BA 10-K & 10-Q changes, risk factors and insider trading

We derive a significant portion of our revenues from a limited number of commercial airlines. We can make no assurance that any customer will exercise purchase options, fulfill existing purchase commitments or purchase additional products or services from us. In addition, fleet decisions, airline consolidations or financial challenges involving any of our major commercial airline customers could significantly reduce our revenues and limit our opportunity to generate profits from those customers. AirlinesOur customers’ fleet decisions and financial position are also areimpacted experiencing increasedby fuel and other costs, andas thewell globalas economyinflationary has experienced and may continue to experience high inflation.pressures.

The commercial aircraft business is extremely complex, involving extensive coordination and integration with suppliers, highly-skilled labor performed by thousands of employees of ours and other partners,employees, and stringent and evolving regulatory requirements and performance and reliability standards. WeAs havea experiencedresult, our ability to deliver aircraft on time, satisfy regulatory and maycustomer continuerequirements, and achieve or maintain, as applicable, program profitability is subject to experiencesignificant production quality issues, including in our supply chain.risks.

The introduction of new aircraft programs and/or derivatives, such as the 777X, 737-7 and 737-10, takes years and involves significant risks associated with meeting development, testing, certificationcertification, and production schedules. We are followingfollow the lead of the FAA as we work through the certification process, and the FAA will ultimately determinedetermines the timing of certification and entry into service. There have been significant delays on each of these development programs and if we experience additional delays in achieving certification,certification or meeting customer commitments, or if we or our suppliers are unable to timely and effectively address issues discovered during certification and testing and/or efficiently and cost-effectively incorporate required design changes into production aircraft, our financial position, results of operations and cash flows would be adversely impacted. For example, the 777X program, which launched in 2013 and is currently expecting first delivery in 2027, recognized additional reach-forward losses of $4.9 billion and $3.5 billion in 2025 and 2024, primarily due to production challenges, certification and delivery delays, and higher estimated labor and supplier costs. A number of our customers have contractual remedies, including compensation for late deliveries or rights to reject individual airplane deliveries based on delivery delays. Delays on the 737, 777X and 787 programs have resulted in, and may continue to result in, customers having the right to terminate orders, be compensated for late deliveries and/or substitute orders for other Boeing aircraft.

We must minimize disruption caused by production changes, achieve and maintain operational stability and implement productivity improvements in order to meet customer demand and maintain our profitability. We have previously announced plans to adjustincrease production rates on several of our commercial aircraft programs.programs, Inwhile addition,continuing ongoing development and production of new or derivative aircraft. These plans include increasing the 737 production rate to 47 per month in 2026, as well as further production rate increases that will require a new production line. There is risk that planned production rate increases may be delayed or not occur at all if our production health key performance indicators and rate readiness process guided by our Safety Management System do not support increasing production rates or we are unable to obtain FAA concurrence. Similarly, there is risk that planned 787 production rate increases may be delayed or not occur at all. We also continue to seek opportunities to reduce the costs of building our aircraft, including working with our suppliers to reduce supplier costs, identifying and implementing productivity improvements and optimizing how we manage inventory. If production rate changes aton any of our commercial aircraft assembly facilitiesprograms are delayed or create significant disruption to our production system, or if our suppliers cannot timely deliver components that comply with design specifications to us at the cost and rates necessary to achieve our targets, we may be unable to meet delivery schedules and/or the financial performance of one or more of our programs may suffer.

Operational challenges impacting the production system for one or more of our commercial aircraft programs could result in additional production delays and/or failure to meet customer demand for new aircraft, either of which would negatively impact our revenues and operating margins. Our commercial aircraft production system is extremely complex. Operational issues, including deliverycertification and/or certificationdelivery delaysdelays, orquality issues, labor instability, supply chain constraints, defects in supplier components, failure to meet internal performance plans, or delays or failures to achieve required regulatory approval, resultsresult in additional out-of-sequence work and increased production costs, as well as delayed deliveries to customers, impacts to aircraft performance and/or increased warranty or fleet support costs. For example, as part of our plan to improve safety and quality and to address the issues identified by the FAA following the 737-9 door plug accident in January 2024, we slowed 737 production rates and delayed planned production rate increases to reduce traveled work in our factory and at our suppliers. These actions, as well as our recent acquisition of Spirit (Spirit Acquisition), significantly impacted our financial position, results of operations and cash flows. We and our suppliers arehave experiencingexperienced supply chain disruptions and constraints, labor instability and inflationary pressures. We continue to monitor the health and stability of the supply chain. These factors have and may continue to reduce overall productivity and adversely impact our financial position, results of operations and cash flows.

Changes in levels of U.S. government defense spending or acquisition priorities, as well as significant delays in U.S. government appropriations, could negatively impact our business, financial position andposition, results of operations.operations and cash flows.

We derive a substantial portion of our revenue from the U.S. government, primarily from defense related programs with the United States Department of DefenseWar (U.S. DoDDoW) and contracts with other government agencies, including NASA. Levels of U.S. defense spending are very difficult to predict and may be impacted by numerous factors such as the evolving nature of the national security threat environment, U.S. national security strategy, U.S. foreign policy, the domestic political environment, macroeconomic conditions and the ability of the U.S. government to enact relevant legislation such as authorization and appropriations bills. The government may also constrain discretionary spending by instituting enforceable spending caps.

The timeliness of annual appropriations for U.S. government departments and agencies remains a recurrent risk. Congress may fund government departments and agencies with one or more continuing resolutions, which could delay new programs or competitions and/or negatively impact the execution of certain program activities. A lapse in appropriations for government departments or agencies would result in a full or partial government shutdown, which could impact our operations. In the event of a prolonged shutdown, requirements to furlough employees in the U.S. DoD,DoW, the Department of Transportation, including the FAA, or other government agencies could result in payment delays, impair our ability to deliver commercial airplanes or perform work on existing contracts, delays in the certification of new aircraft or otherwise impact our operations, negatively impact future orders, and/or cause other disruptions or delays. There is uncertainty regarding which government functions would shut down or continue operations during a lapse in appropriations, and corresponding uncertainty regarding the extent or magnitude of potential impacts to our operations. For additional information on U.S. government appropriations and budgets, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Additional Considerations – U.S. Government Funding” on page 31 of this Form 10-K.

In addition, there continues to be uncertainty with respect to future acquisition priorities and program-level appropriations for the U.S.DoW, DoDNASA and other government agencies (including NASA),agencies, including changes to national security and defense priorities, and tension between modernization investments, sustainment investments, and investments in new technologies or emergent capabilities. Future investment priority changes or budget cuts, including changes associated with the authorizations and appropriations process, could result in reductions, cancellations, and/or delays of existing contracts or programs or future program opportunities. Any of these impacts could have a material effect on our financial position, results of operations and/or cash flows.

As a result of the significant ongoing uncertainty with respect to both U.S. defense spending and the evolving nature of the national security threat environment, we also expect the U.S. DoDDoW to continue to emphasize affordability, innovation, cybersecurity and delivery of technical data and software in its procurement processes, including the implementation of cybersecurity compliance requirements on the Defense Industrial Base, for which the supply chain may not be fully prepared. If we and our suppliers are unable to adjust to these changing acquisition priorities and policies, our revenues and market share could be impacted.

