they have to drop $20 billion to clean up a major disaster (787 development, Max ).
    Bottom line, management can maximize stock price by risky cost cuts that threaten quality and safety….the stock does better if Boeing drops $20 bil cleaning up a disaster than if they spent a few bil doing things right in the first place.

  33. Curious.
    BA wants to get 787 production up to 10 per month in 2025-2026 (see link # 1).
    However, current unfilled (i.e. undelivered) orders stand at just 477 (see link # 2). There are about 100 in the parking lot, so that leaves about 375 to be built. That’s just 3 years of production at rate 10 p/m — less, actually, because there’ll also be production (at a lower rate) between now and 2025. So, the line will run dry somewhere around 2027. And then?

    BA is evidently betting on selling lots of 787s in the meantime. Interesting, seeing as net 787 orders in 2022 amount to just 14 planes so far.



    • I am suspicious that Boeing is just trying to improve cash flow by any mean possible…

      That being said, if the 777X is cancelled, there will be likely a small surge of 787 orders resulting from conversion.

      • I certainly agree with your first sentence (cash flow).

        I agree to an extent with your second sentence (777X order shift): if/when the 777X is cancelled, Qatar will have no choice but to migrate to the 787, but other airlines in the 777X club are already A350 operators, and may decide to go for that aircraft instead — especially in view of the recent A350 interior space/capacity increase and the upcoming freighter version. I suppose it all comes down to how one defines the “small surge” to which you refer.

        Nightmare scenario for BA: many 787 orders can be cancelled without penalty, due to the delay caused by the long delivery hiatus. If there’s a longhaul downturn (recession, inflation, high fuel prices, CoViD), then there may be a painful erosion of the 787 order book. Even worse, BA will also have to repay all the deposits for those cancellations.

        On the other hand: 2 commenters here (I won’t name them) foresee a very rosy future for the 787, with 1000 new orders in the coming years. Not sure what this is based on — “fantasize” might be a more accurate verb than “foresee”.

        • @Bryce


          This is off the BA website. 413 after ASC 606. They’re down to building about 300.

          From their financials:

          “At September 30, 2022, $9,015 of 787 deferred production costs, unamortized tooling and other nonrecurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $4,648 is expected to be recovered from units included in the program accounting quantity that represent expected future orders. We expensed abnormal production costs of $925 during the nine months ended September 30, 2022.”


          So they project to cover $9 billion from the current backlog (all the inventory sitting there and the unbuilt ones) PLUS they are going to cover another $4.6 billion in margin (not gross sales, this is revenue less expenses) in future sales.

          If you extrapolate – that means another ~200 Dreamliners ordered (~400 to cover $9 billion -> 200 to cover another $4.6 billion).


          On flipping orders:

          If I am an airline (Lufthansa for example; which ordered the 777X in 2013) and expected to have those jets in my fleet already, only to be told 2025 at the earliest – then to be told to choose another, because it’s not being made…

          …I might be a little miffed, especially after plunking down deposits and progress payments.

          While I respect your opinion, they can’t let this happen. It would be devastating to BA. How does anyone trust them with their future fleet plans, after being shucked and jived so many times?

          • I wonder if the other guys are getting many feelers for the timeframe of A350 delivery slots.

          • “While I respect your opinion, they can’t let this happen.”

            Frank, I also respect your opinion (bless you), but BA is now so far up Sh#t Creek that they just may have to let it happen, whether they like it or not. There’s a huge rat under the 777X carpet, and it’s not going away. Offering low-margin 787s as a switch may save face but will be bad for the balance sheet.

    • Further to my comment above, of the 787 deliveries that have occurred since the resumption of deliveries in August, only three appear to be “new build”, i.e. line numbers 1129, 1130 and 1131. All the rest appear to have been from inventory.

      3 new line deliveries in 3 months –> line production rate of 1 p/m.

    • Is it realistic for BA to plan the MAX production at 50 per mth??
      Last year BA received only 375 MAX order; this year, it’s 333 (up to Sept. I believe).

      • Again, I assume that Boeing is just trying to improve its cash flow by any mean necessary, not long term sustainability.

  34. “Wall Street Doubts If Boeing Can Hit Ambitious 2025 Targets”

    “(Reuters) – Supply pressures may hinder Boeing Co from making about 50 MAX jets per month at least by 2025, from about 31 currently, according to analysts, after the planemaker on Wednesday laid out a plan to speed up its recovery from successive crises.

