tapebrief
BA · Q3 2025

BA · Q2 2025 Earnings

Cautious

Boeing

Reported July 29, 2025

30-second summary

Boeing delivered 150 commercial airplanes, hit the 38/month 737 rate, and burned only $200M of free cash — a materially better outcome than the Street feared. Revenue of $22.7B grew 35% YoY on an 81% jump in Commercial Airplanes, but BCA still ran a -5.1% operating margin and the company posted a $612M net loss. Management framed FY2025 free cash flow at roughly -$3B for the year with a positive Q4 FY2025 contingent on rates, deliveries, and trade — the recovery is real but not yet earning anything.

Headline numbers

EPS

Q2 FY2025

$-1.24

Revenue

Q2 FY2025

$22.75B

+34.8% YoY

Free cash flow

Q2 FY2025

$-0.20B

Operating margin

Q2 FY2025

-0.8%

Key financials

Q2 FY2025
MetricQ2 FY2025YoY
Revenue$22.75B+34.8%
EPS$-1.24—
Operating margin-0.8%—
Free cash flow$-0.20B—

Guidance

Prior quarter data unavailable — comparison not possible.

Segment KPIs

Q2 FY2025
SegmentQ2 FY2025YoY
Commercial Airplanes$10.874B+81.0%
Defense, Space & Security$6.617B+10.0%
Global Services$5.281B+8.0%

Other KPIs

Q2 FY2025
SegmentQ2 FY2025
737 Production Rate38 per month
Commercial Airplane Deliveries150 units
Total Company Backlog$619 billion
Commercial Airplanes Backlog$522 billion
Commercial Airplanes Backlog Units5,900+ airplanes
Defense, Space & Security Backlog$74 billion
Commercial Airplanes Operating Margin-5.1%
Global Services Operating Margin19.9%

Management tone

Management's posture this quarter was "recovery plan is taking hold" — the most assertive framing the company has used since the door plug incident. The tone is still guarded ("we still have a lot of work to do" appeared repeatedly), but Ortberg explicitly told the market the plan is working across all four pillars simultaneously, not just on isolated programs.

The most concrete shift was on the 737 line. Production hit 38/month with KPI stability inside management's thresholds, and the company telegraphed an FAA request for 42/month "in the coming months." This is the first call where rate increases were framed as imminent rather than aspirational, and the cadence was given explicit guardrails: 5-rate increments, no faster than every six months. "We achieved a rate of 38 airplanes per month, and we're now focused on demonstrating stability at that rate." That replaces a year of language about variability and rework.

Defense fixed-price programs got the most striking tonal shift. After years of EAC charges and crisis framing, management said: "Our renewed efforts around baseline and risk management of these programs are producing early results... I do like the direction we're headed." That "I do like the direction" is the first explicitly positive sentiment expressed on this portfolio. Two consecutive quarters of held EACs is what's earning that change — but one more charge would reverse it instantly.

Tariffs moved from headwind to manageable. Management quantified input tariff impact as <$500M and now expects to beat that, citing the Japan zero-for-zero deal and EU bilateral progress. "We're probably feeling better today, but we still need to actively manage through this dynamic environment." Notable that tariff-driven order momentum is being framed as a tailwind for Boeing as customers reposition supply.

The 737-7 and 737-10 certification slip to 2026 was the one clear setback, and management buried it: "Work on the solution is taking longer than expected... we don't expect a material impact to our production plans." That's a real delay being minimized — worth watching whether customer order conversion suffers.

The next-generation single-aisle question was deliberately deflected. When asked about a 797-class decision, Ortberg cited three immature workstreams (market, cash, technology) and refused to commit to a decision date. Reasonable given the balance sheet, but it leaves Airbus uncontested on the long-haul narrative.

Recurring themes management leaned on this quarter:

Production stabilization and rate increases on 737 and 787Quality improvements and reduced rework across commercial programsDefense fixed-price program stabilization and EAC managementFree cash flow trajectory improvement despite Q2 negative usageCulture change and employee accountability initiativesTariff mitigation through trade negotiations

Risks management surfaced:

737-7 and 10 certification delays extending into 2026Ongoing dynamic tariff environment requiring active managementRemaining work on 777X program prior to customer delivery next yearPotential one-time DOJ payment impacting Q4 free cash flowDependency on continued global trade favorability for commercial delivery forecast

Q&A highlights

Miles Walton · Wolf Research

Breakdown of $2 billion better free cash flow performance in Q2, translation to prior $4-5 billion target, comfort level around $3 billion, and upside risks for the year.

Management confirmed $3 billion is a reasonable assumption for full year. Q2 benefited from better BCA delivery performance and 13 777 deliveries (vs. typical 6-7), generating $700M incremental FCF. Q3 will see 777 reversal offset by lower interest payments. Q4 expected to be positive, with potential $700M DOJ payment. Full year momentum positive heading into 2026.