The markets in which we operate are highly competitive and one or more of our competitors may have more extensive or more specialized engineering, manufacturing and marketing capabilities than we do in some areas. In our BCA business, we face aggressive international competition intent on increasing market share. In our BDS business, we anticipate that the effects of defense industry consolidation, shifting acquisition and budget priorities, the entry and growth of private capital-backed and other non-traditional defense companies, and continued cost pressure at our U.S. DoDDoW and non-U.S. customers will intensify competition for many of our BDS products. Our BGS segment faces competition from many of the same strong U.S. and non-U.S. competitors facing BCA and BDS. Furthermore, we are facing increased international competition and cross-border consolidation of competition, and U.S. procurement and compliance requirements that could limit our ability to be cost-competitive in the international market. There can be no assurance that we will be able to compete successfully against our current or future competitors or that the competitive pressures we face will not result in reduced revenues and market share.

We derive a significant portion of our revenues from non-U.S. sales and are subject to the risks of doing business in other countries.countries, including those related to tariffs, trade restrictions and government actions.

In 2024,2025, non-U.S. customers, which include foreignForeign militaryMilitary salesSales through the U.S. government (FMS), accounted for approximately 46% of our revenues.total revenues and 60% of Commercial Airplanes revenue from customer contracts. We expect that non-U.S. sales will continue to account for a significant portion of our revenues for the foreseeable future. We are subject to risks of doing business internationally, including:

•tariffs, duties or penaltiesother costs attributable to the importation of raw materials, parts, products and services, which could impact sales and/or delivery of products and services outside the U.S. and/or impose increased costs on us, our supplierssupply chain or our customers;

With respect to each of our commercial aircraft programs, inventoriable production costs (including overhead), program tooling and other non-recurring costs and routine warranty costs are accumulated and charged as cost of sales by program instead of by individual units or contracts. A program consists of the estimated number of units (accounting quantity) of a product to be produced in a continuing, long-term production effort for delivery under existing and anticipated contracts limited by the ability to make reasonably dependable estimates. To establish the relationship of sales to cost of sales, program accounting requires estimates of (a) the number of units to be produced and sold in a program, (b) the period over which the units can reasonably be expected to be produced and (c) the units’ expected sales prices, production costs, program tooling and other non-recurring costs, and routine warranty costs for the total program. Changes to customer or model mix, production costs and rates, learning curve, changes to price escalation indices, costs of derivative aircraft, supplier performance, customer and supplier negotiations/settlements, supplier claims and/or certification issues can impact these estimates. Estimation of the accounting quantity for a program takes into account several factors including firm orders, letters of intent from prospective customers and market studies. In addition, on development programs such as the 777X, 737-7 and 737-10, we are subject to risks with respect to the timing and conditions of aircraft certification, including potential gaps between when aircraft are certified in various jurisdictions, changes in certification processes and our estimates with respect to the timing of future certifications, which could have an impact on overall program status. Any such change in estimates relating to program accounting may adversely affect future financial performance.

As part of our business strategy, we may merge with or acquire businesses and/or form joint ventures and strategic alliances. Whether we realize the anticipated benefits from these acquisitions, including our acquisition of Spirit, and related activities depends, in part, upon our ability to integrate the operations of the acquired business, the performance of the underlying product and service portfolio, and the performance of the management team and other personnel of the acquired operations. Accordingly, our financial results could be adversely affected by unanticipated performance issues, legacy liabilities, cybersecurity issues or vulnerabilities, transaction-related charges, amortization of expenses related to intangibles, charges for impairment of long-term assets, credit guarantees, partner performance and indemnifications.indemnification obligations. The Spirit Acquisition closed in December 2025, and difficulties in integrating Spirit may result in the failure to realize anticipated benefits of the acquisition (including anticipated synergies and safety and quality improvements) in the expected timeframe or at all, as well as operational challenges, the diversion of management’s attention from other ongoing business concerns, and unforeseen expenses, which may have an adverse impact on our operations and our financial position, results of operations and cash flows. Consolidations of joint ventures could also impact our reported results of operations or financial position. WeAs part of our portfolio management, we also may make strategic divestitures from time to time. These transactions may result in continued financial involvement in the divested businesses,time, such as throughour recent divestiture of portions of our Digital Aviation Solutions business. In connection with acquisitions or divestitures, we may have obligations to, or rely on the performance of, unrelated third parties, including pursuant to transitional or longer-term services agreements and/or guarantees or other financial arrangements, followingand thenonperformance transaction.or Nonperformanceunderperformance byof thosesuch divested businessesagreements could affect our future financial resultsresults. throughFor additionalexample, paymentin obligations,connection higherwith coststhe Spirit Acquisition, we are required to provide services to buyers of divested Spirit businesses, including Airbus, and if we are unable to satisfy our obligations to these third parties or assetif write-downs.they assert claims against us, our business and financial condition could be adversely affected.

In 2024,2025, 42%35% of our revenues were earned pursuant to U.S. government contracts, which include Foreign Military Sales (FMS) through the U.S. government.FMS. Business conducted pursuant to such contracts is subject to extensive procurement regulations and other unique risks.

We are subject to U.S. government inquiries and investigations, including periodic audits of costs that we determine are reimbursable under U.S. government contracts. U.S. government agencies, including the Defense Contract Audit Agency and the Defense Contract Management Agency, routinely audit government contractors. These agencies review our performance under contracts, cost structure and compliance with applicable laws, regulations and standards, as well as the adequacy of and our compliance with our internal control systems and policies. Any costs found to be misclassified or inaccurately allocated to a specific contract will be deemed non-reimbursable, and to the extent already reimbursed, must be refunded. Any inadequacies in our systems and policies could result in withholds on billed receivables, penalties and reduced future business. Furthermore, if any audit, inquiry or investigation uncovers improper or illegal activities, we could be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or debarment from doing business with the U.S. government. We also could suffer reputational harm if allegations of impropriety wereare made against us, even if such allegations are later determined to be false.

We enter intoOur fixed-price contracts, which couldcontracts subject us to losses ifwhen we have cost overruns.

Our BDS and BGS defense businesses each generated approximately 54% and 63%60% of their 20242025 revenues from fixed-price contracts. Fixed-price development contracts subject us to the risk of reduced margins or incurring losses if we are unable to achieve estimated costs and revenues. IfWhen our estimated costs exceed our estimated price, we recognize reach-forward losses which can significantly affect our reported results. For example, during the year ended December 31, 2024, BDS recorded $5.0 billion of additional losses on its five most significant fixed-price development programs (KC-46A Tanker, T-7A Red Hawk, Commercial Crew, VC-25B Presidential Aircraft, and MQ-25). We continue to experience production disruptions and inefficiencies due to technical challenges, supplier disruption and factory performance. These factors have contributed to significant earnings charges on a number of fixed-price development programs, which are expected to adverselyalso affect cash flows in future periods, and may result in future earnings charges and adverse cash flow effects. Higher supplier pricing, the IAM 751 work stoppage, higher labor costs and an inexperienced workforce also contributed to earnings charges and lower earnings in 2024.periods. New programs could also have risk for reach-forward loss upon contract award and during the period of contract performance. The long-term nature of many of our contracts makes the process of estimating costs and revenues on fixed-price contracts inherently risky. Fixed-price contracts often contain price incentives and penalties tied to performance, which can be difficult to estimate and have significant impacts on margins. In addition, some of our contracts have specific provisions relating to cost, schedule and performance.

