The Boeing Company ($BA)

Malave with us today, CFO, Executive Vice President of The Boeing Company. So Jay, thank you for coming.

Thank you Ron. Thanks for having me here. Happy to be here.

Yes. That's great having you here. So maybe to quickly start off this sort of a big broad question I ask everybody, how's business?

The business, I think, is doing quite well. 2025, and it's just a big picture was a good year for The Boeing Company. It was one, I'd say, foundational, while at the same time, a year of pretty significant progress in the company's recovery. And you take a step back and maybe you just go around the portfolio for a second. BCA coming off of 2024, we had a work stoppage and it was really unclear in terms of what we'd be able to achieve from a delivery standpoint, a production standpoint. And the company delivered -- BCA delivered 600 aircraft last year, which was the highest since 2018. So they also had, besides kind of just putting together a solid framework and production cadence, they actually were increasing rates at the same time last year, too. And the company put together a pretty strong and followed it a quality and safety plan and was methodical about creating stability and maintaining stability in the production system, which enabled it to then increase the rates, which is what we saw. And it really put -- created a springboard for where we are in 2026 and where we're going and beyond. And so they had a very good year. They also closed the Spirit acquisition, which was no small feat. As you know, integrations are difficult, and we closed that at the end of last year, and then they started in on the integration and have done quite well. We've seen defects come down by 40% here early 2026 relative to what we were performing at even in 2025. So really good performance there at Spirit as well. We did have to fold in their accounting, which does cause a little bit of pressure on the BCA margins. So for those that have followed us closely, we were expecting to be at least flat or positive margins at BCA this year. That gets pushed out a year to about until 2027. This year will be negative. And in fact, in this quarter, will be negative around 7.5%, 8%. But even so, the combined business of Spirit and BCA is positioned well to really deliver for the future demand that we have. I mean we think about our backlog, we've got $682 billion of backlog across the entire company, over $560 billion of backlog at BCA. So it's critical that, that part of the value chain works in a synchronized fashion and they're doing so. So really good progress at BCA. BDS is the same thing. On the whole, BDS really made some good progress. Again, same thing, stability in their developed programs and some of the challenge of programs that have been challenged. Yes, in the fourth quarter, we did get nicked up a little bit on the Tanker program. But on the whole, they made a lot of progress. And again, position themselves to start putting us here a positive margin for 2026. And getting ourselves up that ramp to high single-digit margins that they should be at. So they're in the right path, Steve Parker has done a nice job there, really stabilizing that business, focusing on the fundamentals, really just program management, integrated product teams and incorporating really across the company, not just BDS, but across the company, things like lean and continuous improvement. And so really seeing good progress there. And finally, at BGS, they did a -- just clicking along quite nicely, high-teens margins ended the year last year at 18% delivering solid cash flow for us, which is critical given where we are in our recovery. And at the same time, they were part of the disclosed, the divestiture of Jeppeson, which is not easy to do keeping everything going on a day-to-day basis while at the same time executing a divestiture. So they did a nice job there and I give a boost to our cash balance, which is -- puts us in a good place in terms of a margin of safety. And so all those things taken together, a pretty good -- pretty strong year and sets us up well. The one blemish, if you will, we had last year was on development programs at BCA. We had to reset the schedules on the 737-7 and -10. We had to reset the schedule in the third quarter on the 777-X. or -9 program. But the good thing there is that we put those now on the right schedule. The reset was while painful, now puts us in a position that we can execute, too, and perform, too, on that schedule, and we are performing exactly to those schedules today as we speak. So '25 is a good set up into '26, and we're moving forward.

So maybe for lack of better expression, double click on Spirit for a moment. When you guys closed and brought it in, what did you find that was surprising? What had changed in the years when it was not part of Boeing anymore?

