BA · Q3 2025 Earnings

Cautious

Boeing

Reported October 29, 2025

30-second summary

Boeing took a $4.9B pre-tax charge on the 777X and slipped first delivery a year to 2027, driving a $5.3B net loss and a -48% BCA operating margin even as revenue grew 30% to $23.3B. Underneath the charge, the operational story improved materially: 737 rate hit 42/month with FAA sign-off in October, Q3 FY2025 free cash flow turned positive at $238M, and management quantified FY2025 FCF usage at ~$2.5B vs the prior ~$3B framing. The recovery thesis is intact on narrowbody and cash; the wide-body franchise just got pushed out another year and now consumes >$2B of cash in 2026.

Headline numbers

EPS

Q3 FY2025

$-7.47

Revenue

Q3 FY2025

$23.27B

+30.2% YoY

Free cash flow

Q3 FY2025

$0.24B

Operating margin

Q3 FY2025

-20.5%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$23.27B	+30.2%	$22.75B	+2.3%
EPS	$-7.47	—	$-1.24	-502.4%
Operating margin	-20.5%	—	-0.8%	-1970bps
Free cash flow	$0.24B	—	$-0.20B	+219.0%

Guidance

Boeing raised FY2025 free cash flow outlook to ~$2.5B usage (vs. prior qualitative 'positive Q4'), secured FAA approval for 737 rate increase to 42/month, and reaffirmed near-term certification and delivery timelines.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

Metric	Period	Guide	YoY
777-9 First Delivery	FY 2027	2027	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Free Cash Flow	FY 2025	positive in Q4 (contingent on trade environment)	usage of about $2.5 billion	Prior guidance was qualitative (Q4 positive); current is quantified full-year usage of ~$2.5B, representing a material improvement vs. expectations	Raised
737 Production Rate	FY 2025	expected to request FAA approval to increase to 42 per month	42 per month (agreed with FAA in October)	Milestone achieved: FAA approval secured in October (prior: expected approval in 'coming months'); production rate increase now confirmed rather than pending.	Raised

Reaffirmed unchanged this quarter: 737-7 and 737-10 Certification (certification expected in 2026), Profitability (positive before any DOJ payment impact)

Segment KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
Commercial Airplanes	$11.094B	+49.1%
Defense, Space & Security	$6.902B	+24.7%
Global Services	$5.37B	+9.6%

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Commercial Airplane Deliveries	160
737 Production Rate	38 per month (increased to 42 per month in October)
787 Production Rate	7 per month
Total Company Backlog	$636 billion
Commercial Airplanes Backlog	$534.6 billion (5,900+ airplanes)
Defense, Space & Security Backlog	$76 billion
Commercial Airplanes Operating Margin	-48.3%
Defense, Space & Security Operating Margin	1.7%

Management tone

Narrative arc: Q2 FY2025 "recovery taking hold" → Q3 FY2025 "operational turn validated, wide-body franchise reset"

Three quarters ago the 777X was framed as progressing toward 2026 delivery; in Q2 FY2025 management still anchored to that timeline with caveats about flight test work; this quarter the program was reset to 2027 with a $4.9B charge and a candid admission that the issue is the certification process itself. "With this charge, we now have a higher confidence that we'll complete the certification within the financial estimate." That language — converting a delay and a $4.9B loss into a "confidence" milestone — is recovery-mode rhetoric, but the underlying admission (Boeing and the FAA underestimated TIA process complexity together) is the most honest statement this management has made on the program. The shift signals that 777X is no longer a 2026 swing factor; it is a 2028-2029 story.

In Q2 FY2025 the 737 rate move to 42/mo was "imminent" but aspirational; this quarter it is achieved with the FAA jointly aligned. "We jointly agreed with the FAA in October to increase 737 production to 42 per month." That word — "jointly" — is new. It positions the regulator as an aligned partner rather than a gating obstacle, and the rate cadence beyond 42 (5-rate increments, no faster than every six months) is now framed as Boeing's own discipline, not externally imposed. This is the single biggest tonal upgrade on the operational story.