Our BDS and BGS defense businesses each generated approximately 46% and 37%40% of their 20242025 revenues from cost-type contracting arrangements. Some of these are development programs that have complex design and technical challenges. These cost-type programs typically have award or incentive fees that are subject to uncertainty and may be earned over extended periods. In these cases the associated financial risks are primarily reduced award or incentive fees, lower profit rates or program cancellation if cost, schedule or technical performance issues arise. Examples of programs with cost-type contracts include Ground-based Midcourse Defense, Proprietary and Space Launch System programs.

Contracts in the commercial satellite industry and certain government satellite contracts include in-orbit incentive payments. These in-orbit payments may be paid over time after final satellite acceptance or paid in full prior to final satellite acceptance. In both cases, the in-orbit incentive payment is at risk if the satellite does not perform to specifications for up to 15 years after acceptance. The net present value of in-orbit incentive fees we ultimately expect to realize is recognized as revenue in the construction period. If the satellite fails to meet contractual performance criteria, customers willmay not be obligated to continue making in-orbit payments and/or we may be required to provide refunds to the customer and incur significant charges.

We face various cybersecurity threats, including attempts to gain unauthorized access to our systems and networks, denial-of-service attacks, threats to our information technology infrastructure, ransomware and phishing attacks, and attempts to gain unauthorized access to our company-, customer- and employee-sensitive information. These threats come from a variety of actorsactors, some of which are highly organized and sophisticatedsophisticated, such as nation-state actors and criminal enterprises. In addition, the techniques used in cyberattacks evolve rapidly, including from emerging technologies, such as advanced forms of automation and artificial intelligence. As cyber threats increase in volume and sophistication, the risk to the security of these systems and networks – and to the confidentiality, integrity, and availability of the data they house – continues to evolve, requiring constant vigilance and concerted, company-wide risk management efforts.

A cyber-related attack or security breach, whether experienced directly or through our supply chain or third party-service providers, could, among other serious consequences, result in loss of intellectual property; allow unauthorized access to or cause the publication of various categories of sensitive, proprietary or customer data; cause disruption or degradation of our business operations; compromise our products or services; and/or result in reputational harm. There is no guarantee that our controls, policy enforcement mechanisms, monitoring systems or contractual arrangements will be sufficient to prevent or mitigate the risk of cyber-related attackattacks or incident,incidents, or allow us to detect, report or respond adequately or in a timely manner.

We have experienced, and may in the future experience, whether directly or through our subsidiaries or our supply chain, third-party service providers or other channels, cyber-related incidents. While prior cyber-related attacks and incidents (including those at our wholly-owned subsidiaries Boeing Distribution, Inc. in 2023 and Jeppesen, Inc. in 2022) have not materially affected our business strategy, results of operations or financial condition, thereThere is no guarantee that a future cyber-related attack or incident would not result in significant operational, regulatory, or financial impacts that could materially affect our business strategy, results of operations or financial condition.

Our business may be impacted by disruptions including threats to physical security or our information technology systems, extreme weather (including effects of climate change) or other acts of nature, and pandemics or other public health crises. Any of these disruptions could affect our internal operations or our suppliers’ operations and delay delivery of products and services to our customers. Any significant production delays, or any destruction, manipulation or improper use of Boeing’s or our suppliers’ data, information systems or networks could impact our sales, increase our expenses and/or have an adverse effect on the reputation of Boeing and of our products and services.

The outcome of litigation and of government inquiries and investigations involving our business is unpredictable, and an adverse decision in any such matter could have a material effect on our financial position andposition, results of operations.operations and cash flows.

We are involved in a number of litigation matters. These matters divert financial and management resources that would otherwise be used to benefit our operations. No assurances can be given that the results of these matters will be favorable to us. An adverse resolution of any of these lawsuits, or future lawsuits, could have a material impact on our financial position andposition, results of operations.operations and cash flows, or cause reputational harm. In addition, we are subject to extensive regulation under the laws of the United States and its various states, as well as other jurisdictions in which we operate and/or market our products. As a result, we are subject to government inquiries and investigations due, among other things, to our business relationships with the U.S. government, the heavily regulated nature of our industry, accidents involving our products and in the case of environmental proceedings, our current or past ownership of certain property. Any such inquiry or investigation could result in an adverse ruling against us, which could have a material impact on our financial position, results of operations and/or cash flows.flows, or cause reputational harm. For additional information about legal proceedings, investigations and inquiries, see Note 2223 to our Consolidated Financial Statements.

Increasing stakeholder environmental, social and governance (ESG) expectations, physical and transition risks associated with climate change, emerging ESGsustainability regulation, contractual requirements, and policy requirements may pose risk to our market outlook, brand and reputation, financial outlook, cost of capital, global supply chain and production continuity, which may impact our ability to achieve long-term business objectives. Changes in environmental and climate change laws or regulations could lead to additional operational restrictions and compliance requirements upon us or our products, require new or additional investments in production systems or product designs, result in additional carbon offset investments or otherwise negatively impact our business and/or competitive position. Increasingly stringent aircraft performance standards and requirements including but not limited to manufacturing and product air pollutant emissions, potential carbon pricing mechanisms, and sustainability disclosure requirements in the U.S. and other jurisdictions may result in increased costs or reputational risks and could limit our ability to manufacture and/or market certain of our products at acceptable costs, or at all. For example, certain jurisdictions including the State of California and the European Union have enacted legislation which require more stringent greenhouse gas emissions and climate risk reporting. Physical impacts of climate change, increasing global chemical restrictions and bans, and water and waste requirements may drive increased costs to us and our suppliers and impact our production continuity and data facilities.

