The Boeing Company (BA) 44th Annual Aerospace/Defense & Industrials Conference (Transcript)

The Boeing Company (NYSE:BA) 44th Annual Aerospace/Defense & Industrials Conference February 15, 2023 10:45 AM ET

Company Participants

Brian West - EVP and CFO

Conference Call Participants

Cai von Rumohr - Cowen and Company

Cai von Rumohr

Delighted next to have Boeing Company and from Boeing, the CFO, Brian West. Brian is going to make a couple of comments, and then we'll go into a fireside chat. Brian?

Brian West

It's great to be here, and I congratulate on your 44th, Cai, in a new location. But it's great to be here, and I think we have a forward-looking safe harbor statement. We're just going to flash there to remind everyone. Okay. Do you want to make any initial comments?

Question-and-Answer Session

Q - Cai von Rumohr

By the way okay sounds good. So last year was important for Boeing. You generated first positive cash flow from the first time since 2018. Maybe tell us where do, you think you are in the recovery?

Brian West

Yes, last year, it was important, and that was an important milestone to generate that free cash flow, particularly the fourth quarter was when we had the right amount of momentum. And I felt good, along with getting the -7 to -10, allowing that work to continue with the FAA. But in terms of the momentum, we still feel that coming into this calendar year, and we have confidence in the cash flow guidance that we have out there between $3 billion and $5 billion.

In terms of the recovery and where we're at, the good news is we know where we're headed, right? We know where we're headed. And it's underwritten by our financial expression of $10 billion of free cash flow by the '25 '26 time frame. But from here to there, a couple of really big things have to happen that we're working hard on. On the commercial business, we have to - two really important things.

We have essentially inventory on the 87 and the 37 that has to unwind and liquidate, and it's going to take us a couple of years to do that. And the important part of that is delivering those airplanes to customers, but also relieving ourselves of essentially two dual production systems that are in there doing all that rework. So that's important to get that behind us. Similarly, in the commercial side, we're looking to take our rate up, particularly on the 37 from today what's 31 to 50 and on the 87 from which low to-date to 10.

So all of that ramp will happen over the course of the next two years, so getting rid of the liquid in the inventory and be able to have confidently in a disciplined fashion ramp the rate, that is what is right - center of attention over the next couple of years, and that's important. On the BDS side, similarly, we've got to get our margins, which are today too low to where they are much more normal call it, in the high single-digit margin rate as well as take advantage of the market opportunities that exist around the world.

And then on the services side, can't forget services, just from the stable play, run a stable, profitable, capitally efficient - play with services and let that franchise extend. So those are the big things in front of us over the next couple of years. It's going to get bumpy, but once we get all behind us, have confidence that we're going to be able to have a company that has recovered and looks a lot more normal to what investors are expecting.

Cai von Rumohr

Right, so MAX, obviously, is key, and you had a strong 54 deliveries in December. January looks pretty good at 35. Now normally, the first month of the quarter is the weakest. How is production doing and will deliveries out of inventory, can they still hold the nine or 10 per month?

Brian West

Yes, so on the 737 first of all, we still see 400 to 450 deliveries in this calendar year. That is unchanged. In terms of - and that will come from the factory as well as the inventory liquidation. I think your number out of inventory is probably a little touch high. We did 20 in the fourth quarter, so call it 7-ish a month, not quite as high as you were thinking in terms of penciling it in. But that work continues to be very steady and predictable as that work scope is very manageable.

In terms of starting off the year, usually, the first month of the quarter is the lowest except for the first quarter. Last year in the first quarter, we had 29-ish and then it dipped to 20. Maybe that's a February phenomenon, but we will have a lower February in this quarter. It will be low 20s, but we're going to be on track with what we expect for the first quarter. And then, those deliveries will continue to accelerate through, the course of the year to end up in that 400 to 450 range. So, we like the January. It will dip in February, on track overall.

Cai von Rumohr

Terrific. So your plan is to go from 31 to 38 later this year. Is there an interim step because that's a pretty big step-up percentage-wise? Usually, I think before you've been going up in increments or something like five?

Brian West

So that 38 is not new news. So that number has been out there for quite a while, the better part of the year, at least in terms of the master schedule being out there with our supply chain partners. So -- and there's been folks studying it, planning for it, so confidence that, that's the right break. And when we did the MAX return, we went from 19 to 26 in a break.