    ““We think there will be a healthy level of skepticism as to whether Boeing can actually hit these targets, especially over the next year or so as supply chain issues are likely to remain a challenge,” Vertical Research Partners analyst Robert Stallard said.”

    ““On the supply side, (production targets) will require a significant ramp up from the castings/forgings suppliers, which was a challenge even prior to the pandemic, and remains even more of a challenge today,” Credit Suisse analyst Scott Deuschle said.

    “Deuschle added that he will take commentary from the company on making about 50 MAX jets per month “with a grain of salt”.”


  35. Scott slapped my on the hand (rightfully) for a cheap shot on the CCO. I feel a revitalization of the US Aerospace Industry should be on the agenda in Washington DC. Maybe Boeing feel it coming & that’s why they are moving there.

    IMO the current situation is mostly self-inflicted, not a result of COVID-19 & the MAX drama. A decade of short term profitability (free cash flow, huge stock buy backs for raising stock and linked stock price based executive bonusses) and using their cloud to push aside slow, bureaucratic regulators. All proved real bad strategy from the highest level.

    Realistically, while seeing what was happening, who was brave enough to raise their hand when stock, backlog & deliveries, dividents and contributions were soaring? https://s.thestreet.com/files/tsc/v2008/photos/contrib/uploads/d2d37b38-24bb-11e9-82b4-ff5cf7f24320.png

    McNerney’s / Muilenberg’s generation cashed, draining the company, while everyone (most analysts, politics, public) were cheering on the sideline. Now everybody feels misinformed, dumb, chooses to forget, look forward.


  36. I am just adding an observation/comment that has not been explicitly raised, to my knowledge, before on Leeham news. Since Boeing uses program accounting, the inventory on the balance sheet also includes the “deferred production cost” and the “unamortized tooling”, which is about 20 billion for the 737, 787, and 777X. However, this amount is just an artificial accounting quantity sitting on the balance sheet because of the unique accounting technique used by Boeing. That 20 billion of unrecognized cost also results in an overestimation, by the same amount, of the net equity compared to that of a classical accounting approach.

    • Hello Jacques
      Very happy that you are also concerned by the deferred production cost issue
      Actually i have been looking at this point for a long time, and raised this issue several times in Leeham News, just two recent :
      – 1/end of January 2022
      “Very strange! 787 deferred accounts went down by 3,5Bn$ in the 4th quarter…. In good years with 10 deliveries/month 787 they go down by 1Bn$ each quarter. the 3,5Bn write off that is annonced to day “to cover compensation to airlines”
      is it new money put aside?..
      Or creative accounting?
      dubious creative accounting is probably the speciality of the recently appointed Lynne DOUGHTIE.
      It is worth knowing a few things about Lynne DOUGHTIE on the board of directors.:: she comes from KPMG (ex GE auditor).
      From https://www.goingconcern.com/lets-speculate-about-why-lynne-doughtie-is-leaving-kpmg/ “And let’s not forget that KPMG might be replaced after more than 100 years as external auditor for General Electric, which was just accused of perpetuating a $38 billion accounting fraud.” the ex GE Dave Calhoun did not select her by chance.”
      2/and a few days ago
      “Just one additional point: nobody mentionned the deferred 787 costs!
      It is obvious that these 14$bn will never be recovered.
      Expect a biggish depreciation sooner or later”

      • In that specific case, it was a write-off. So basically, Boeing had to reduce its inventory (an asset) on the balance sheet by 3.5 billion. At the same time, Boeing had to recognize a charge (an expense) of the same amount on the income statement. This extra expense in turn reduced net profit and thus retained earnings (and thus net equity).

        So in a nutshell, both net equity and asset have been reduced by 3.5 billion (with liabilities unchanged) by this write-off.

        • thank you Jacques!
          But why this convoluted accounting method through the deferred accounts?
          ” to cover compensation to airlines”? could be done in a much more simple way…
          Really looks like they tried to write off part of the deferred accounts in a discrete manner.
          And we agree that most of the remaining 14Bn will have to be written off sooner or later…. but it is better that WS guys are not aware

          • According to program accounting rules, future expected profits have to be equal or larger than the “deferred production cost” as the objective is to use parts of the profits to zeroth the “deferred production cost” at the end of the program. If future expected profits are not large enough, a write-off is necessary. This specific write-off is known as “reach-forward loss”.

            So my understanding is the additional costs caused by compensations to airlines made the program unprofitable based on the current accounting quantity (1500 units, if I remember correctly), so a “reach forward loss” became necessary.