We depend, in part, on our ability to successfully access the capital and financial markets to fund our operations and contractual commitments. Net cash used by operating activities for the year ended December 31, 2024 was $12.1 billion and we expect negative operating cash flows to continue in future quarters as we work to ramp up commercial airplanes production. As of December 31, 2024,2025, our debt totaled $53.9$54.1 billion, of which approximately $13.6$15.5 billion of principal payments on outstanding debt are scheduled to become due over the next three years, and our airplane financing commitments totaled $17.1$15.2 billion. In addition, we will assume Spirit’s net debt upon the closing of our acquisition of Spirit, which is expected to occur later this year. We also expect to require up to $345 million of cash per year for the payment of dividends on the outstanding shares of our 6.00% Series A Mandatory Convertible Preferred Stock (Mandatory convertible preferred stock), through the mandatory conversion date of October 15, 2027. Dividends accumulate at a rate per annum equal to 6.00% on the liquidation preference thereof, which is $1,000.00 per share, payable when, as and if declared by our Board of Directors. The dividends, if declared, can be paid in cash, or subject to certain limitations, in shares of our common stock, or a combination of both. Any unpaid dividends will continue to accumulate. If dividends have not been declared and paid for six or more dividend periods, whether or not for consecutive dividend periods, the holders of such shares of Mandatory convertible preferred stock,stock will be entitled at our next annual or special meeting of shareholders to vote for the election of two additional members of our Board of Directors, subject to certain limitations. If we require additional capital to support our operations, pay off existing debt, address impacts to our business related to market developments, fund dividend payments or outstanding financing commitments or meet other business requirements, we may need to refinance or restructure our debt, reduce or delay capital investments, or issue equity, equity-linked or debt securities, and these activities could have terms that are unfavorable or could be dilutive. If we are unable to access the capital or financial markets at competitive rates, on terms acceptable to us or in sufficient amounts, or if we experience an increase in our borrowing costs or otherwise fail to manage our liquidity effectively, our business, financial position and results of operations would be adversely affected.

We have in the past experienced and could in the future experience further downgrades in our credit ratings. Any such downgrades, as well as other factors including disruptions or declines in the global capital markets, a decline in our financial performance or outlook, a delay in our ability to ramp up production and deliveries, and changes in demand for our products and services, could increase the cost of borrowing, jeopardize our ability to incur debt on terms acceptable to us, and negatively impact our access to the capital and financial markets and our ability to fund our operations and commitments. We cannot be assured that we will be able to maintain an investment grade rating, and any additional actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under further review for a downgrade, may impact us in a similar manner and have a negative impact on our liquidity, financial position, and access to the capital or financial markets.

Many of our employees have earned benefits under defined benefit pension plans. Potential pension contributions include both mandatory amounts required under the Employee Retirement Income Security Act and discretionary contributions to improve the plans' funded status. The extent of future contributions depends heavily on market factors such as the discount rate and the actual return on plan assets. We estimate future contributions to these plans using assumptions with respect to these and other items. Changes to those assumptions could have a significant effect on future contributions as well as on our annual pension costs and/or result in a significant change to shareholders' equity. For U.S. government contracts, we allocate pension costs to individual contracts based on U.S. Cost Accounting Standards (CAS),Standards, which can also affect contract profitability. We also provide other postretirement benefits to certain of our employees, consisting principally of health care coverage for eligible retirees and qualifying dependents. Our estimates of future costs associated with these benefits are also subject to assumptions, including estimates of the level of medical cost increases. For a discussion regarding how our financial statements can be affected by pension and other postretirement plan accounting policies, see “Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates – Pension Plans” on page 51 of this Form 10-K. Although under Generally Accepted Accounting Principles in the United States of America (GAAP) the timing of periodic pension and other postretirement benefit expense and plan contributions are not directly related, the key economic factors that affect GAAP expense would also likely affect the amount of cash or stock we would contribute to our plans.

The issuance of our common stock upon the closing of the Spirit acquisition and upon conversion of our Mandatory convertible preferred stock, and the possibilityexchange of the saleSpirit orExchangeable issuanceNotes, as well as any other issuances of our common stock in the future,stock, could cause dilution todilute the interests of our existing shareholders.

On the terms and subject to the conditions set forth in the Merger Agreement, each share of Spirit common stock will be exchanged for a number of shares of our common stock equal to an exchange ratio between 0.18 and 0.25, calculated as $37.25 divided by the volume weighted average share price of our shares over the 15-trading-day period ending on the second trading day prior to the closing (subject to a floor of $149.00 per share and a ceiling of $206.94 per share). In addition, unlessUnless earlier converted, each outstanding share of Mandatory convertible preferred stock will automatically convert for settlement on or about October 15, 2027, into between 5.8280 and 6.9940 shares of common stock, subject to customary anti-dilution adjustments. At any time prior to October 15, 2027, a holder of Mandatory convertible preferred stock may convert one share of such stock into a number of shares of common stock equal to the minimum conversion rate of 5.8280, subject to certain anti-dilution and other adjustments. We may also issue shares of our common stock upon the exchange of the $230 million of 3.250% Exchangeable Notes, maturing November 1, 2028 (the Spirit Exchangeable Notes), that we assumed in connection with the Spirit Acquisition. For additional information on the Spirit Exchangeable Notes, see Note 17 to our Consolidated Financial Statements in Part II Item 8 of this Form 10-K. In addition, a substantial number of shares of our common stock is reserved for issuance upon the exercise or settlement of equity awards. Collectively, these issuances or potential future issuances of common stock could be significant and will dilute the interests of our existing shareholders.

We are a global market leader in the design, development, manufacture, sale, service and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services. We are one of the two major manufacturers of 100+ seat airplanes for the worldwide commercial airline industry and one of the largest defense contractors in the U.S. While our principal operations are in the U.S., we conduct operations in an expanding number of countries and rely on an extensive network of U.S. and non-U.S. partners, key suppliers and subcontractors.

Our strategy is centered on successful execution in healthy core businesses – Commercial Airplanes (BCA), Defense, Space & Security (BDS) and Global Services (BGS). BCA is committed to being the leader in commercial aviation by offering airplanes and services that deliver superior design, safety, quality, efficiency and value to customers around the world. BDS integrates its resources in defense, intelligence, communications, security, space and services to deliver capability-driven solutions to customers at reduced costs.customers. Our BDS strategy is to leverage our core businesses to capture key next-generation programs while expanding our presence in adjacent and international markets. BGS provides support for commercial and defense customers through innovative, comprehensive and cost-competitive product and service solutions.

On January 5, 2024, a 737-9 flight made an emergency landing after a mid-exit door plug detached in flight. As a result of the accident, the Federal Aviation Administration (FAA) performed an investigation into the 737 quality control system. In the second quarter of 2024, we submitted a comprehensive safetysystem and qualityimposed plancertain toadditional therequirements FAAand to address the issues identified.restrictions. As part of our plan to improve quality and safety and to address the issues identified, we slowed production rates and delayed planned production rate increases to reduce traveled work in our factory, as well as at our suppliers. We have also began takingtaken additional actions to improve safety and quality, which includeincluding investing in workforce training, simplifying plans and processes, eliminating defects, and enhancing our safety and quality culture. The 737-9 door plug accident and our resulting actions, including slowing production, significantly impacted our financial position, results of operations and cash flows during 2024 and 2025.

On November 4, 2024, the International Association of Machinists and Aerospace Workers District 751 (IAM 751), representing approximately 30,000 Boeing employees, voted to ratify a new contract, thereby ending the work stoppage initiated on September 13, 2024, which paused production of certain commercial aircraft models (737, 767, 777 and 777X aircraft) as well as production of commercial derivative aircraft for our Defense, Space & Security business (KC-46A Tanker and P-8A Poseidon). Production for all programs resumed in December 2024.2024 and gradually ramped up during 2025.