So it's not unprecedented. I acknowledge that the increase is sporty. But we've been looking at this, and there's a lot of confidence that that's the right number. What's important is that, on that 38 for us, the factory space is there. The tooling is there, and the labor is there, right? So we wanted to make sure we were ready and ahead, and we are.

And the question is going to be - in terms of being able to get to that number will be a function of this broader supply chain, and essentially the skilled labor that it takes to be able to fulfill all the components to make all that come together.

Cai von Rumohr

So some suppliers suggest they may be at 42 by year end. It kind of - and that sounds higher than where they were talking. Has there been any acceleration in the ramp for the suppliers or for you in terms of the rates you're moving up?

Brian West

Nothing's changed. Nothing changed from when we talked in November to the investment community and our expectations for this calendar year, and that was consistent with January. So there's been no change. What I will tell you, more broadly speaking, is that the supply chain continues to have its moments of disruption. There are still part shortages. We're still working through it, and it still is not stable and predictable, not there yet.

We didn't expect to be there in the first quarter of the year either, but it's getting better. And what's getting better is that the alignment around the demand across the supply chain, better; hiring, better. The visibility of the constraints in the Tier 2 and Tier 3 suppliers is better. And the operating rhythms and the cadences for the Tier 1s, is much better. And that is top-to-top and down and in. So everyone is seeing the same things, and the coordination, the communication is better.

And we have our resources that we're deploying into our suppliers just to help them. So we're -- it's not over. We're not stable yet, but there is a fairly good alignment, and we'll get better and more predictable and more stable as we go through the course of the year. and the production question about when that rate can happen, it will be when we can, across the board, have everyone, one, stable; and two, line of sight that everyone can move to that level. We're just not there yet.

Cai von Rumohr

All right. So Dave sounded a little more upbeat about China recently. Have you seen any positive indicators from your customers as to when they might take some planes? And how does that impact your decision to remarket some of those 140 inventory MAXs for Chinese customers?

Brian West

So passenger traffic numbers look pretty good as we start the year. And our job one right now is helping our airlines in China return airplanes to service. There's, two airlines that have moved out. There are several that are in the air generating revenue, but there's, about 90 that still have to return to service. And we stand ready to help our customers in that market just as soon as they're ready and we will follow their queue.

In terms of the next series of activities will be around return to delivery, and that will be in conjunction with the CAAC and the DRC in order to make sure that they fulfill all their requirements, protocols to get to that moment. And they're not there yet, and I can't predict when they will, but we stand ready.

And in terms of the remarketing question, we knew we were going to have to remarket some, but the intention and continues to be our intention is to support our critical customers in China. And objective would be to get them to go back mostly to where they originally were supposed to go. It's not going to happen 100% that way, but we do want to make sure that we are very prudent as we make those decisions and very, very close to our important clients in that very important market.

Cai von Rumohr

Got it. So you mentioned passenger traffic getting better so, international traffic looks like it's really recovering quite nicely. So update us on your overall order prospects, for 37, 87, 777X. What regions are doing better? What models are really hot? And are we seeing another step-up? I mean we saw this gargantuan order out of the Tata Group, but?

Brian West

We're very proud of that partnership with Tata and Air India for sure. I would start with the 37 is sold firm through 2026 and the 87 is sold firm through 2025. And the demand, as we have been describing, has been solid and it's strong. Last year, we had 800 orders net. And I talked a lot about the narrow-body. I would say, in answer to your international point, as international traffic continues to recover, we are seeing a pickup in the conversations with clients on the widebodies.

And in fact, last year, we had 200 wide-body orders, which I believe that's the most since 2018. So that definitely feels like it's got a little bit of opportunity in there, some interest. And then more broadly, you look at traffic largely. Trans-Atlantic is back to pre-COVID levels. That's pretty hot. And in terms of the next thing to likely move will be Asia and as those restrictions ease, you could expect Trans-Pacific and then these are Asia routes all to create some more momentum as we head into this year.

And I think that will bode well for our product lineup for sure. And then if I think more broadly, we're at - we start the year at 75% of pre-2019 levels. And GDP is 10% better. So those are just two really big important data points that show that we've got room to go. And I think that gives our customers confidence, and they're acting on that confidence. Ultimately, I think they'll be good for the flying public. It will be good for the airlines, it will be good for Boeing. So overall, market still feels pretty good.

Cai von Rumohr

Got it. So if I think about the cadence of orders, usually first quarter, not so much. But in a Paris Air Show year, I can't remember a year when everyone didn't pull all their stuff out of their back pockets. As we think about the cadence of orders this year, could that be a year like that where Paris is really like lots of orders? And we see some stuff before, but not quite like Paris?

