Boeing Co at Morgan Stanley Laguna Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kristine Liwag - Morgan Stanley - Analyst : Great. So on it will kick off. Brian, thanks again for being here. Last night, we had the IAM union vote and we had a 96% rejection of the contract. I guess the first question is, are you surprised and where do we go from here you think you own.

Question: Kristine Liwag - Morgan Stanley - Analyst : Well, thank you, Brian. Thank you for that color. So maybe moving to our I mean, Kelly Ortberg joined as CEO, starting at the end of July. You mentioned his priorities are the first one, but can you talk about other priorities he has in this new seat? And what are the biggest changes that you anticipate in the company's approach in tackling the issues facing Boeing today with the priorities for the company broadly are very clear.

Question: Kristine Liwag - Morgan Stanley - Analyst : Great. And moving to the 77 MAX. Can you help us better understand how the FAA's affecting operations today? What's the path for the FDA to remove the 38 per month cap on production of course, I'll speak prior to the strike come.

Question: Kristine Liwag - Morgan Stanley - Analyst : And Greg, you know, I thank you for providing that color regarding what it was like pre strike and looking at the deliveries pre-strike for the seven three seven MAX, we saw improved deliveries in June. July, August was also fairly stable. I mean, at this point, how do you expect production to progress through the year? Is it still feasible to get to 38 per month by year end? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 13, 2024 / 3:45PM, BA.N - Boeing Co at Morgan Stanley Laguna Conference

Question: Kristine Liwag - Morgan Stanley - Analyst : Thanks, Brian. I'm moving to the triple seven X thrust links on. We saw news of what happened there can you discuss the impact of entry into service and the free cash flow impact it would have on 2024, 2025 and 2026 for the program.

Question: Kristine Liwag - Morgan Stanley - Analyst : Shifting gears to the supply chain and also working capital on. Can you talk about what's what issues you're facing with the supply chain prior to the strike and also even before the strike, you had on a pure procuring suppliers at a higher rate in which you were producing and you're building a physical inventory at some point that was expected to unwind. It could be a tailwind to cash. So firstly, give us context in terms of when that would have occurred. And number two, with the uncertainty regarding the strike right now, how should we think about this cadence of working capital?

Question: Kristine Liwag - Morgan Stanley - Analyst : Thank you. And maybe taking a step back in the past few years for Boeing had seen a lot of production disruption. You had COVID, the seven 37 MAX issues, our 77 quality issues, inflation supply chain process to enlist more, but you know, it's through that whole portfolio of business to the defense portfolio. There have been a lot of changes with the company. So can we just take a step back and think about unit economics once at some point you do get to over 50 per month for the seven, three seven MAX, how should we think about the unit cash for the program? And then for the 7E7, once you do get the 10 per month, what should that look like? And ultimately, do you anticipate that the unit cash profit for these programs will be greater than where they were pre-COVID when you get there.

Question: Kristine Liwag - Morgan Stanley - Analyst : And And Brian, you mentioned defense. So no surprise, but let's have a defense question here on defense has continued to face challenges. Can you provide an update on the watch programs like the tanker, the T 7A, trainer, Carolina Air Force one on these programs that are headwinds to cash and what are the key milestones of the BDS portfolio that we should monitor and what's really the visible path to a positive free cash flow.

Question: Kristine Liwag - Morgan Stanley - Analyst : It's fine. Now on has of 2Q 24, you had given a free cash flow guide of unified negative $5 billion to $10 billion. I think people are asking you where you would end up between five negative five or negative 10. We declined to give a more specific number, but here we are we're in September and you also mentioned with the strike their efforts to have cash conservation. How much visibility do you have on that free cash flow number? And any initial thoughts for 2025?

Question: Kristine Liwag - Morgan Stanley - Analyst : Brian, on the balance sheet on debt remains elevated and free cash flow continues to shift to the right. Is there a possibility that the Company may need to raise debt our equity by year end or early 2025.

Question: Kristine Liwag - Morgan Stanley - Analyst : And we will take any necessary actions between now and then to make sure we accomplish those two objectives in looking at the time, it seems like we have time for one or two questions from the audience on raise your hand and we'll bring a mike you. Yes, what is the next step with the union. So as you saw last night, just after nine local time on the announced results, strike began at midnight. It has been carried on throughout the day. As I mentioned, Kelly, he's been in Seattle all week, getting first-hand information about situation. The ground and his priorities are to reset, reengage and rebuild. So how that plays out in terms of timetable that will be up to the union, the bargaining table participants to decide upon. But our intent it is to get back to table and trying to get accretive if everything they're asking for, how much is that incrementally on an annual basis? So I'm not going to touch that one. Rob will tell you is that working with union leadership for quite a period of time. And we thought we had what was an unprecedented offer to hit the things that we knew or understood our members care about was around wage increases around supplements to health care supplements to retirement and job security. And we put our best foot forward. And that's what was unanimously endorsed until it wasn't because endorsement by the leadership versus the members was quite a disconnect. And I was kind of work forward to listen to all our members. We have to hear what's on their mind and we have to be responsive. Unidentified Participant Could you talk about the supply chain kind of philosophy around you've been you've kept the supply chain going at an elevated rate. How long can you do that for what's the philosophy around keeping the supply chain intact with before saying, hey, guys, we got to cut we have too much inventory

Question: Kristine Liwag - Morgan Stanley - Analyst : Well, great. And thank you very much, everyone. That's all the time that we have today. This concludes our presentation with Boeing. Brian, thank you very much for joining us. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 13, 2024 / 3:45PM, BA.N - Boeing Co at Morgan Stanley Laguna Conference