BOEING CO

Overview

In May 2025, the U.S. government released the President's budget request for fiscal year 2026 (FY26), which requested $848 billion in funding for the DoW and $19 billion for NASA. The corresponding FY25 appropriated levels are $856 billion for the DoW and $25 billion for NASA.

In July 2025, the One Big Beautiful Bill Act appropriated an additional $156 billion for national defense priorities and an additional $10 billion for NASA programs over the next several years.

There is ongoing uncertainty with respect to final program-level spending for the DoW, NASA and other government agencies for FY26 and beyond. Future budget cuts or investment priority changes, including changes associated with the authorizations and appropriations process, could result in reductions, cancellations and/or delays of existing contracts or programs. Any of these impacts could have a material effect on our financial position, results of operations and/or cash flows.

The non-U.S. market continues to be driven by complex and evolving security challenges and the need to modernize aging equipment and inventories. BDS expects that it will continue to have a wide range of opportunities across Asia, Europe and the Middle East given the diverse regional threats. At September 30, 2025, 20% of BDS backlog was attributable to non-U.S. customers.

Since our operating cycle is long-term and involves many different types of development and production contracts with varying delivery and milestone schedules, the operating results of a particular period may not be indicative of future operating results. In addition, depending on the customer and their funding sources, our orders might be structured as annual follow-on contracts, or as one large multi-year order or long-term award. As a result, period-to-period comparisons of backlog are not necessarily indicative of future workloads. The following discussions of comparative results among periods should be viewed in this context.

Deliveries of new-build production units, including remanufactures and modifications, were as follows:

BDS revenues for the nine months ended September 30, 2025, increased by $1,310 million compared with the same period in 2024. The increase is primarily due to $1,438 million lower net unfavorable cumulative contract catch-up adjustments compared to the prior year comparable period. The increase in revenue was partially offset by the absence of a favorable MQ-25 contract modification that was awarded during the first quarter of 2024.

BDS revenues for the three months ended September 30, 2025, increased by $1,366 million compared with the same period in 2024. The increase reflects $830 million lower net unfavorable cumulative contract catch-up adjustments. The increase also reflects higher volume of $525 million primarily on E-7, KC-46A, and weapons programs.

Earnings/(Loss) From Operations

BDS earnings from operations for the nine months ended September 30, 2025, was $379 million, compared with a loss from operations of $3,146 million in the same period in 2024. The year-over-year improvement in earnings is primarily due to lower net unfavorable cumulative catch-up adjustments of $3,714 million compared to the prior year comparable period. During the nine months ended September

30, 2024, losses incurred on the five major fixed-price development programs totaled $3,302 million. Losses on the five major development programs were not significant in 2025. In addition, the year over year earnings improvement reflects higher earnings from other programs including fighters, P-8, satellites and weapons.

BDS earnings from operations was $114 million for the three months ended September 30, 2025, compared with loss from operations of $2,384 million in the same period in 2024. The year over year improvement in earnings reflects a decrease in net unfavorable cumulative contract catch-up adjustments which were $2,362 million lower than the comparable period in the prior year. Higher volume also contributed to the comparative earnings increase. During the third quarter of 2024, losses incurred on the five major fixed-price development programs totaled $2,036 million. In addition, earnings in 2024 were adversely impacted by lower earnings on several programs including fighters, P-8 and E-7, reflecting production and engineering inefficiencies.

See further discussion of fixed-price contracts in Note 11 to our Condensed Consolidated Financial Statements.

BDS earnings/(loss) from operations includes our share of earnings from equity method investments of $30 million and $10 million for the nine and three months ended September 30, 2025, compared with $104 million and $9 million for the same periods in 2024.

Backlog

BDS backlog was $76,084 million at September 30, 2025 compared with $64,023 million as of December 31, 2024. The increase reflects the timing of awards, partially offset by revenue recognized on contracts awarded in prior periods.

Our BDS business includes a variety of development programs which have complex design and technical challenges. Some of these programs have cost-type contracting arrangements. In these cases, the associated financial risks are primarily reduced award or incentive fees, lower profit rates or program cancellation if cost, schedule or technical performance issues arise. Examples of these programs include Ground-based Midcourse Defense, Proprietary and Space Launch System programs.

Some of our development programs are contracted on a fixed-price basis. Examples of significant fixed-price development programs include Commercial Crew, KC-46A Tanker, MQ-25, T-7A Red Hawk, VC-25B, and commercial and military satellites. A number of our ongoing fixed-price development programs have reach-forward losses. New programs could also have risk for reach-forward loss upon contract award and during the period of contract performance. Many development programs have highly complex designs. As technical or quality issues arise during development, we may experience schedule delays and cost impacts, which could increase our estimated cost to perform the work or reduce our estimated price, either of which could result in a material charge or otherwise adversely affect our financial condition. These programs are ongoing, and while we believe the cost and fee estimates incorporated in the financial statements are appropriate, the technical complexity of these programs creates financial risk as additional completion costs may become necessary or scheduled delivery dates could be extended, which could trigger termination provisions or other financially significant exposure. Risk remains that we may be required to record additional reach-forward losses in future periods.

Approximately 3,200 International Association of Machinists and Aerospace Workers District 837 (IAM 837) represented employees at our St. Louis area sites have been on strike since August 4, 2025. This is disrupting our St. Louis operations. Programs impacted include F/A-18, F-15, T-7A, MQ-25 and Weapons. If we are unable to successfully negotiate a new contract with IAM 837 and the strike continues for a prolonged period, our financial position, results of operations and cash flows could be materially impacted.