The Boeing Company (BA) Equity Research

Research evidence excerpt

The Boeing Company (BA) Equity Research

11 Air India 10 2%

Change Incorporation Underway. The Air Current reported today that there are massive rework 1213 CargoluxEthiopian AirlinesAirlines InternationalGroup 108 2%1%

challenges looping on the 777X program. Our understanding is that change in work on the aircraft 1415 ChinaSilk WaySouthernWest AirlinesCargo 52 1%0%

is already built into EACs. Any aircraft deemed unfit for delivery would be consumed in the inventory 1617 ANAUnidentifiedHoldingsCustomer(s)Inc. 351 0%5%

line of cash and likely already considered the FCF usage. In April, BA stated there is a dedicated .Source:TotalCompany data, Jefferies estimates 657 100%

team performing the change incorporation statement of work for pre-built 777X aircraft that will

be completed over a number of years for roughly 30 aircraft. Aero Analysis Partners identifies 42

aircraft in inventory including 40 777-9 and the first two 777-8Fs. The statement of work varies by

tail, with the older models requiring larger changes related to the structural & process improvements

that have occurred for the program over the flight test program.

Change Incorporation Already in the Past Charges. BA realized $4.9BB and $3.5BB reach-fwd

losses on the 777X in 2025 and 2024, respectively, which are inclusive of the assumed statement

of work related to the change incorporation. As of Q1:26, BA inventory included $5.3BB related to

the WIP 777X and $2.0BB of unamortized tooling & non-recurring costs. The 777X is expected to

consume ~$5BB of cash in '26E vs ~$3.5BB in 2025, with further step-up in '27E before turning

cash positive EIS+1 year.

777X Backlog of 657 Aircraft. BA's current 777X backlog stands at 657 aircraft. This represents

~10% of BA's total backlog of 6,814 at the end of June.