Free cash flow language tightened from directional to quantified. Q2 FY2025 framed FY2025 FCF at "roughly -$3B" with Q4 FY2025 positive "contingent on trade environment"; this quarter management put a specific number on it (~-$2.5B usage) anchored to "better than expected performance year-to-date" — and pre-emptively isolated the DOJ payment as a separate item. The shift from contingent to quantified, with carve-outs for legal items, is the language of management that believes the underlying cash engine is now predictable.

The hedging on 787 got more pronounced. Last quarter the move beyond rate 7 was framed as "stabilize then step up"; this quarter management explicitly said 787 to rate 10 "will be more challenging than 737 MAX due to lack of inventory buffer" with seat certifications still constraining. "We still have a significant portion of this flight test certification program to go." The wide-body franchise — both 787 and 777X — is now the cautious half of the story; narrowbody is the confident half.

Recurring themes management leaned on this quarter:

Safety and quality as foundational recovery driverProduction rate increases methodically tied to KPI stability777X program reset with higher financial confidencePositive free cash flow milestone reached after extended lossCulture change and employee engagement as operational leverDefense business stability and record backlog amid geopolitical demand

Risks management surfaced:

Work remaining on commercial development and certification programsSignificant portion of 777X flight test certification program still to completeIAM workforce strike in St. Louis impacting productionPotential DOJ payment impact on Q4 cash flowProlonged government shutdown risk to 2025 outlook

Q&A highlights

Miles Walton · Wolf Research

What is the negative cash flow impact of 777X in 2026 in totality, and how soon after first delivery can the program reach cash flow neutrality?

777X will be a heavy cash use year in 2026 (slightly higher than $2 billion headwind), with improvement expected in 2027. Management projects break-even neutrality around 2028 and positive free cash flow starting in 2029, driven by improving payments from aircraft deliveries and advances.

$2 billion headwind to prior expectations2026 cash usage slightly higher than $2 billionBreak-even neutrality expected in 2028Positive free cash flow expected starting 2029

Ron Epstein · Bank of America

What changed in the past two to three months that led to the re-evaluation of the 777X program timing and charges?

No new issues with the aircraft or engines. The problem stems from underestimating the work required to achieve TIA (Approved Test Item) approvals from the FAA. Management underestimated both Boeing's analysis/data submission requirements and the FAA's review time. This is the first incremental TIA process of this type, creating learning curves for both parties.

No new technical issues with 777X or enginesTIA approval delays are the sole driver of schedule changesFirst incremental TIA process of this typeLearning curve shared between Boeing and FAA on certification process

Robert Stallard · Vertical Research

Can you break down the moving parts of the $4.9 billion charge and explain how Boeing will manage the 777X supply chain given the delay?

Primary driver is revised production plans to mitigate pre-certification aircraft builds. Schedule delay impacts all production system elements; longer holding periods and slower ramp rates increase carrying costs and affect learning curves. Supply chain impacts are contemplated in the revised estimate; Boeing will flow new schedules to suppliers and negotiate case-by-case impacts.

$4.9 billion total chargePrimary driver: revised production plans to reduce pre-certification buildsIncreased carrying costs from longer holding periodsLearning curve impact from slower ramp

Noah Poppenack · Goldman Sachs

Will Boeing reach 42 production units on 737 MAX by year-end, and what is the expected cadence for rate increases from 42 to 47 to 52 units per month?

Boeing is currently rolling at 42 rate and plans to exit the year at 42 monthly rate. Move to 47 requires not earlier than six months to demonstrate stability and test at the new rate. Future rate increases (47 to 52) will depend on system maturity and supply chain readiness; earlier increases may be possible if targets are hit, but deliberation over speed is prioritized.