We and our suppliers are experiencing improving supply chain performance with fewer disruptions as a result offrom production quality issues, global supply chain constraints,constraints and labor instability. We and our suppliers arecontinue alsoto experiencingexperience inflationary pressures. We continue to monitor the health and stability of the supply chain. TheseNotwithstanding improvements, these factors havecontinue reducedto challenge overall productivity and adversely impactedimpact our financial position, results of operations and cash flows.

Airline financial performance, which influences demand for new capacity,aircraft, hasis benefitedbenefiting from the resilient demand for travel. The International Air Transport Association (IATA) is estimating 20242025 industry-wide net profits of $31.5$39.5 billion, up from its forecast of $25.7$28.3 billion ain year ago,2024, primarily driven by Europe, North America, EuropeAmerica and the Middle East. For 2025,2026, IATA is forecasting $36.6$41 billion in net profits for the industry globally. The overall outlook continues to stabilizestabilize. as weWe face uncertainties in the environment in the near- to medium-term as airlines are facing persistently high and volatile costs.costs even as fuel prices have declined. The global economy is expecting a continued easing of inflation and interest rates, with regional economic and geopolitical difficulties adding uncertainty to the outlook and the financial viability of some airlines and regions.

The long-term outlook for theairline industry outlook remains positive due to the fundamental drivers of air travel demand: economic growth, increasing propensity to travel due totravel, increased trade, globalization and improved airline services driven by liberalization of air traffic rights between countries. Our Commercial Market Outlook forecast projects a 3.2%3.1% growth rate in the global fleet over a 20-year period. Based on long-term global economic growth projections of 2.6%2.3% in average annual gross domestic product, we project demand for approximately 43,97543,600 new airplanes over the next 20 years. The industry remains vulnerable to exogenous developments including fuel price spikes, potential new or increased tariffs, changing energy policies, credit market shocks, acts of terrorism, natural disasters, conflicts, epidemics, pandemics and increased global environmental regulations.

At BDS, we continue to see stablestrong demand reflecting the important role our products and services have in ensuring our national security. Outside of the U.S., we are seeing similar solid demand as governments prioritize security, defense technology and global cooperation given evolving threats. WeOur continuefixed-price todevelopment experienceprograms productionare disruptionsmaturing; however, technical and inefficienciesschedule duechallenges to technical challenges, supplier disruptionremain and factory performance. These factors have contributedresulted toin significant earnings charges on fixed-pricethese developmentprograms. programsBDS’s asproduction wellsystem asand onsupply a number of mature programs whichchain are continuingbeginning to stabilize; however, prior period performance has adversely affectaffected margins and cash flows.

Earnings/(Loss) From Operations

The following table summarizes LossEarnings/(loss) from operations:

(2) Core operating earnings/(loss) is a non-GAAP measure that excludes the FAS/CAS service cost adjustment. See pages 4647 - 48.

Core operating earnings increased by $15,047 million in 2025 compared with 2024 and core operating loss increased by $9,982 million in 2024 compared with 2023 and decreased by $2,833 million in 2023 compared with 2022 primarily due to changes in Segment operating earnings/(loss) as described above.

Deferred compensation expense increased by $68 million in 2025 and decreased by $74 million in 2024 primarily driven by changes in our stock price. Deferred compensation expense increased by $305 million in 2023 primarily driven by changes in broad stock market conditions.

ResearchUnallocated research and development expense increased by $34 million in 2025 and $62 million in 2024 and $37 million in 2023 primarily due to increased spending on enterprise product development.

Net periodic pension benefit costs included in LossEarnings/(loss) from operations were as follows:

The pension FAS/CAS service cost adjustment recognized in LossEarnings/(loss) from operations in 2025 was largely consistent inwith 2024 compared with 2023 and decreased by $50 million in 2023 compared with 2022 due to changes in allocated pension cost year over year.2023. Net periodic benefit cost included in LossEarnings/(loss) from operations in 20242025 was largely consistent with 20232024 and 2022.2023.

Non-operating pension income included in Other income, net was $176 million in 2025, $476 million in 2024,2024 and $529 million in 20232023. andThe $881decreased millionincome in 2022.2025 compared to 2024 was primarily due to lower expected return on plan assets. The decreased income in 2024 compared to 2023 was primarily due to lower expected return on plan assets and higher amortization of net actuarial losses, partially offset by lower interest cost. The decreased non-operating pension income in 2023 compared to 2022 was primarily due to higher interest cost and lower expected return on plan assets, partially offset by lower amortization of net actuarial losses.

Non-operating postretirement income included in Other income, net was $19 million in 2025, $73 million in 2024 and $58 million in 20232023. The decreased income in 2025 was primarily due to lower amortization of net actuarial gains and 2022.higher interest cost. The increased income in 2024 was primarily due to lower interest cost, partially offset by amortization of prior service credits.

Contractual backlog of unfilled orders excludes purchase options, announced orders for which definitive contracts have not been executed, orders where customers have the unilateral right to terminate, and unobligated U.S. and non-U.S. government contract funding. The increase in contractual backlog during 20242025 was primarily due to an increase in BDS and BGS backlog that was partially offset by a decrease in BCA backlog. We may experience reductions to backlog and/or significant order cancellations due to various factors including delivery delays, production disruptions and delays to entry into service of the 777X, 737-7 and/or 737-10.

Unobligated backlog includes U.S. and non-U.S. government definitive contracts for which funding has not been authorized. UnobligatedThe increase in unobligated backlog during 2025 was largelydue unchangedto an increase in 2024.BDS backlog.

U.S. Government Funding Considerable uncertainty exists regarding how future U.S. government budget and program decisions will unfold, including the spending priorities of the new Administration and Congress.

TheAfter ContinuingJanuary Resolution30, (CR)2026, enactedthe ongovernment Decemberwill 21,enter 2024,a continuespartial federalshutdown fundingunless atand fiscal year 2024 appropriated levels through March 14, 2025.until Congress and the President must enact either full-year fiscal year 2025 (FY25)FY26 appropriations bills or an additional CRContinuing to fund government departments and agencies after March 14, 2025, or a government shutdown could result.Resolution. We rely on the U.S. government in various aspects of our defense, commercial and serviceservices businesses. In the event ofDuring a shutdown, requirements to furlough employees in the U.S. Department of Defense (U.S. DoD),DoW, the Department of Transportation, including the FAA,DOT or other government agencies could result in payment delays, impair our ability to perform work on existing contracts or otherwise impact our operations, negatively impact future orders,orders and/or cause other disruptions or delays.delays that could have a material effect on our financial position, results of operations and/or cash flows.

The current state of U.S.-China relations remains an ongoing watch item. China is a significant market for commercial aircraftaircraft, and we have long-standing relationships with our Chinese customers, who represent a key component of our commercial aircraft backlog.customers. Overall, the U.S.-China trade relationship remainsis stalledchallenged due to tariffs, sanctions, and export restrictions, as well as other economic and national security concernsconcerns. continueDuring 2025, certain customers in China temporarily paused accepting delivery of our aircraft in response to beongoing atariff challenge.negotiations between the U.S. and China.