            Also, Boeing had to recognize 2 billion in abnormal production costs due to the reduced production rate of the 787. Cost recognition in program accounting is based on a estimated mean production cost (updated quarterly). Production cost above this mean production cost is “temporary” moved to “deferred production cost”. Once the production cost become lower than the mean production cost, the excess profits is used to reduce the “deferred production cost”. However, producing at a much lower rate affects all those cost estimate. Since this much lower production cost is abnormal, program accounting allow the recognition of “abnormal production cost” accrued over the period which the aircraft is produced at an abnormal production rate.

    • “However, this amount is just an artificial accounting quantity sitting on the balance sheet because of the unique accounting technique used by Boeing.”

      Jacques, let me qualify this by saying in no way am I defending BA, but times have changed.

      IIRC program accounting (PA) was used in the oil & gas industry, as companies had large upfront expenditures, who’s value would be realised over time. From CPA journal:

      “Program accounting is a modified version of percentage of completion contract accounting. The primary difference between contract accounting and program accounting is that program accounting estimates the number of units of a given model that will be sold over its lifetime and estimates the total costs the company will incur to build that number of units in the program, whereas contract accounting bases its estimated costs on the cost to complete a specific contract. A secondary difference is that program accounting recognizes revenues when the customer takes delivery of the product, while contract accounting recognizes revenues based on estimates of the percentage of the costs that have been incurred to complete the contract.”

      The key word here, is ‘estimates’.

      “The theory behind program accounting asserts that with each program or model, production cost per unit will be reduced over time due to volume efficiencies and learning effects. The additional costs on the first units produced should be capitalized and amortized to expense over the units subsequently produced.”

      In BA’s situation, the poop really hit the fan when instead of being able to reduce costs due to efficiencies and learning, they got whacked with an increase in costs due to 1) 787 battery 2) Max grounding 3) 777X certification – to name a few things.

      What it allowed BA to do (especially during good times) was to recognize profits on programs so that…yes, the C-suite boys and shareholders, could get paid.


      ***Here comes the part about the changing world***

      No one seems to care today about ratios, debt load and all that stuff I studied years ago in accounting school. Look at the crazy valuations given to companies, how bad news is downplayed and ‘potential’ is hyped.

      Every time you try to make an educated point about the poor shape BA is in, there will be someone to say “But look at the back log – 5000 aircraft! Look at BA’s projection for the aircraft market – 20,000 aircraft! They’re in a duopoly with Airbus – who can’t make them all!”

      Crazy valuations of companies who haven’t ever turned a profit.


      You’ve gotta dive deep into the 10-Q’s to dig up info on the deferred production balance making up part of Inventory and most people are loathe to do that.

      For each of the three programs BCA has, you also find this:

      737 Max

      At September 30, 2022, $3,012 of 737 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $20 is expected to be recovered from units included in the
      program accounting quantity that represent expected future orders.


      At September 30, 2022, $9,015 of 787 deferred production costs, unamortized tooling and other nonrecurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $4,648 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.


      The 777X program has near break-even margins at September 30, 2022.
      There is a huge amount of estimation going on here. They estimate another ~$4.7 billion (this is margin, not gross sales figures) in sales in the 787 program. Really?

      Yah – inventory is over valued. It’s actually money that has been spent and should be expensed, creating an even bigger loss. It’s kick the can down the road and hope for the best. Calhoun is thinking he won’t even be around when the final accounting comes due; let the next guy deal with it, I have to get mine.

      • Airbus does not use program accounting, neither Bombardier nor Embraer does. So, program accounting is quite unique to Boeing in the aircraft industry…

      • Maybe some clarifications regarding program accounting …

        With program accounting, a program accounting quantity is first determined, i.e. an estimated of the total number of units to be produced over the lifetime of the program. From this accounting quantity, a total program revenue and a total program cost is estimated. From those estimates, a mean “cost of sale as percentage of revenue” is determined by the ratio of the total cost estimate over the total revenue estimate. For example, if total program revenue is estimated to be 100 billion and if total program cost is estimated to be 80 billion, the “cost of sale as percentage of revenue” is 0.80 or 80%.

        Production cost is recognized from this “cost of sale as percentage of revenue” and the recognized revenue. For example, if the “cost of sale as percentage of revenue” is 80% and recognized revenue is 10 billion, the recognized production cost will be 8 billion (resulting in a recognized profit of 2 billion, independently of the actual production cost). If the recognized revenue is 15 billion, the recognized production cost will be 12 billion (resulting in a recognized profit of 3 billion).