Yes. Well, the company had embarked on diversification. So it became a little less -- or tried to become a little bit less Boeing focused. In that there was an impact in performance there among a number of other issues. The good thing there is that our team, our production team and our supply chain team was able to get in there earlier than the close just as in a supplier and purchaser relationship. And so we were able to get, I think, an early start on quality performance. I think the team did a really, really good job there setting it up. And that's now resulted in the performance we're seeing today much, much better. From a surprise standpoint, you don't get access to all the information until you actually close. And so there was cost that was -- they were -- their cost was higher than the price that they were getting from us. And so we had to reset the margins at BCA as a result. But again, that's a short-term headwind. I think that we'll be able to work through that. When you think about longer-term cash flows, that really won't get in the way of us being able to generate the types of cash flows we've talked about in the past with both -- with you as well as with investors. And so I think those are the 2 primary things. Really focused on execution there for all of our customers, not just the Boeing commercial programs, but our defense customers as well as our aftermarket customers is important. And we're seeing some good trends there.

That's great. And then in 4Q, there was a lot of progress made throughout the year. As outsiders looking in, what should we be looking for to kind of give us confidence? What gives you confidence that, that performance is going to continue into this upcoming year?

Yes. For us, it's -- I'll take it maybe into different pieces on -- just in general, you're saying, right?

Yes.

On the production side, it's really following our production rollouts as well as our deliveries from time to time and how things shake out. And when you look at our production cadence, the deliveries may vary from month to month, but our production rollouts are -- have been pretty steady. And that's the important aspect of the production, particularly in the factory. And so we're seeing good performance there. As we said, we're not going to increase rates before we're ready. And so we're going to stick to the safety and quality plan that we put in place. We need to see stability. We need to see the metrics perform, and we have -- those 6 KPIs. They haven't changed. We'll follow those KPIs and let the data follow our decision-making there. So I think that's one area that's how we're performing against the KPIs and how we're performing and the production system as in general. As we -- on the development programs, it's really completing where we are on the 3 programs is just various levels of flight testing. And where do we stand on those? Are completing the flight testing on the time line that we had laid out? Are we in a position to be able to submit the information that the FFA requires so they can perform their analysis and provide the necessary approvals for that. So those are ongoing as well. Those are I think are going pretty well. We can talk about that in more detail. But it's really monitoring those progress. I think quarter-to-quarter as we report results, we have been and we will continue to do, just to give you the color on where production is and where we are in our development programs, where we are on the programs in BDS from a recovery standpoint. And you'll get to see the BGS financials every quarter to see how they're tracking from a growth standpoint.

Got you. How is the about Everett 737 line...

It's going well, actually. Kelly and I were there last week. We did a tour of the line, the tooling and equipment is in place. We're going through training. Our employees are being trained in the Renton factory, and that's ongoing. That's been going -- happening for a few months now. So we expect that we'll start our first aircraft building here in the summer. And we're -- so everything is right on track there. The stands are in place. The line is ready to go. It's going to be an exact replica of Renton lines. So there'll be no change for those employees, and we have some employees that are going to be coming in from Renton. We have some employees that will be coming in from our Moses Lake factory and some new employees that we're training up today. So it will be a mix of experienced employees that will work in tandem with all the employees. And so we're excited about that. It provides not only just the ability to increase our rate, but also provides resiliency in the production system because now we'll have 2 sites producing and delivering a 737. So very excited about that.

And as outsiders, when would we expect that line to be sort of at a normalized cadence, right?

Well, it will take us a few years. We'll start this year on our first build. It will take us a number of months because of it is kind of the first aircraft and we'll induct the second aircraft. So sometime next year, we'll bump up to a rate too, and it will go from there. But again, it's going to be no different than any other our factories, follow the metrics, make sure the performance is following the safety and quality plan. And whenever we're ready to increase rates in Everett we will. The way it's set up is, Renton will be rate 47 capable and anything above 47 will be in Everett. So it will be a great enabler to these increasing rates.

Got you. Got you. And then just you think about the MAX 7 and MAX 10 certification targets and things seem to be in line. What remaining test items have to happen? And again, what should we be monitoring to kind of feel good that things are going the right way.

Yes. I mean, well, the good news on that program is that we have all of the flight testing envelope has been approved by the FAA. So it's a matter of completing the flight testing. There are remaining things, things like autopilot with the engine anti-ice solution that we implemented last year has to go through the flight testing program as well. Advanced angle-of-attack. There's a number of aircraft systems and capabilities and functions that will have to be tested, but we expect to be complete with that sometime this summer. We'll be in a position, we'll be able to provide the appropriate documents and paperwork for the FAA for them to do their analysis upon. So that's tracking really well. There'll also be some reviews related to what I call is the engineering process reviews to validate that your validation program ties all the way back to your original requirements. And that will take place later this year as well. So we're still on track to have these aircraft certified towards the second half of this year, and we'll start delivering next year.