We seek to comply with all U.S. and other government import requirements, export control restrictionsrequirements and sanctions. We continue tocontinually monitor the global trade environment for new and/or evaluatechanging additionaltariffs, retaliatory actions, trade agreements, export restrictions, sanctions andor exportother restrictions that may beimpact imposed by the U.S. Governmentus or other governments, as well as any responses that could affect our supply chain, business partnerschain or customers, forand anywork additionalto mitigate impacts to our business.

Supply Chain We and our suppliers are experiencing inflationary pressures, as well as supply chain disruptions as a result of global supply chain constraints and labor instability. Our supply chain is also being impacted by the tariffs and export restrictions discussed above. Certain of our suppliers are also experiencing financial difficulties. We continue to monitor the health and stability of the supply chain. These factors have reduced overall productivity and adversely impacted our financial position, results of operations and cash flows. During 2024, we recorded a reach-forward loss of $1,770 million on the T-7A Red Hawk program that was primarily driven by projected increases in supplier cost estimates. In addition, we recorded losses on the KC-46A Tanker and Commercial Crew programs that were partially attributable to higher supplier costs. We recorded a reach-forward loss on the 777X program during the third quarter of 2025 that was partially attributable to higher estimated supplier costs.

Industry Competitiveness The commercial aircraft market and the airline industry both remain extremely competitive. Continued access to global markets remains vital to our ability to fully realize our sales potential and long-term investment returns. Approximately 80%85% of BCA’s total backlog, in dollar terms, is with non-U.S. airlines. We face aggressive international competitors who are intent on defending or increasing their market share. They offer competitive products and have access to most of the same customers and suppliers. This market environment has resulted in intense pressures on pricing and other competitive factors, and we expect these pressures to continue or intensify in the coming years.

BCA revenues decreasedincreased by $11,040$18,633 million in 20242025 compared with 20232024 primarily due to lowerhigher deliveries across all programs and the absence of $443 million of 737-9 customer considerations related to the January 2024 grounding.

BCA revenues increaseddecreased by $7,875$11,040 million in 20232024 compared with 20222023 primarily due to higher 787lower deliveries inacross 2023.all programs and 737-9 customer considerations.

BCA loss from operations was $7,079 million in 2025 compared with $7,969 million in 2024 compared with $1,635 million in 2023 reflecting reach-forwardhigher lossesdeliveries ofacross $4,079all million onprograms, the 777X and 767 programs in the third and fourth quarter of 2024, $443 millionabsence of 737-9 customer considerations related to the January 2024 grounding, lower deliveries, lower margins driven byabnormal production disruption including the IAM 751 work stoppagecosts, and new agreement, and higherlower research and development expense,costs, partially offset by $1,271higher combined reach-forward losses of $5,283 million ofon the 777X and 767 programs in 2025 and lower abnormalprogram production costs.margins.

Revenues for the six and three months ended MarchJune 31,30, 2026, increased by $2,721$4,532 million and $1,811 million compared with the same periodperiods in 2025 primarily driven by higher revenues at Defense, Space & Security (BDS) and Commercial Airplanes (BCA).

Earnings/(Loss) from Operations

The following table summarizes Earnings/(loss) from operations:

CoreEarnings operatingfrom earningsoperations for the threesix months ended MarchJune 31,30, 2026, increased by $94$319 million compared with the same period in 2025, primarily duedriven toby highera Segmentdecrease operatingin earningsloss from operations on Unallocated items, eliminations, and other ($419 million) and at BCA ($209 million), partially offset by unfavorable changes in the FAS/CAS service cost adjustment as($209 described above.million).

The most significant items included in Unallocated items, eliminations and other (expense)/income are shown in the following table:

Unallocated share-based plans expense for the six and three months ended MarchJune 31,30, 2026, increased by $25$1 million and decreased by $24 million compared with the same periodperiods in 20252025. primarilyChanges are due to the timing of when share-based plans expense was recorded compared with when it was allocated to our segments.

Deferred compensation incomeexpense for the six and three months ended MarchJune 31,30, 2026, increased by $12$27 million and $39 million compared with the same periodperiods in 2025 drivendue byto changes in broad stock market conditions, including changes in our stock price.conditions.

Research and development expense for the six and three months ended MarchJune 31,30, 2026, increased by $22$27 million and $5 million compared with the same periodperiods in 2025 due to increases in enterprise investments in product development.

Eliminations and other unallocated items expense for the six and three months ended MarchJune 31,30, 2026, decreased by $50$477 million and $427 million compared with the same periods in 2025. The decrease reflects the absence of an earnings charge of $445 million recorded in the second quarter of 2025 primarily duerelated to loweran unallocatedagreement expenses.with the Department of Justice.

Other income, net for the six and three months ended MarchJune 31,30, 2026, decreased by $129$375 million and $246 million compared with the same periodperiods in 2025, primarily due to higher non-operating pension expense.

Interest and debt expense for the six and three months ended MarchJune 31,30, 2026, decreased by $92$202 million and $110 million compared with the same periodperiods in 20252025, primarily as a result of lower debt balances.

Cost of sales, for both products and services, consists primarily of raw materials, parts, sub-assemblies, labor, overhead and subcontracting costs. Our BCA segment predominantly uses program accounting to account for cost of sales. Under program accounting, cost of sales for each commercial aircraft program equals the product of (i) revenue recognized in connection with customer deliveries and (ii) the estimated cost of sales percentage applicable to the total remaining program. For long-term contracts, the amount reported as cost of sales is recognized as incurred. Substantially all contracts at our BDS segment and certain contracts at our Global Services (BGS) segment are long-term contracts with the U.S. government and other customers that generally extend over several years. Cost of sales for commercial spare parts is recorded at average cost.

Cost of sales for the six and three months ended MarchJune 31,30, 2026, increased by $2,592$4,424 million and $1,832 million, or 15%,12% and 9%, compared with the same periodperiods in 2025, primarily due to higher revenues at BCABDS and BDS.BCA. Cost of sales as a percentage of Revenues increased during the six and three months ended MarchJune 31,30, 2026, compared with the same periodperiods in 2025 primarily due to lower margins at BGS.BGS and BDS.

Research and development expense increased by $59$70 million and $11 million during the six and three months ended MarchJune 31,30, 2026, compared towith the same periodperiods in 2025. The increase in expense was2025, primarily due to higher spending at BCA.

Contractual backlog of unfilled orders excludes purchase options, announced orders for which definitive contracts have not been executed, orders where customers have the unilateral right to terminate, and unobligated U.S. and non-U.S. government contract funding. The increase in contractual backlog of $12,950$34,785 million during the threesix months ended MarchJune 31,30, 2026, was primarily due to a $8,293$29,434 million increase in BCA backlog and $2,856 million increase in BGS contractual backlog. We may experience reductions to backlog and/or significant order cancellations due to various factors including delivery delays, production disruptions and delays to entry into service of the 777X, 737-7 and/or 737-10.

Unobligated backlog includes U.S. and non-U.S. government definitive contracts for which funding has not been authorized. The decrease of $448$1,731 million in unobligated backlog during the threesix months ended MarchJune 31,30, 2026 was due to a decrease in BDS unobligatedbacklog backlogprimarily reflecting reclassifications to contractual backlog, partially offset by annew increase in BGS unobligated backlog.awards.