Brian West

Well, we really enjoyed yesterday. It was a big. In terms of what's to come, stay tuned. We'll see. I don't want to guess.

Cai von Rumohr

No problem. No problem. So you just announced a plan to add a fourth 737 line in Everett in mid-'24. So what's that for, to get to 50 a month for surge capacity to go higher?

Brian West

So we're very fortunate to have Everett as an option. It's got the space and it's got a very skilled workforce. So that makes all the sense in the world that we can confidently move to that line in that spot. I would say I won't guess in terms of beyond 50. We're at 30 now. We're on our way to 50%. And as we think about opening up that fourth line - it will start with handling the more complicated configuration airplanes so that Renton can be very predictable and very reliable.

And then it's going to create that opportunity over time to fulfill the demand of the skyline. I mean there's 3,600 737s that are in the order book. It's a lot of airplanes - we're going to work hard to deliver. And having a fourth line is going exempt [ph] the option to do that very in a very disciplined, very predictable in a very stable manner. So, we think it bodes well for both the near term as well as for the long-term as we fulfill that big order book.

Cai von Rumohr

Got it. So what kind of rate do you think you might be able to support on a sustainable basis if China comes back and the MAX 7 and 10 are both certified?

Brian West

Yes, like I said, I'm really looking at the 50 and how we get to the 50. I don't want to guess beyond that other than reminding everyone that - there's a lot of airplanes that we have to deliver, and we have a market that continues to be robust for growth. So won't guess, but let us just be really focused on trying to get from where we're at to what we project is 50. And then in the - at the right time, we'll talk about beyond that.

But I think all of the indicators bode well for long-term demand feels good. It's all about our requirement to execute. And with the supply chain that, over time, we expect to stabilize, not there yet. But in all likelihood it will. And then I think that, that's going to benefit the industry.

Cai von Rumohr

So profitability on the 737, one of the things that really impressed me about your Investor Day was A) I think - you talked about you have enough people on board today to do 38 per month. It's just that you got to train them because they're less experienced. And then we walk through this automated wing fab line, and it looks like there are no people. It's all machines doing it. And then you're talking about, it takes as many hours to take a plane out of the inventory and get it ready to deliver as it does in terms of final assembly.

And I put all that together and I think, wow, there's got to be enormous fixed cost and upside cash and leverage. So talk a little bit about the 737 cash margin trajectory you think you might achieve.

Brian West

So in the near term, there'll be pressured because of we're working through the rework and all the things that we need to do to liquidate around 250 airplanes. And we also have some customer mix that will work against us. But over time, as we begin to move through this recovery period to where we get to the steady state we expect those 737 cash margins to look a lot like they did in 2018.

And they'll be underwritten by being able to do it in a very productive fashion and getting a lot of these things that I mentioned early on, behind us. So it's very clear we have to go do in the next couple of years. And we do think that those margins will get better, and we expect them to look more normal.

Cai von Rumohr

Got it. I mean, as you look at it, does it look like it's kind of a straight linear line of improvement or - I mean, it's not absolutely linear. But can you see any point at which, well, we're going to be struggling until point x and then it should take off or is it look?.

Brian West

Look my expectation is that year-over-year, it will be better. There will always be lumpiness within the months and the quarters for sure. But overall, the trajectory will be momentum, right? Because just by sheer nature of the inventory liquidation is going to start to subside. It's going to -- we're going to get it behind us, and then we're going to be able to ramp the rates. So I think all of that is going to happen over a period of time where - well, within a year lumpy, but over time, should be a pretty good progression with momentum getting better and better.

Cai von Rumohr

So one of the things is kind of getting the 250 planes in inventory out the door I mean, you talked about being at 7 a month in terms of dealing with those? Can you get that rate up because otherwise, it's going to take a long time to?

Brian West

Yes, so we can part of it, remember, 138 are airplanes that have been designated for China. And then there's around 30 that are - 7, -10. And those are ones that just - it's a function of the certification. So there are some unique components in there that don't allow you just to do a monthly click. But we do think that we know the two big things being China and the -7, -10 that as soon as we get more clarity, we understand where they're going to go and how we can then move.

And the good news is that we have a labor force and a production system that's gotten much more steady and stable at doing this. I mean they could do 11, 12. They could do. It's just that when you look at the opportunity set in front of us, you just - you're starting to run out of airplanes to work on because you haven't yet gotten the -7, -10 and you haven't necessarily gotten 100% clarity on the ones in China. So those are the two things that create a little bit of lumpiness, but they've been showing they can - they've gotten much better in the last year, and they can do them once they get the signal.

