stockrowWhat it does
Boeing is a major aerospace company founded in 1917, headquartered in Chicago, and led by chief executive Kelly Ortberg. It has three businesses: Commercial Airplanes (BCA), Defense, Space & Security (BDS), and Global Services (BGS).
BCA develops, produces and sells jet aircraft to commercial airlines worldwide. Its in-production family includes 737 narrow-body aircraft and 767, 777 and 787 wide-body aircraft; it is also developing the 777X and the 737-7 and 737-10 derivatives. The company received FAA certification for the 737-7 in July and the 737-10 in October 2026.
BDS develops and modifies military aircraft, weapons systems, rotorcraft, tilt-rotor aircraft, tankers and other commercial-derivative aircraft. It also works on missile defense, intelligence and command systems, cyber and information solutions, satellites, space exploration, human space flight and launch systems. Management said on the call that the U.S. Navy selected Boeing to design, build and deliver the F-AXX next-generation fighter aircraft.
BGS supports commercial and defense fleets after sale. Its offerings include spare parts, supply-chain and logistics management, engineering, maintenance, modifications, upgrades, conversions, training, technical documents, digital tools and analytics.
How it makes money
Boeing earns revenue by delivering aircraft and defense systems, then by servicing fleets and systems over their operating lives. Commercial-aircraft revenue is tied to deliveries of 737, 767, 777 and 787 aircraft, while BDS revenue comes from development, production and modification work for military and government customers. BGS earns from parts, logistics, maintenance, engineering, modifications, upgrades, training and digital offerings for commercial and defense customers.
The company uses program accounting for commercial aircraft: inventoriable production costs, tooling, other non-recurring costs and routine warranty costs are accumulated and charged to cost of sales by program rather than unit by unit. Its defense businesses also use fixed-price contracts; BDS and BGS defense operations each generated approximately 60% of 2025 revenue from fixed-price contracts. Under these arrangements, failure to achieve estimated costs and revenues can reduce margins or create losses.
Services can recur as aircraft and systems require maintenance, parts, upgrades, logistics and training. The company expects commercial-services revenue to remain strong as airline activity transitions to growth, while its government-services demand outlook remains stable.
In 2025, revenue increased by $22,946 million from 2024, driven by higher revenue in all three segments. In Q3 2026, revenue was $24.2 billion, up 4%, primarily reflecting higher defense and services volume, partly offset by a less favorable commercial delivery mix. BCA delivered 161 airplanes in that quarter, while BGS revenue was $5.6 billion.
Customers and how it sells
BCA principally sells commercial jets to airlines worldwide. Its commercial customers also buy fleet support from BGS, including parts, maintenance, training, modifications and logistics. BCA received orders during Q3 2026 from Turkish Airlines, Ethiopian Airlines and Lufthansa.
Government customers are central to BDS and to BGS’s defense-services business. Boeing works with U.S. military branches, NASA, the FAA and the Department of Homeland Security, as well as government authorities outside the U.S. The U.S. government is BGS’s largest individual served market.
The company’s principal operations are in the U.S., but it operates in an expanding number of countries through U.S. and non-U.S. partners, suppliers and subcontractors. Approximately 85% of BCA backlog by dollar value is with non-U.S. airlines. At December 31, 2025, 26% of BDS backlog was attributable to non-U.S. customers. Non-U.S. sales are subject to U.S. and local regulation, procurement practices, trade restrictions, currency movements and political and economic conditions.
Boeing had approximately 182,000 employees at December 31, 2025, with 14% located outside the U.S.
Suppliers and costs
Boeing depends on a large group of U.S. and non-U.S. suppliers and subcontractors for materials, parts and subassemblies. Important raw materials include aluminum, titanium and composites; alternative material sources generally exist, but qualifying them can take a year or more. Many major components and equipment items are bought on a sole-source basis.
Supplier performance affects production quality, schedules and program profitability. The company has experienced supplier price increases and inflationary pressure, and also depends on electricity and other energy sources at affordable prices. Engine delivery performance remains the pacing item for raising 787 production to 10 aircraft per month.
A supplier of wing components disrupted 777 freighter and 767 tanker production lines during Q3 2026. Shipments resumed, but the resulting production gap is expected to flow through those lines over the following quarters, with abnormal costs treated as period expense. Boeing acquired Spirit AeroSystems Holdings, Inc. in December 2025, including Boeing-related commercial operations that make fuselages and major structures for several Boeing programs.
- Revenue$89.5B
- Cost of revenue−$85.2B
- Research and development−$3.6B
- Selling, general and administrative−$6.1B
- Other operating costs−−$9.7B
- Operating income$4.3B
Competitive position
BCA competes in the commercial-jet market with Airbus and entrants from China. The company describes the commercial aircraft and airline markets as extremely competitive, with pressure on pricing and other competitive factors. Airbus Group also competes in the U.S. defense market.