$3 billion full-year free cash flow target$700 million positive FCF from 13 Q2 777 deliveries vs. typical 6-7Q2 free cash usage of $200M better than expectationsPotential $700 million DOJ non-prosecution payment in Q3

Sheila Kaiglu · Jefferies

Impact of tariff trade agreements (Japan zero-for-zero, EU agreements) on Boeing orders, order momentum, pricing dynamics, and supply chain implications given seven-year backlog.

Management indicated input tariff impact less than $500M; Japan and EU zero-for-zero agreements (particularly on equipment imports from Japan and fuselage components from Italy) will help. Tariff-driven demand is boosting orders. Pricing in constrained environment provides offset to cost growth. Key risks: retaliatory tariffs with China and USMCA renegotiation. Confident tariffs can beat the $500M target.

Input tariff impact less than $500 millionJapan zero-for-zero agreement on equipment importsItaly fuselage components (Alenia) dependent on zero-for-zero outcomeTariff-driven order environment beneficial for Boeing

David Stress · Barclays

Delivery guidance for MAX (400 prior target) and 787 (80 prior target) for full year; inventory movement explanation given 777X absorption but inventory decline.

787 on track for high end of 70-80 range with 37 delivered in H1, stabilizing at 7/month. 737 MAX tracking ahead of 400 target (209 delivered in H1 including 37 from inventory) poised to do 'a little better than 400.' Inventory decline despite 777X increase due to wide body liquidation; 777X expected to increase again as program moves to EIS (Entry Into Service).

787: 37 delivered in H1, targeting high end of 70-80 range (full year)737 MAX: 209 delivered in H1 (including 37 from inventory), tracking above 400 target737 MAX expected to exceed 400 deliveries for full year777X inventory expected to increase again toward EIS

Peter Arment · Baird

Long-term production rate framework for 737 MAX and 787; specific focus on 787 long-term rate potential given strong demand and wide body replacement cycle.

Management is taking incremental approach: 787 moving from 5 to 7/month successfully with green KPIs, will stabilize then consider next increases. Series of rate increases planned with Charleston expansion investment. 737 MAX at 38/month stabilizing; expects FAA discussions soon on increases. One KPI below threshold (rework hours) being addressed. Rate increases beyond 38 will be in 5-month increments, no earlier than 6-month intervals. Priority is stability and quality before rate increases.

787 current rate: 7/month (moved from 5)737 MAX current rate: 38/month, stabilizing737 MAX rate increases: 5-month increments, no earlier than 6 months apart787 Charleston expansion investment underway for capacity growth

Noah Poppenack · Goldman Sachs

Clarification on 2025 free cash flow math (Q3 similar to Q2 plus $700M DOJ would imply barely positive Q4 against historical seasonality); validation of $10 billion long-term FCF framework for 2027-2028 and whether timing remains reasonable.

Management reiterated $3 billion net 2025 assumption is reasonable; Q4 positivity dependent on delivery performance, rate increases, and favorable global trade environment. On $10 billion long-term target: Kelly (new CFO) sees nothing structural preventing it; framed as 'not if, but when' but declined to specify timing. Acknowledged significant work remains on production rates, rate increase cadence, and supply chain.

$3 billion 2025 free cash flow guidance reconfirmedQ4 2025 positive FCF contingent on delivery performance and rate increases$10 billion long-term FCF target viewed as achievable ('not if, but when')Timing of $10 billion target deferred pending rate increase execution and supply chain maturation

What to watch into next quarter

FAA approval to move 737 from 38 to 42/month — management said the request is coming "in the coming months." Whether the request is filed in Q3 FY2025 and whether the FAA signals timing is the single most important operational milestone.

Q3 FY2025 free cash flow ex-DOJ payment — guided "more or less in line" with Q2 FY2025's -$200M, but the potential $700M DOJ payment could push reported usage to ~-$900M. Whether underlying ex-one-time FCF actually matches Q2 FY2025 is the test.

BCA operating margin trajectory — at -5.1% with deliveries running hot, the question is when volume converts to margin. Watch whether Q3 FY2025 narrows below -3%; if not, the $10B long-term FCF math gets harder.

787 rate beyond 7/month — management committed to stabilizing at 7 before the next step. Whether a move to 8 or 9/month is signaled on the Q3 FY2025 call would confirm wide-body cash generation thesis.

Defense EAC discipline — third consecutive quarter without a charge would meaningfully de-risk the segment. One more charge reverses the tone shift outright.

737-7 / 737-10 certification milestones in 2026 — whether the FAA solution work converges in H1 2026 or slips further. Each quarter of additional delay compounds customer mix issues.

Sources

  1. Boeing Q2 FY2025 press release / 8-K Exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/12927/000001292725000058/a202506jun308kprex991.htm
  2. Boeing Q2 FY2025 earnings call prepared remarks and Q&A

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