That's great. And then, how is the 777X going? And what milestones should we be looking for? And how should we think about longer-term demand and build rates for that airplane?

Yes. It's a similar case. It's not as far along as 737, but it's still on the right pace. We discussed and disclosed in the fourth quarter call in January, that we had approval for the TIA 3 which was the next big phase of flight testing. There are 2 more that need we need to get approval for. And we're waiting for the next one very shortly here. We -- flight testing is ongoing. So it's not like we're paused in any way. We have a number of flight test assets that can handle or configured for the different flight test program approvals that the FAA gives us so that we can run all of these programs concurrently. So like I said, this is a little bit behind from a certification standpoint than 737, -7 and -10, but we're on the right path. And as we mentioned, when we reset the program in the third quarter of '25, we expect it to get certified and start delivering aircraft in 2027, we're still on that framework. So again, it's similar milestones to the 737. Where are you in your approvals for flight test program? And where are you actually on the flight test program? And again, we're pretty much on track there.

And then when we think about it, if you can, longer-term potential build rates for the program...

Yes. Longer term, we'll be running up to about 5 per month. There's discussion about potentially taking that higher, but for the time being, we're right around 5, and that's something that we've been able to demonstrate for the legacy 777 program. So there's a fair amount of demand. We've got over 500 aircraft in the backlog. There continues to be demand. We took a lot of significant orders last year. And it's excellent aircraft. So there still continues to be a lot of interest there. We expect there to be more orders.

Got you. Got you. And then in 2026, how should we think about aircraft coming out of inventory versus aircraft coming off the line? I guess from an outsider looking in, when will we -- there'll be a tighter correlation between actual rollouts of the line to deliveries versus things coming out of the second factory.

Yes, this year it gets a lot closer. And you think about last year, maybe take a step back last year, and I'll compare it to this year. Last year, on the 737, we delivered 447 aircraft. About 50 of those came from aircraft that have been built prior to 2023. So it's a fair amount that had to do some completion work. But that really bolstered the delivery framework because we weren't producing at that level. On the 787, we delivered 88 aircraft and similar type of story at about 15 in that ballpark of aircraft that delivered out of inventory. So what was coming out of production wasn't at the rate of delivery. This year, for the most part, does catch up. When you look at 737, we expect around 500 aircraft this year, and that's supported by the 42 rate as well as we're expecting to go to 47 sometime midyear on that program. In addition, we are building another 30, 737-10s for delivery in 2027 once that gets certified. So actually, build will exceed deliveries this year on the 737 program. Let me just stop here on that program for the moment. Because last week, I think it was reported that we had paused delivery on 737 due to a internal notice of escape related to wiring in our -- one of our facilities. Since that time, our team went through the investigation to that analysis. They also presented that and worked with the FAA. And they -- what's come out of that is we've got about a population about 25 aircraft that are impacted by that. So they will have to go -- undergo some level of rework. But you're talking around 3 days of rework, so not a significant amount of rework on those aircraft. We have resumed deliveries as of last week. So towards end of the last week, we're able to resume deliveries of aircraft. And so the impact here is really one of timing. We'll see about 10 aircraft. We are expecting about to deliver around 120, 737s in the first quarter. So we'll slip about 10 of those deliveries into the second quarter. So fairly limited in the grand scheme of things, that will put a little bit of pressure on cash flow in the quarter. I talked about cash flow being similar to what it was last year, maybe a couple of hundred million dollars worse than last year as a result. But at the end of the day, we'll get those aircraft back delivered here in the second quarter. Really no change to our factory production really didn't change. It continued. It was not a safety of flight issue at all. And again, we worked out with the FAA. And we fully expect that will change rate to 47. Like I said around this -- around midyear, the team is actually working through an earlier date than that. But we're kind of for purposes of conservatism, I'm around midyear. And we're still expecting to deliver over 500 aircraft. So really not much change at all. It's something that the team worked through. And frankly, I'm proud in terms of how they approached it really using the lean and continuous improvement tools, go down root cause, corrective action, understand the population affected besides getting to the corrective action, determining what you can do to using continuous improvement parlance mistakeproof. So how can you prevent something like this happening? Do a read across on other types of systems and machines so that you don't see a reoccurrence of this. So I think that the BCA did all the right things around this and the impact is fairly limited.