Cai von Rumohr

Got it. So turning to the 787, you've guided 70 to 80 this year, second half weighted. What does that assume about 100 in inventory? How many of those can we move out?

Brian West

Yes. So the 100 will go -- virtually all of it will go between this year and next year. We'll liquidate those airplanes. And again, that statement of work is very clear and the teams are structured around making that very predictable. And I think that, that will sort of sell out between now and next year, can't wait for it to get behind us.

Cai von Rumohr

Got it. And so the - how has the move to Charleston going? And where are you - supply chain has been, I think, a bigger problem on the 87. How are you doing on those two issues?

Brian West

So the move to Charleston has gone extremely well. There's a very strong team and a very resilient workforce. You can just imagine what they've gone through with the 87 over the last 18, 24 months, very capable, very proud of that team. In terms of where they're at the moment, we had been operating at around three per month. And then as - and the supply chain has been firing at three per month, as it pertains to final assembly.

We've had to take a little bit of a pause in that area in the near term to make an adjustment so that we can get the spirit fuselage in a spot where it was more predictable. And the teams are working hard at that. The collaboration is very strong. And our expectation is that they will get back to that three per month. And then as we move through the course of this year, be exiting the year more, closer to five per month.

And then, of course, the next step will be - get into that 10 per month by the '25 '26 timeframe. None of that's changed. We're very transparent with our supply chain partners. And while there has been this near term adjustment, confident that we're going to work our way through it.

Cai von Rumohr

So is the adjustment because of a quality issue to meet a quality spec or just basically getting the work done?

Brian West

Getting the work done, it's - as you think about all of the requirements that we have in the airplane post the reentry and the work - scope of work that has to happen, it's intense, and we're helping them. We've got engineers and lean support and their factory to help assist. It's just getting the work done.

Cai von Rumohr

Got it. And so you've talked of 787 cash margins reaching new highs as the delivery mix shifts to the -10. Overhead improves as you consolidate in China - in Charleston, excuse me. What's the likely cadence of that ramp?

Brian West

Similarly to the 37 question, it will get better over time with some lumpiness as we move from where we're at to where we want to get to. But there is - those cash margins will be better than the 2018 timeframe, mostly for the two things that - there was one thing you mentioned an additional thing is that -10 is going to be very helpful to the margin profile as well as this benefit of consolidating in Charleston so all that's very real.

We still have very good line of sight to that happening. And right now, it's just getting from that through the '23 and '24 timeframe, again, liquidating inventory, ramping those production rates in close partnership with our supply chain, Tier 1, Tier 2 and 3. In order to all make that happen, still feel like it's ours to execute.

Cai von Rumohr

And so I guess what you've talked about, if you get rid of 100 in inventory by year end '24, so we're talking about four to five a month or is that going to be accelerating as we go?

Brian West

No, that - I think that's probably - what will happen is between the first half and the second half of this year, you'd probably see more out of inventory and production as we get more confident in getting back to five, it's likely the way that's going to work and then it will be also a function of our customer fleet planning.

So it's in the ballpark. I still feel confident that, one, it will get inventory liquid largely over the next two years and then you feather in a production rate ramp to get to 10. So nothing's changed, and a lot of teams are working very hard to make all that happen.

Cai von Rumohr

And I assume from the way you're talking about it, we should assume that deliveries accelerate - well, increase as we go over - as we go through the year. I know normally, the third quarter is a little bit lighter than the second, and then the fourth would be the strongest.

Brian West

Yes, that's probably the way it's going to work.

Cai von Rumohr

Got it. So where are we talked about certification? We haven't talked about certification. So where are you with the certification of the 7 and the 10? And where are we with the 777X?

Brian West

So 7, first - has been working very hard with the FAA and our teams yet can't - won't predict a timeline of a date certain, but a lot of activity and a lot of confidence that, that will get done this year. As opposed to the 10, we'll be after the 7. Again, there's another level of intensity with that in terms of all the requirements to get that across the finish line. We know what it needs to happen. We got resources on it as well as our FAA partners.

Again, they're going to dictate the time line. And on the 777X, similarly, we've got a lot of teams marching down the priority so that we could get that entered into service in the 2025 timeframe. I think our lesson learned is that the requirement and the intensity around getting the certification with our regulators. It's different, and we acknowledge it, and we are resourcing for it, and we're being very patient as we should be with their ultimate decision to certify.