U.S. Government Funding Considerable uncertainty exists regarding how future U.S. government budget and program decisions will unfold, including the spending priorities of the Administration and Congress. As of MarchJune 31,30, 2026, the majority of government departments and agencies, including the Department of War (DoW), the National Aeronautics and Space Administration (NASA), and the Department of Transportation are funded through September 30, 2026.

Following the February 20, 2026, Supreme Court ruling regarding the imposition of tariffs under the International Emergency Economic Powers Act (IEEPA), U.S. Customs and Border Protection isdefined developingprocesses refundfor proceduressubmitting claims for tariffs previously paid under IEEPA. Concurrently, the Administration imposed a temporary 10% general tariff under Section 122 of the Trade Act of 1974 subject to several exemptions, including the import into the United States of certain aerospace products. These developmentsTariffs did not have a material impact on our financial position, results of operations and cash flows during the first quarterhalf of 2026.

The current state of U.S.-China trade relations remainremains an ongoing watch item. China is a significant market for commercial aircraft, and we have long-standing relationships with our Chinese customers. Overall, the U.S.-China trade relationship isremains challenged due to tariffs, sanctions, and export restrictions, as well as other economic and national security concerns.

Human Capital Some of our and our suppliers' workforces are represented by labor unions. Work stoppages and instability in our and our suppliers' union relationships have in the past and could in the future disrupt and/or delay the production, delivery and/or development of our products,products and services, which could strain relationships with customers and result in lower revenues, earnings and cash flows. If we are unable to successfully negotiate successor agreements with our unions that our employees will ratify (including with Society of Professional Engineering Employees in Aerospace who have two contacts expiring October 2026),ratify, we may experience additional work stoppages in the future,future and/or higher than anticipated costs, which could materially adversely affect our business, financial position, results of operations and cash flows. We have two contracts with the Society of Professional Engineering Employees in Aerospace expiring October 6, 2026, and we are currently in negotiations working toward reaching new agreements in the third quarter of 2026.

BCA loss from operations was $563$885 million for the threesix months ended MarchJune 31,30, 2026, compared with $537$1,094 million in the same period in 2025 primarily reflecting higher spending on research and development,deliveries, partially offset by higher deliveries.spending on research and development. BCA loss from operations was $322 million for the three months ended June 30, 2026, compared with $557 million in the same period in 2025 primarily reflecting higher revenues and a lower reach-forward loss on the 767 program, partially offset by higher spending on research and development.

BCA total backlog increased from $567,290 million as of December 31, 2025, to $575,583$596,724 million at MarchJune 31,30, 2026, reflecting new orders in excess of deliveries. Aircraft order cancellations during the threesix months ended MarchJune 31,30, 2026, totaled $933$2,777 million and primarily relate to 737 aircraft. Net ASC 606 adjustments during the six months ended June 30, 2026, totaled $2,089 million and primarily relate to 737 and 787 aircraft. Net ASC 606 adjustments during the three months ended March 31, 2026, totaled $505 million and primarily relate to 777X and 737 aircraft. ASC 606 adjustments include consideration of aircraft orders where a customer-controlled contingency may exist, as well as an assessment of whether the customer is committed to perform, impacts of geopolitical events or related sanctions, or whether it is probable that the customer will pay the full amount of consideration when it is due. We may experience reductions to backlog and/or significant order cancellations due to various factors including delivery delays, production disruptions and delays to entry into service of the 777X, 737-7 and/or 737-10.

*Approximate undelivered orders by minor model for MarchJune 31,30, 2026 and December 31, 2025: 737-7 (6%, 6%), 737-8 (60%,58%, 60%), 737-9 (5%, 5%) and 737-10 (29%,31%, 29%).

737 Program We increased the accounting quantity by 400 units during the six months ended June 30, 2026, due to the program's normal progress of obtaining additional orders and delivering airplanes. During the first quarterhalf of 2026, the 737 program continuedbegan to producetransition atfrom a production rate of 42 per month. The program plans to increase the production rate from 42 to 47 inper 2026month with the concurrence of the Federal Aviation Administration (FAA). We are also planning for additional production rate increases beyond 47 per month asand well as adding a fourth 737 production line. We expect to beginbegan low-rate production on thea new 737 production line laterin inJuly 2026. The new production line will have tomust be production-certified by the FAA prior to first delivery.

We continue to expect certification of the 737-7 and 737-10 in 2026, including the final certification of the engine anti-ice solution. As of MarchJune 31,30, 2026, we had approximately 3540 737-7 and 737-10 aircraft in inventory. We are following the lead of the FAA as we work through the certification process and the ultimate timing will be determined by the regulators.

767 Program The 767 assembly line includes the commercial program and a derivative to support the KC-46A Tanker program. We are targeting a production rate of approximately three aircraft per month. We expect to complete production of the 767 commercial program by 2027. This program hasrecorded break-evena grossreach-forward margins.loss of $40 million during the first half of 2026 and $191 million in the same period in 2025.

InThrough Julythe 2024,end of 2025, we obtained approval from the FAA to begin the first three phases of certification flight testing. In the first half of 2026, we received approval to begin the fourth phase of certification flight testing. We expect approval on the final phases of flight testing whichduring isthe ongoing.second half of 2026. We continue to work with our supplier and the FAA onto the solutionincorporate and certificationcertify plantheir solution related to the engine durability issue identified in 2025. In the first quarter of 2026, we received approval from the FAA to begin the Type Inspection Authorization 4a phase of flight testing.

787 Program We increased the accounting quantity by 100 units during the three months ended March 31, 2026, due to the program's normal progress of obtaining additional orders and delivering airplanes. The accounting quantity was unchanged during the three months ended June 30, 2026. During the firstfourth quarter of 2026,2025, we began increasing the production rate to eight per month. We continued to work toward stabilizing production during the productionfirst ratequarter of 2026. We briefly slowed the factory in April 2026 due to supply chain shortages. The factory recovered in May, and we have now stabilized at eight per month.month Weenabled areby experiencing factory disruption as a result ofcontinued supply chain shortages which has impacted production and we are working with our supply chain to enablefactory recovery.

The non-U.S. market continues to be driven by complex and evolving security challenges and the need to modernize aging equipment and inventories. BDS expects that it will continue to have a wide range of opportunities across Asia, Europe and the Middle East given the diverse regional threats. At MarchJune 31,30, 2026, 27% of BDS backlog was attributable to non-U.S. customers.

BDS revenues for the threesix months ended MarchJune 31,30, 2026, increased by $1,301$2,167 million compared with the same period in 2025. The increase was primarily due to increased revenues on proprietary and weapons programs, higher KC-46 productionvolume and Foreign Military Sales to Israel and Japan, and the acquisition of Spirit's defense business. Revenue was further increased by $123$135 million lower net unfavorable cumulative contract catch-up adjustments compared to the prior year comparable period.