Can you speak to how it was just noticed in the first place? Like what in the quality system said, hey, you know what, we have an issue here...

Well, they observed some mix in some of the wiring. And that traced back to a machine that was -- that had -- just didn't have the right calibration settings. And so they have to go back and trace back the root cause of the setting changes. So -- but in the meantime, what they've done is really taking those machines offline and you're able to manually do this. And so they've been doing it manually.

Got it. And then maybe just while we're talking about production. In South Carolina, how are things going with 787?

Yes. Thank you for asking the question. 787, again it's -- the rollouts have been pretty good actually for January and February the deliveries have been a little bit lighter. We've delivered about aircraft quarter-to-date, which is lighter. We were expecting to deliver anywhere about 20 aircraft in the quarter. So we expect that to be closer to maybe 15, maybe one or two better or worse in that ballpark. And that's mostly related to Seating certifications. Kelly talked about that in the fourth quarter call in January. And we're still paced by some of these certifications that we're working through. Again, the build is happening. So we're really not changing the production cadence. The factory has been really, for the most part, unaffected there. And so we continue to expect that we'll deliver 90 to 100 aircraft this year as well there. So for that program, it's a timing issue as well. And a little bit lighter in the first quarter, but we'll catch that up.

Got it. And what we've heard is the front-end interior seats cert issue?

Yes, the premium seating has been challenging. Those are very strict, rigorous types of certifications and you wouldn't ordinarily think so, but they are. They're difficult to get through and airlines I'd like to have the specific unique configuration, which they view as a differentiating selling point to their customers. And so we have to work through those.

Maybe changing gears a little bit to the defense business. We're going to see potentially another large uplift in the U.S. defense spending in fiscal '27. How that look for you guys? I mean, what kind of opportunities are you looking for there?

Well, the business coming into this year was very strong. As I mentioned, we had record backlogs. They had a record backlog of $85 billion coming across a business that's generating about $27 billion of revenue. So you've got multiple years already in the backlog and you're looking at potentially more upside. The team recently announced that they had reached an agreement with the Department of War related to PAC-3 intercept, our seeker there. And I think the team is committed. And they got ahead of it. They have made some investments on the production system on that program earlier. So that enables them to ramp up a little quicker than they otherwise would have on that program. So they're doing quite well. And the demand is pretty much robust. We're having a lot of dialogue with customers on our -- mainly the U.S. DOW customer on the platforms as well. Things like the tanker program. And yes, we have to kind of work through these lots in prior contracts. But we're in a position where we'll have much better contracts and much better demand on that tanker program as well. So there's just quite a bit happening. There's demand on the helicopters. And as you know, Ron, a significant amount of activity in space. And our team has a very good business there. And so we're positioned quite well to participate in these higher budgets. For us, it's execution. We got a backlog now. Execute on that backlog. And make sure we earn the right to bring in additional business.

Any thoughts on F/A-XX, what could happen there?

I would be speculating, Ron. We're awaiting that. That's been on and off, on and off. You hear different things on that program. We got to follow the customer's lead on that. And look, we feel that we submitted a fabulous compelling proposal to the customer, both technically, commercially, while at the same time, protecting the Boeing shareholder. But that's ultimately a decision they got to make on a time line -- their time line. And that's not something that we necessarily have much of a say on.

Got you. Got you. And then one question that kind of comes up all the time. How should investors be thinking about potential incremental charges in the defense business?

