Boeing at Jeffries Conference Notes

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Gregory Smith – Chief Financial Officer and Executive Vice President

There’s robust demand for growth but also replacement

“you’re seeing obviously a lot of volatility as of this morning in the marketplace, but despite that, it’s pretty robust demand in the market around products and services. I think a lot of that certainly goes to some of the growth areas of growth. But there’s also a significant portion of that, as you and I have discussed, going to replacement”

The new aircraft are very efficient

“you look at what we’re bringing into the marketplace as far as efficiency, you look at what our competitors bringing into the market efficiency, and these are very efficient aircraft, and the value that those aircraft are bringing into the market is really creating a lot more demand, which is very different than the prior cycles.”

40-50% of demand coming from replacement next 20 years

“as you look out over the next 20 years, and the demand that’s taking place there, you’re looking at 40% to 50% of that demand coming from replacement”

When I look at diversity and makeup of customers it gives me more confidence in this cycle. We’re watching it, but not seeing a slowdown

“when I look at the diversity by customer, I look at the diversity geographically, I look at the makeup of replacement versus growth again. It gives me much more confidence, and I’d say this cycle versus what I’ve seen prior. And obviously we continue to monitor it. But like I said, despite a lot of movement going on in the global marketplace, and we’re watching it, we’re not seeing a slowdown in demand for our products.”

You wont find a correlation between orders and oil prices

“you go back over time and you look for a correlation between orders and oil price, and you won’t find it, right? I mean, the customers are buying these assets over a long term.”

Made a lot of investments in automation

“We’ve made a lot of investments in automation over the last couple of years, and we’ll continue to do that. We’re proven out that automation on 777 and incorporating that in a very disciplined fashion with the idea that we’ll implement that fully on the X.”

Getting 787 unit cost down is area of productivity focus

“getting 787 unit cost down, unit over unit, is a big if not the biggest productivity improvement or focus area we have in the company. They have done a good job. There’s no question about that. It made good progress despite some of the challenges we’ve had within the supply chain. They’ve done a good job.”

Stability brings productivity

” We’ve got round numbers, Howard, about 1,100 projects that are in a room, that are on the wall, that we’re going through in dispositioning. And these are all productivity, quality, flow-time-related ideas that we’re dispositioning whether they come through the supply chain or us, that now that you’re stable, the teams are able to now look ahead and have enough experience on their belt to know, hey, there’s a better way of doing this. There’s a more efficient way of doing this wing join. There’s a more efficient way of installing interiors. There’s more efficient way of wringing out the airplane and putting power on. Things like that that you can’t see when you’re going up every six months in rate when stability brings productivity. And you can go back through the history of all our production programs, that’s the case.”

We have a big backlog, it’s about how efficiently can we drive cash flow from that

“with that backdrop and the rate increases that we’re planning that are in our backlog, this isn’t about capturing more to maintain them. It gets to how efficient can you do that and driving cash flow as a result of that. So, we’ll continue to see, as we make these rate increases and drive productivity as we have. We’re going to continue to see cash flow grow over time as we look forward.”

Thoughts on Silicon Valley falling in love with space

“I mean, we’ve got long years of history obviously in space. And it certainly starts with having the right capability and a proven success rate, mission success rate. We’ve got that, and a continuous focus on affordability. So, I view competition as good thing. I think it makes us better. And so having folks that want to emerge into this, whether it’s on their own or through some form of a partnership, I think it’s a good thing. It makes us better and makes us more competitive in the marketplace.”