Because that's their job, and we're going to do anything we can to support and help them. But I can't control it. We are putting every resource you could possibly think of. And there's been real no change in terms of our expectations as we talked about as recently as last month. So I think we're still staying the course.

Cai von Rumohr

Got it. Okay. So what are we - what are the key drivers? When we look at BCA margins as they go to '25, '26. What should we think about, all in, what the key drivers are to get us there?

Brian West

So we said low double digit-ish as we kind of talked about. And how we get from here to there, it's really going to be about the rate ramp. In terms of going from 31 to 50 is going to be a big component on it. Eliminating this -- these dual factories -- dual production systems rather around the 37, the 87, so they can kind of retire, and those are the two big things for BCA. Again, things that we control, things that we know we need to execute on.

And there's, not real things that we don't have line of sight to. So we have good confidence as we start to march forward. So - and again, that's getting back to what they used to look like. So it's familiar territory. We just have to go run the play.

Cai von Rumohr

Got it. So turning to BDS, T7 MQ-25, Presidential aircraft, they're still going to be in flight test or LRIP into 2025. They're all fixed price. So like how worried should we be that these guys are going to bite us a couple more times?

Brian West

As you know, last year, we made a pretty big step to derisk those plus a couple of others that you didn't mention of these fixed price selling programs. And while you can never eliminate risk, we did our very best on the very big assumptions to retire as much risk as we could. And we feel very good about where we are in terms of those products, and we can't wait to deliver them to the customer perfect products. You never can say never but we did thoughtfully and deliberately retire some pretty big risks.

Cai von Rumohr

Got it. So as we look at its potential, I mean, what's the international sales potential there? And secondly, what about new programs? I mean there are a couple of NGAD or other things. Are there any major opportunities that kind of could give you a big new driver program?

Brian West

So in terms of the overall environment, we're working very closely with our allies and NATO partners around the world as they start to prioritize security. It's a good signal for all of us. How that manifests itself in terms of appropriations and actual spending approvals wait to be seen. Feel really good about Germany, the Chinook order; and Poland, the Apache order. But largely speaking, in the environment that we find ourselves in.

I think our portfolio lines up pretty well on the surveillance front, get the P-8. On the fighter side, you got the F-15EX vertical lifts. I mentioned a couple there. Missiles and weapons is another area that our product set lines up for what missions [ph] are a, bit customers around the world will need. Now we're patient in terms of how quickly that comes, but we do have a sales force all around the world very close to our customers to make sure we're getting involved with every opportunity that we should be.

So overall, I think that feels pretty good. But we're still talking about an expectation that it's going to be a slow growth business, right? And I think right now, I want to make sure we don't get too far in front of ourselves. In terms of other programs, you mentioned a really important one, and that's all we can talk about, as you know. And those kind of proprietary opportunities are there.

We've got great capabilities in-house, and we'll be competitive is my guess. But other than - there's not another breakout that I can think of. I think we've just got to run our play for the portfolio that we have in place, get through our fixed price development programs and deliver those to the customer. And then, of course, the other proprietary stuff will sort itself out.

Cai von Rumohr

Right. So one of the surprises last year was your German Chinook win I mean, basically, the competition basically have been the incumbent, they had - with CH-53K, they have a new product. It seems like a shoo-in, and then you guys come out of left field. Are there any other kind of area - big buys out there where you guys could be a surprise winner where we would kind of have written you off?

Brian West

I don't think so. I got to be a little careful. You win some you lose some, of course. But overall, I think that where we line up around the world - we feel really good about our portfolio. And we want to go win it and win it in a way that's good for our customers, good for the warfighter and good for our investors, too. So that's an important component, and we'll get better and better at that. But I can't think of any one particular campaign that would be big enough to draw the attention of a take.

Cai von Rumohr

Got it. So at one point, your predecessors talked about going - BDS going to $50 billion. Is that still a reason? Is that still anything that's around or how should we think about that business?

Brian West

No.

Cai von Rumohr

Okay.

Brian West

That's not in the playbook. What I will tell you though, and I experienced this in a prior life in the aviation world, the services franchise is incredibly powerful and incredibly important, and we want to grow it. We've got a great leadership team. And as long as we can grow, and we want to make sure we resource for growth, but the growth has got to be accretive to profit, and it's got to be relatively capital light.