Yes. That's been, I think, the running -- I don't know if it's a joke or running fear, Jay Malave is going to come in and do a bunch of EAC reviews and we're going to have whole bunch of charges pop out left and right. What I could say is that, starting in January, I was able to get access to the defense businesses and many of the programs. And I've had a number of reviews, and it's not just financials, it's strategy, it's capability. How is that capability relevant today? How will that capability relevant tomorrow? How can you enhance it? What type of modifications and what's the investments necessary for that? So its much strategic as it is financial. But just on the financial, because I think that's really where your question is, is I've had a chance to review a number of the EACs. And while we do have improvement in those EACs, they're very achievable. I'm very comfortable the team has the right assumptions in there. They've got the right performance baselines. There's sound reasoning for the assumptions that they have in those EACs. And so like Kelly said, you can never say never -- charges, but I don't see anything imminent. I think the team has done a good job of estimating and are doing a good job of staying on track to the estimates, the improvement plans that they have in those EACs. So I don't see anything imminent. We'll continue. Look, I do ongoing reviews on the commercial side, I'll be doing ongoing reviews on the defense side just to see how we're doing, but there's nothing that, that comes to mind that worries me.

That's great. How's supply chain? I mean are there pinch points? How are you managing that? And can the supply chain currently support the ramp that you have in front of you?

Yes. I think in the short term, the answer to that is yes. We're going from -- let's just start with BCA and the 737. We're going from 42 in our next rate change would be going to 47. I think that supply chain is very well positioned to support that change pretty much across the board. We have ample number of fuselages. We have an ample number of engines to support that. As you start going beyond 47 to 52, it starts getting a little bit tighter. And there's areas that we have we're watching. I mean, engines is an obvious area where there's that tension between aftermarket and original equipment demand that with a limited supply. And ultimately, that's something that we watch, and we have a very good relationship with our engine provider, and they do a good job of keeping us informed. And so I think that's -- they continue to make progress, and we'll just continue to monitor that. And so I think that's the primary one probably on narrowbody. On the wide-bodies, as you know we've talked about some of these seating certifications that we're dealing with on the 787. There's also been some issues here and there on just on some interiors and from a quality standpoint. So quality needs to get better so that we can improve the delivery and we're going to go from 8 to 10 on the 787 this year. That will be probably in the back half of the year is our expectation there. And again, I think when we go from, say, 10 to 12 in future years, that will be something that we'll have to keep an eye on same thing. I think that we'll have to keep an eye on the interiors and probably engines as well.

And then maybe back on 78, should we be thinking about 78 freighter as a potential replacement for the 67?

It's possible. It's under consideration. The team considers it. I mean right now, look, we've got enough on our plate to deal with. And then the investment there is not insignificant. It's not -- it's not easy. So it's not something you can just do on a side. But yes, it's under consideration.

Yes. Interesting. What's the aircraft pricing environment look like?

The pricing environment, I'm going to take that question back to the question that you asked Kelly in the fourth quarter call. And you asked the question more in the context of just profitability pools and things like that in the industry. And would you change that on a future program. And I agree the way Kelly answered. And I think it's equally applicable to the pricing environment now. And what he said was that, a lot of it comes down to contracting. The risk that you take in your contracting, the terms that you agreed to, and you think about -- you take a step back and you think about The Boeing Company, what we are is we're an aircraft system integrator. And we take a lot of risk associated with being an aircraft system integrator. And so the contract and the pricing as well as the terms that we agreed to should be commensurate with the risk of that. And so we need to protect ourselves probably better than we have from a risk perspective on the term side and the pricing should be reflective of the risk that we're taking as the integrator. And so I think we are seeing a better pricing environment and it's reflective, I think, of a move towards that. It's not just being kind of opportunistic because there's minimal slots available. Yes, that's a factor. But I think that we need to be just more prudent in the way we price. And again, like I said, it's got to be more connected to -- correlated to the risk that we take as an integrator.

I mean just maybe double quick on that, because that was a question that I asked. Do you see the industry move in that direction? Because I would argue that I think most investors think that Boeing and your primary competitor don't price enough on the aircraft that you provide?

Well, I can't speak for others. I can only speak about what we're doing. And I really -- I believe -- I'm really again impressed with BCA, what Stephanie and her team and her sales team are doing in terms of just being more prudent with sales campaigns, being more disciplined, being just using sound reasoning for -- to the extent that we're incorporating changes that customers may or may not have seen in the past. And so just -- it's just logic-based. And so I think that there's just room for that. And so whether or not others are doing, I can't really say. All I can tell you is what we're doing. And I think discipline is an important part of our recovery plan.