        Of course, total program revenue and total program cost estimates change over time. The idea is then to updated quarterly the total program cost estimate and the total program revenue estimate. For those updated estimates, previously recognized cost and revenue are subtracted and the reminder of both quantities is used to compute an updated “cost of sale as percentage of revenue” to be applied forward (simply using the ratio of the updated total program cost and total revenue estimates will result in “cost of sale as percentage of revenue” that have to be applied both forward and backward, i.e. requiring correcting past financial statements).

        Initially, actual production cost will be higher than the production cost computed from the “cost of sale as percentage of revenue”. Any production cost above the recognized production cost remains on the balance sheet under the name “deferred production cost” and, hence, is artificially recapitalized as in asset (this results in an overevaluation of both inventory and net equity on the balance sheet compared to a classical accounting approach). The idea is once production is reduced to a level below the mean production cost compute by the “cost of sale as percentage of revenue”, the excess profit is used to reduce the accumulated “deferred production cost” with the objective to zeroth it at the end of the program and the quarterly update of the “cost of sale as percentage of revenue” should guarantee that.

        Problems arise if the latter is not possible. In that case, a write-off is necessary, such write-off are known as “reach-forward loss” in program accounting. A “reach-forward loss” results in a reduction of “deferred production cost” such that future expected profits now allow zeroing the reminder of the “deferred production cost”.

  37. “..Group President and CEO David Calhoun said that Boeing will not launch a new aircraft program anytime soon. As he said before, he has no appetite to fight the Airbus A321XLR in the middle of the market. Without referring to this aircraft, Calhoun said: “I don’t want to fill a niche, I want an aircraft that is thirty to forty percent more efficient.” ”


    Oh. I want a pony, myself.

    • Time for Boeing shareholders to demand the sell off the commercial division to Musk Seems like there is no ‘fight or will” left in the existing management team or BOD. Wonder where Musk would find a aircraft lavatory sink to carry into headquarters after the acquisition

      • I do not agree with the idea of selling Boeing (or any large entity) to so-called
        “beneficient” oligarchs, like the one mentioned.

        We are indeed living in strange times, when a substantial number of people
        believe that the ultra-rich have the hoi polloi’s best interests in mind, and clamor for their *own enslavement* to the very, very few..

        We’ll see how it goes.

      • Musk is a maniac but not a madman for buying such a monster as BA ))

    • I have been saying for a long that Calhoun would not launch a the NMA. The GE-McD executives who took over the C-suites set the requirements for a business case so high that it’s never met. Calhoun won’t launch cause current technology would make a plane maybe 10% more efficient. Calhoun won’t launch unless the delta is 30 or 40%. But what happens when the competition has a lesser requirement. Once new tech makes a plane 20% more efficient a new plane will be launched….by Airbus. The end result is that Boeing’s product line gets older and older, falls further and further behind Airbus, and its market share dwindles away to nothing.
      But, in the meantime there will be positive cash flow for dividends and buybacks.

      • Thanks.

        No problem for the C-suite. Their golden parachutes are going to be bigger and more rewarding. WN (and Alaska) would continue to be its fan no matter what.

  38. FG: “Boeing’s next new aircraft is years away but 787 updates are imminent: executives”


    This chimes with recent reporting by Leeham with regard to a potential 787 HGW and/or 787 F. I think such a move represents a wise use of the limited resources available to BA, allows an improved square-off with the A350, and is a useful stepping stone toward a potential cancellation of the 777X — all with minimal expenditure of money, time and effort.

    • I believe repeated production delays have forced ANZ (one of the first customers to receive the HGW variant) to push back the timeline of its new 787 by twelve months to FY2025

  39. Is Boeing A Value Trap, Never To Turn The Corner?

    Title of article by Michael Bruno in Aviation week today…

    The answer is YES!

  40. Reuters:
    -> Boeing has embarked on a high-risk waiting game over the next round of jet developments, betting nascent technology will restore it to glory in the 2030s while ceding the upper hand in a key part of the market to Airbus for the rest of this decade.
    -> Industry sources said lifting the spectre of a new jet also cheered Airbus which – like CFM – has most to gain from milking a favourable status quo and avoiding a premature product race.
    -> That marks what some industry sources described as a quiet but decisive U-turn behind the scenes after months in which the planemaker had been informally touting the possibility of a pair of late 2020s jets known as 5X and 6X to block the A321neo.
    -> Ron Epstein of Bank of America said lack of investment historically turns market dominance to “market subordination”.

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