BA Q2'26 Conference Call Notes

Three things from Boeing's call, starting with: Spirit Wichita integration driving 20% quality improvement but hiding deeper supply chain rot at rate 52+

Three things that matter from Boeing (BA) in its Q2’26 call:

1. Spirit Wichita integration driving 20% quality improvement but hiding deeper supply chain rot at rate 52+: While management celebrates defect reduction from Wichita, they’re unusually silent on Spirit’s cash burn trajectory (still negative $1B annually) and completely dodged specifics on wing constraints that will hit at rate 52.

2. 777X certification at 55% complete looks like progress until you realize GE still hasn’t delivered a single modified engine: Management says ‘on track for 2027’ but buried the lede: GE engine deliveries resume ‘in the third quarter’ which means they’ve delivered ZERO engines for months while Boeing keeps building airframes.

3. BDS margins of 3.5% ex-charges masks that VC-25B just ate another $280M and Starliner EAC is still TBD: Jay tried to sound confident about ‘high single digit margins by decade end’ but when pressed on fixed price risk, Kelly admitted ‘we have work yet to do with the customer’ on Starliner, code for: NASA hasn’t agreed to our cost overruns yet.

Disclosure Quality: C+ | Financial Quality: D

Track BA’s promise history and grade trend: callsheetdaily.com/tickers/ba

---

Delta Sheet

• ▼ Revenue: $22.2B (+14% YoY) → $24.6B (+8% YoY) (Growth decelerated 600 bps)

• ▼ Core EPS: -$0.20 (improved YoY) → -$0.76 (improved YoY) (Loss widened $0.56 sequentially)

• ▲ Free Cash Flow: -$1.5B → +$631M (Swung positive $2.1B)

• ▼ Operating Margin: 2.0% → 0.6% (Compressed 140 bps)

• ▼ BCA Revenue: $9.2B (+13% YoY) → $11.8B (+8% YoY) (Growth slowed 500 bps)

• ▲ BCA Operating Margin: -6.1% → -2.7% (Improved 340 bps)

• ▲ 737 Deliveries: 114 units → 129 units (+13% sequential acceleration)

• ▲ 787 Deliveries: 15 units → 25 units (+67% sequential surge)

• ▼ BDS Revenue: $7.6B (+21% YoY) → $7.5B (+13% YoY) (Growth decelerated 800 bps)

• ▼ BDS Operating Margin: 3.1% → -0.2% (Turned negative on VC-25B charge)

• ▼ BGS Revenue: $5.4B (+6% YoY) → $5.3B (+1% YoY) (Growth stalled to 1%)

• - BGS Operating Margin: 18.1% → 18.1% (Flat but still double digit)

• ▲ Total Backlog: $700B → $715B (+$15B record level)

• ▲ Debt Balance: $47.2B → $45.9B (Paid down $1.3B)

• ▼ 777X Certification Progress: 50% → 55% (Only 5% progress in full quarter)