BDS earnings from operationsrevenues for the three months ended MarchJune 31,30, 2026, wasincreased $233by million,$866 million compared with earnings from operations of $155 million in the same period in 2025. The $78increase million improvement in earnings iswas primarily due to lowerincreased revenues on proprietary and weapons programs, higher KC-46 volume and the acquisition of Spirit's defense business. The net unfavorablecumulative cumulativecontract catch-up adjustments ofwere $80$11 million comparedless tounfavorable than the comparable period in the prior year comparable period.year.

BDS earnings/(loss) from operations includes our share of lossesearnings from equity method investments of $4 million and $8 million for the six and three months ended MarchJune 31,30, 2026, compared with earnings$20 ofmillion $6and $14 million for the same periodperiods in 2025.

BDS backlog was $85,821$85,322 million at MarchJune 31,30, 2026 compared with $84,786 million as of December 31, 2025. The increase reflects the timing of awards, partially offset by revenue recognized on contracts awarded in prior periods.

BGS revenues for the threesix months ended MarchJune 31,30, 2026 increased by $307$370 million compared with the same period in 2025, primarily due to higher commercial and government services revenue, partially offset by the absence of $305$632 million of revenue as a result of the Digital Aviation Solutions Divestiture. The net favorable impact of cumulative contract catch-up adjustments for the threesix months ended MarchJune 31,30, 2026, was $39$51 million higher than the net unfavorable impact in the prior year comparable period.

BGS earnings from operations for the threesix months ended MarchJune 31,30, 2026 increaseddecreased by $28$53 million compared with the same period in 2025 primarily due to higher government services revenue, partially offset by the absence of $79$145 million of earnings as a result of the Digital Aviation Solutions Divestiture.Divestiture, partially offset by higher government services revenue. A 2026 gain on asset disposition offset a similar gain on asset disposition in 2025. The net favorableunfavorable impact of cumulative contract catch-up adjustments for the threesix months ended MarchJune 31,30, 2026, was $40$57 million higherlower than the net unfavorable impact in the prior year comparable period. The Digital Aviation Solutions Divestiture alsoand ongoing disruption in one of our distribution businesses resulting from the transition to a new enterprise resource planning system in late 2025 contributed to the year-over-year reduction in operating margin.margins.

BGS total backlog increased from $29,720 million at December 31, 2025 to $32,957$32,840 million at MarchJune 31,30, 2026, primarily due to the timing of awards, partially offset by revenue recognized on contracts awarded in prior years.

Operating Activities Net cash usedprovided by operating activities was $0.2$1.2 billion during the threesix months ended MarchJune 31,30, 2026, compared with $1.6cash used of $1.4 billion during the same period in 2025. The $1.4 billion decrease in net cash used by operating activities was2025, primarily driven by favorable changes in working capital.

Changes in assets and liabilities during the threesix months ended MarchJune 31,30, 2026, improved by $1.3$2.1 billion compared with the same period in 2025, primarily driven by favorable changes in Advances and progress billings ($2.4$5.3 billion) and Accounts payable ($1.2$1.4 billion), partially offset by unfavorable changes in Inventories ($1.1$3.5 billion), Other current assets ($0.9 billion), and Accrued liabilities ($0.9$0.8 billion). The change in Advances and progress billings during the three months ended March 31, 2026, compared to the same period in 2025 was primarily driven by higher advances onand commercialprogress airplanebillings orders.at BCA and BDS. The favorable changechanges in Accounts payable and unfavorable change in Inventories during the three months ended March 31, 2026, compared to the same period in 2025 primarily reflect increased production primarily in our commercial airplanes business. Unfavorable changes in Accrued liabilities during the three months ended March 31, 2026 were $1.3 billion compared to $0.4 billion during the same period in 2025.

Payables related to suppliers who elected to participate in supply chain financing programs were largely unchanged during the six months ended June 30, 2026 and decreased by $0.2 billion and $0.6$1.1 billion during the threesame monthsperiod endedin March2025. 31,At June 30, 2026 and 2025.December Supply31, 2025, payables related to suppliers who elected to participate in supply chain financingprograms iswere not$2.0 material to our overall liquidity.billion.

Investing Activities Net cash provided by investing activities during the threesix months ended MarchJune 31,30, 2026, was $5.7$3.6 billion, compared with net cash used of $1.7$3.9 billion during the same period in 2025. The increase in cash provided was primarily due to net proceeds from investments of $7.0$5.6 billion in 2026 compared with net contributions to investments of $1.0$2.7 billion in 2025. During the threesix months ended MarchJune 31,30, 2026 and 2025, capital expenditures were $1.3$2.0 billion and $0.7$1.1 billion. We continue to expect capital expenditures in 2026 to be higher than in 2025.

Financing Activities Net cash used by financing activities was $7.0$8.5 billion during the threesix months ended MarchJune 31,30, 2026, compared with net cash used of $0.3$0.7 billion during the same period in 2025.2025, primarily due to $7.8 billion higher net repayments.

As of MarchJune 31,30, 2026, the total debt balance was $47.2$45.9 billion, down from $54.1 billion at December 31, 2025. At MarchJune 31,30, 2026, $2.9$4.6 billion of debt was classified as short-term.

At MarchJune 31,30, 2026, we had $9.4$7.2 billion of cash, $11.5$12.8 billion of short-term investments, and $10.0 billion of unused borrowing capacity on revolving credit line agreements. Our $3.0 billion, 364-day revolving credit agreement expiring in August 2026, $3.0 billion, five-year revolving credit agreement expiring in August 2028 and $4.0 billion, five-year revolving credit agreement expiring in May 2029 each remain in effect. The 364-day credit facility has a one-year term out option which allows us to extend the maturity of any borrowings until August 2027. We anticipate that these credit lines will primarily serve as back-up liquidity to support our general corporate borrowing needs. We continue to be in compliance with all covenants contained in our debt and credit facility agreements.

We currently maintain investment grade credit ratings across all three credit rating agencies. AtIn June 2026, Fitch affirmed the BBB- credit rating and revised the outlook to positive from stable. At S&P, we are rated BBB- with a stable outlook, and at Moody’s, we are rated Baa3 with a stable outlook.

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $876$971 million at MarchJune 31,30, 2026. For additional information, see Note 10 to our Condensed Consolidated Financial Statements.

The Pension FAS/CAS service cost adjustments recognized in Earnings/(loss) from operations were benefits of $93$185 million and $193$92 million for the six and three months ended MarchJune 31,30, 20262026, compared with benefits of $390 million and $197 million for the same periods in 2025. The lower benefits in 2026 were primarily due to reductions in allocated pension cost year over year. The non-operating pension (expense)/income included in Other income, net was ($74)$147 million and $43$73 million for the six and three months ended MarchJune 31,30, 20262026, compared with income of $85 million and $42 million for the same periods in 2025. The higher expense in 2026 was primarily due to higher amortization of net actuarial losses and lower expected return on plan assets and higher amortization of net actuarial losses,assets, partially offset by lower interest costs. For further discussion of pension and other postretirement costs see "Management’s Discussion and Analysis of Financial Condition and Results of Operations" on pages 28 and 29 of our 2025 Annual Report on Form 10-K.