BDS faces competition primarily from General Dynamics Corporation, Lockheed Martin Corporation, Northrop Grumman Corporation, RTX Corporation and SpaceX. Boeing says competitors can form teams to meet particular customer requirements. BGS competes with many of the same U.S. and non-U.S. companies in commercial and defense aviation services, where pricing pressure is also intense.
Our reading: Boeing’s installed fleet and its network of training, maintenance, logistics, parts and upgrade offerings provide a strong service relationship with commercial and defense operators across an aircraft’s life cycle. [item1]
Our reading: Its aircraft-design, manufacturing and engineering capabilities are meaningful barriers in commercial and defense aerospace, but the evidence shows continuing direct competition from Airbus and several large defense primes. [item1; item7]
Our reading: Intellectual property supports operations, but is a limited standalone moat because the company does not expect expiry of any particular right or patent license to materially affect the business. [item1]
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Airbus | commercial jet aircraft and U.S. defense market | High |
| General Dynamics Corporation | defense, space and security programs | High |
| Lockheed Martin Corporation | defense, space and security programs | High |
| Northrop Grumman Corporation | defense, space and security programs | High |
| RTX Corporation | defense, space and security programs | High |
| SpaceX | defense, space and security programs | Medium |
| BAE Systems | U.S. defense market | Medium |
| Airbus Group | U.S. defense market | Medium |
Growth opportunities
Boeing’s commercial growth depends on demand for new aircraft, rising production and delivery rates, aircraft certification, and support demand from a growing worldwide fleet. The company sizes demand at nearly 44,000 new commercial aircraft over the next 20 years. It projects a 3.1% global fleet growth rate over that period and expects demand for approximately 43,600 new airplanes based on long-term economic-growth assumptions.
BCA backlog reached $612 billion and included more than 6,300 airplanes. The company is working to stabilize 737 production at 47 aircraft per month, targets 52 in the second half of 2027, and expects 787 production to begin transitioning to 10 aircraft per month during 2026. The company expects 777-9 first delivery in 2027, subject to remaining flight-test approval and certification work.
BDS growth is linked to defense demand, program awards and the move of programs into production. BDS had $101 billion of backlog, received a F-AXX selection, and received a seven-year PAC-3 seeker contract intended eventually to triple production. BGS growth is tied to commercial and government fleet activity; it ended Q3 2026 with $33 billion of backlog.
The company expects approximately $2 billion of free cash flow in 2026, about $3 billion in 2027, about $6 billion in 2028 and $10 billion in 2029.
- $62.3BFY2021
- $66.6BFY2022
- $77.8BFY2023
- $66.5BFY2024
- $89.5BFY2025
Structural risks
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Production quality and certification: The FAA increased oversight of Boeing’s 737 production, quality and safety systems after the 737-9 door-plug accident. Production-rate increases and new lines require FAA concurrence, while new models and derivatives require certification before entering service.
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Supplier dependency: Sole-source components, long supplier qualification periods, supplier quality failures, delivery delays and supplier price increases can affect aircraft quality, schedules, costs and contract profitability.
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Fixed-price development contracts: Fixed-price defense contracts expose Boeing to lower margins or losses when estimated costs or revenues are not achieved. Technical and schedule challenges on BDS development programs have resulted in significant earnings charges.
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Labor disruption: Boeing’s workforce included approximately 72,000 union members at December 31, 2025. Prior work stoppages disrupted commercial, St. Louis and defense production, and further stoppages could affect operations, financial position, cash flow and management attention.
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Airline and international exposure: Commercial-aircraft demand depends heavily on airlines and can be affected by airline finances, fuel prices, tariffs, credit conditions, conflict, epidemics, trade restrictions, currency movements and other global disruptions.
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Government contracting and funding: Governments may terminate contracts for convenience or default. Defense and space work also depends on appropriations and program priorities; budget reductions, cancellations or delays can affect contracts and program execution.
Bottom line
Our reading
Our reading: Boeing combines commercial-aircraft manufacturing, government aerospace programs and fleet services, with the service business providing activity across the life of commercial and defense platforms. [item1; item7]
Our reading: The near-term operating picture rests on disciplined production stabilization, supplier performance, certification progress and execution of fixed-price defense work; these factors have affected deliveries, margins and cash flow. [item1; item1a; call_prepared]
Our reading: Its commercial backlog, defense awards and services operations provide multi-year work visibility, while converting that work into financial results depends on meeting the company’s production and program assumptions. [call_prepared; item7]