Yes. That makes a ton of sense. What are the key building blocks to bridge '25 cash flow to the '26 targets when you think about deliveries, inventory drawdown, working capital?

Yes. I mean you look at a big picture, you go from '25 to '26 and BCA deliveries is just a big component. We are increasing deliveries pretty much across the board on the 2 major programs, the 737, 787. So that provides a cash flow boost. We're also getting a benefit from some excess inventory burn down in '26 relative to where we were in '25. And then timing. I mean this year, we see some timing benefits in terms of new orders that varies from year-to-year, but we're expecting some benefits there, which will give us a little bit of a boost as well. And so some pretty solid contribution out of BCA. And then you've got BDS with the profitability improvement, we'll continue to see a contribution from them as well. So they're shifting from a business that over the past 3 years have been pretty much negative cash flow to a business that will be breakeven to positive cash flow fairly quickly here. So they're on the right path. Just the cash flow will follow the profitability path for them as well. And then on BGS, just kind of clicking along. Just continue to grow and drive some cash flow. So those are all the positives that we'll see in cash flow. Some of the kind of headwinds or offsets that we'll see negatives, we do have negative cash flow, higher negative cash flow on the 777X program this year. We still are going through a certification program and we're building aircraft to start delivering next year. So that does have a pretty decent sized cash burn to it. We've got higher CapEx this year, about $4 billion of CapEx versus around 3 -- little bit $2.9-ish billion last year. And so we'll see that for this year and next year around those levels around $4 billion. And so -- and then we have this kind of onetime payment that this DOJ payment that from our settlement and some additional corporate costs that we're dealing with, too. So those are all kind of things that are dragging it back down into this range of 1% to 3%, but I still feel comfortable in that range, given all those moving pieces. So yes, I mean there's a number of items there that are moving around. When you look at it, and we talked about this on the fourth quarter call in January, when you put aside, and I know, look, actuals are actuals, so you can't necessarily ignore it. But when you put aside some of these temporary issues that we have that are impacting our cash flow, whether it be some of the pricing penalties that we've had, some of these excess advantages that we've got to work through and where we're going in terms of the aircraft build on 777. Once we get ourselves, fully delivering get ourselves on the increasing rates, it's all temporary. That will all burn off and the types of cash flow that investors have come to expect from The Boeing Company, it's in front of us. It's right there. It's not tomorrow, it's not today, but it's there. And so I'm very confident that's going to happen as long as we execute.

Okay. How is it going with hiring and retaining employees? Is that stabilized, is it...

Absolutely. You think about that, Ron, maybe 2 to 3 years ago, there was just so much pressure on retaining talent. And it really was all types of skills. It wasn't just technical skills. It was technical, it was factory workers, it was other professionals. It was just difficult to retain talent. Our retention rates are very high this year last year and this year. Part of it is, I think -- I came into the company in August, and I just saw a change really, a level of enthusiasm because employees started to believe that we could recover. And I think that has just grown the momentum there. And I think that as a result, the retention has just been fantastic. We've got like a 4% acceptance rate for applicants in the company, which you may ask, well then, how did I get in. Yes, it's a good question. We're working on that, but I did get in. But I think big picture, we're doing a good job of retaining our employees, particularly our technical employees on the engineering side as well as on the factory side, we've been able to increase the headcount. We pretty much have the employment levels that we need to deliver at these rate increases. Now it's a matter of training for those that are new employees. And I think we're doing a very good job there as well. And so turnover -- high turnover has really hasn't been an issue for us for a little while now.

Got you. And how is the relationship with the union kind of now that we're past the...

Yes, everyone moves past that, we move on, and we're all one team. And a lot of our incentive structures and bonus structures across the company are tied to one company scores. And we've just -- everyone's moved past that. And it's all about making The Boeing Company a better company each and every day. And delivering to our customers' requirements. I was in Renton maybe about 3 weeks ago, just talking to the team who's going through the training and the Executive was going to manage the Everett line, the North Line. The way she explained is like, look, I'm not your boss, this aircraft is your boss. And we need to do what it takes to make sure that we take care of that aircraft. It's a great way of articulating what we're trying to accomplish. And the Boeing employee -- Boeing employees have bought into that. So we're seeing some really progress and -- like I said, better performance.