Currently rolling at 42 ratePlan to exit 2025 at 42 units/monthNot earlier than six months to reach 47 rateSignificant inventory currently supporting ramp

Seth Seifman · JP Morgan

How should investors think about 787 rate increases (8 to 10), key watch items internally and supply-side, and progress on cash profitability?

787 move from 8 to 10 rate next year will be more challenging than 737 MAX due to lack of inventory buffer. Seat certifications remain a constraining item and will continue to be an issue. Boeing is stable at 8 rate before moving to 10 next year (timing not finalized). Uses same capstone review process as 737 MAX. Improved cash profitability expected as concessions are addressed.

787 rate 8 expected by year-end 2025Move to rate 10 next yearSeat certifications are constraining itemNo inventory buffer like 737 MAX program

Answers to last quarter's watch list

FAA approval to move 737 from 38 to 42/month — Achieved. FAA jointly agreed in October; Boeing is rolling at 42/mo and plans to exit 2025 at that rate. The single most important Q2 FY2025 watch item resolved cleanly.

Resolved positively

Q3 FY2025 free cash flow ex-DOJ payment — Resolved meaningfully better than guided. FCF came in at +$238M vs the "roughly in line with Q2 FY2025" (-$200M) framing. Management did not explicitly break out a DOJ payment in the quarter; the carve-out of "before any DOJ payment impact" was pushed to Q4 FY2025.

Resolved positively

BCA operating margin trajectory — Reported margin of -48.3% is charge-distorted and unusable for trend analysis. Ex the $4.9B 777X charge, BCA margin is directionally consistent with Q2 FY2025's -5.1% but the company did not provide a clean ex-charge figure. The underlying volume-to-margin conversion question is not answered this quarter.

Continue monitoring

787 rate beyond 7/month — Not signaled. 787 remains at 7/mo with the move to 8 deferred and rate 10 pushed to "next year" with no firm timing. Seat certifications cited as the constraint. The wide-body cash acceleration thesis is decelerating.

Resolved negatively

Defense EAC discipline — Third consecutive quarter without a charge. Defense margin held at 1.7% on +25% revenue growth despite the IAM St. Louis strike. The Q2 FY2025 tonal shift on fixed-price programs survived.

Resolved positively

737-7 / 737-10 certification milestones in 2026 — Reaffirmed at 2026 with no further slip.

Continue monitoring

What to watch into next quarter

Q4 FY2025 free cash flow ex-DOJ payment — Management reaffirmed Q4 FY2025 positive before DOJ impact; the FY2025 ~-$2.5B usage guide implies Q4 FY2025 of roughly +$0.5B to +$1B ex-DOJ. Watch whether reported Q4 FY2025 FCF clears at least +$500M ex any DOJ outflow.

777X 2026 cash burn vs the "slightly higher than $2B" framing — Walton's Q&A established this as the new bar. Watch whether the Q4 FY2025 call quantifies 2026 FCF guide and whether 777X cash burn lands inside the $2B-$2.5B range or slips further.

737 rate 47 timing — Six months minimum from October means earliest April 2026. Watch whether the Q4 FY2025 call signals stability at 42 sufficient for an FAA request to step to 47, or whether KPI gates push the timeline.

BCA ex-charge operating margin — With 777X reset behind, Q4 FY2025 should give a clean read on whether BCA margin is narrowing toward break-even on rising deliveries. Watch whether the figure improves from Q2 FY2025's -5.1% baseline.

Defense fourth consecutive quarter without an EAC charge — Would meaningfully de-risk the segment and validate the Q2 FY2025 tone shift. The St. Louis strike resolution is a near-term risk to this.

787 rate 8 signal — If the Q4 FY2025 call still has 787 at rate 7 with rate 8 "next year" unquantified, the wide-body cash thesis weakens further.

Sources

Boeing Q3 FY2025 press release / 8-K Exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/12927/000162828025046915/a202509sep308kprex991.htm
Boeing Q3 FY2025 earnings call prepared remarks and Q&A
Boeing Q2 FY2025 Tapebrief (prior quarter context)

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