And having been in the world before, you can chase revenue and really regret you did, and it wouldn't be good for any of us as investors. So, I don't want to constrain them, but I also don't want to set unrealistic goals. Just keep on growing. But if they grow mid-single digits and they continue to do mid-teen margins and very high free cash flow conversion, that's a very good business, and we like it.

Cai von Rumohr

Why shouldn't they grow near term better than mid-single-digit margins? Your traffic is coming back, prices are going up?

Brian West

Well, I did last year, right? I did - it grew real fast last year, and I'm just cautioned to make sure that you got to be careful that, that commercial recovery, we did see the benefit from, and it's not going to be quite as frothy as we saw it last year, but yes, sure. Look, I - that team obviously is going to grow for numbers that are faster growth. But in terms of planning the business and what we want to expect from it and the associated cash flows, we think we've got it lined up perfectly.

And then if they can go resource to go do better or do an adjacency and grow another part of that franchise, we'll support them. We'll support them. They will not be constrained, but the idea has got to be ones that fit with an economic answer that's accretive and capital light.

Cai von Rumohr

Got it. So talk to us about cash flow and the cadence of the $3 billion to $5 billion that's in?

Brian West

So first quarter will be a usage based on the timing of the year with seasonality mostly tied to deliveries. And then second quarter will be better, and then the second half will be powerfully better in terms of generating free cash flow to get to that three to five range. So very similar profile to what it looked like in 2022, and we still feel pretty good about the line of sight to that.

Cai von Rumohr

Got it. So you've got a lot of cash sitting around. How should I think about your kind of debt refi, debt retirement plans?

Brian West

So we ended the year with $17 billion. And in the first half, we have $5 billion of maturities, and we have a high degree of confidence and comfortable we'll be able to satisfy those maturities as we get through May. And then as the business model starts to perform and we get through that period of getting to our full year expectations that, will open up opportunities for us. But I just want to get through the first half. I feel better and better about it.

I feel more and more confident. And then, of course, satisfying those maturities, that investment-grade rating and then the ability to get even better over time is something that we're very focused on because this is - and I'll be repetitive a bit, this is about generating cash flow and paying down debt. And it gets - it couldn't be more straightforward.

And every month that goes by, we get more and more confident about that. And actually the fact that we have the level of cash we do on hand just gives us that firepower and confidence that, that all will shape out as we get into - shake out as we get into the course of this year and into next year. So I like where we're at.

Cai von Rumohr

Got it. And so your goal of $10 billion by '25, '26, what are the key moving pieces, we should think about and - that gets us to the bridge to $10 billion?

Brian West

Sure, first, BCA. BCA will have meaningful improvement from where they're at to where they're going to get to, and it will be driven by the production ramp that we've described, and it will be also this retirement of the inventory production systems, very meaningful productivity that will occur over that period of time that will generate that additional cash flow. BDS, similarly, the expectation will be the timing of some of the charges that we're taking will be behind us, the associated cash flow.

And they'll start to accrete towards higher - high single-digit margins and the cash flows benefit will come with that will be - as contemplated in getting that to 10. And again, that is what it's always looked like, and we expect it to look like that as we get out of that planning period. So execution in getting those margins for that 85% of the portfolio that's legacy that should and could and will perform better.

They, of course, have their own supply chain constraints that they've been dealing with. So they just have to work their way through it, but a path. Then, of course, the service business will get marginally better and then offset by that BDS and BCA productivity production rent benefit. We are going to have the 777X drag.

We are going to have a cash tax profile that will begin to look more normal that will go against it. And we'll invest in R&D as we go over that period of time. So the good news is that as we think about going from here to there, we have line of sight, and we just have to go execute. We just have to go execute. There's, no what ifs in there.

Cai von Rumohr

It looks like everything kind of improved sort of sequentially as we move forward. 777X, I mean, if you deliver in '25, do we get a nice swing in '25 that starts to become an incremental plus?

Brian West

I would put it probably just beyond that, right? I think it's mostly because you've got all that initial early production financial impact you got to put behind you. But look, I've got a ton of confidence in the 777 family. We have confidence in 777X. And as we begin to work our way through from a development program to production profile, yes, the cash flows are going to get better over time for sure.

It's just that we understand that there is going to be this moment in the early part of the program, as it just gets started, that we've contemplated as going to be a usage in that $10 billion, and it's contemplated. I think that's the most important point. And then as we get outside of that, of course or those cash flows will get better, and those benefits will accrue to all of us.

Cai von Rumohr

Terrific. Hey, this has been fabulous. Thank you so much. Really appreciate it.

Brian West

Thank you.