Maybe switching gears a little bit. You guys [ envisaged ] the portfolio some, would we expect any more portfolio management in terms of the assets you guys have?

Well, I think it's good corporate hygiene to always look at the portfolio and we will do that. We will continue to look at the portfolio and determine whether or not there's things that should be pruned or things that should be added. And so I think that will be an ongoing review. There's nothing imminent that we're looking at. But I think the Board expects the management to give them portfolio reviews, and we do that. So -- but I can't say there's anything to specifically to speak of at the moment.

And then kind of I always wonder about this, as you know, and I think this is a question in the back of people's minds. How are you thinking about new airplane development? And previous regimes around the company said, well, we're not doing that. How would you frame it now?

I would say that there will be a day where we have to enter into a new program. That day is not today, and it's not any time near. But we do think about the technology that's going to be required on a new program. We have dialogues with our suppliers in terms of technology, propulsion technologies is a great example on how something like that will look like, looking at things like new and different types of material properties that you can apply to aircraft. And what type of structures are you going to be looking at. So there's -- what type of systems, there's so much to look at -- you just can't wake up one day and say, hey, we're going to develop a new aircraft. And all of a sudden, so we're just going to turn the engineering lights on for that. You have to think about the technology beforehand. You have to start technology development. But that in no way means that anything is imminent. So it's unrealistic to say that we'll never develop a new program, we will, at the right time. But as Kelly has repeatedly say, I wholeheartedly agree with him, there's 3 conditions that need to take place. Number one, the market has to be ready. Number two, the technology has to be ready. And number three, The Boeing Company has to be ready. And none of those 3 are in a place that we believe that would come anywhere close to supporting a launch of a new aircraft. If you look at the market, we've got overdue aircraft. The customers are just give us what you -- what we've already -- what you've sold to us. We've got a $560-plus billion backlog. We just have to deliver on that. As I mentioned, that technology, there's still just a lot of things, trade studies that have to take place. And there's just a lot -- a fair amount of time that's got pass before our engineers feel anywhere comfortable with settling on any type of configuration around that. So it's very, very kind of just really early. And then The Boeing Company, I think we spent the last half hour plus talking about what we're doing today in here and now. We have to complete our certification programs to 737-7, 737-10. The 777-X program or 777X program we have to complete as well. And we have to get ourselves to these rates that we've talked about. And none of those conditions are anywhere near ready. We're still going up the recovery path here. So like I said, that day will come, but it's not any time soon.

And then the one business, in the couple of minutes we have left that we just didn't really talk about is the services business. How should we be thinking about that and the growth profile there and how you broadly think about that business?

Yes, it's a good business. It has various aspects to it. It has commercial aftermarket to it and the parts business. It has a defense sustainment to it, both kind of modification work, parts work, some level of even some level of MRO to it there. And there's also distribution businesses where we're providing parts to our suppliers who are then turning those and putting those into a subsystem or a system that supply to us. So it's a pretty diverse business. It's -- in the commercial world its not MRO heavy. I'm not sure. I think we've dipped our toe in that. And didn't really like it. So I'm not sure that that's something that we would pursue significantly. But it's got a very good place in the marketplace. It even sells third-party proprietary parts and make some margin on that as well. Because it's kind of a one-stop shop, it's easy to come to The Boeing Company and get a bunch of things for -- to fulfill your needs and if you're a commercial airline or an MRO shop. So we look at it. They're on a great growth project. If you think of where their trajectory, they've got enjoying the commercial supporting OE, commercial aftermarket, a lot happening in military sustainment on a lot of our platforms. And as you know, Ron, these military platforms they get modernized a lot often, and they have to continue to work on those. So it's a good business. And you see it reflected in the growth rates and in the margins.

I think with that, that's pretty much everything I had, Jay.

Well, thank you for your time, Ron. I really appreciate you being up here.

Great. All right. Pleasure.