Doug Harned

Doug Harned inquired about the investment in the Charleston facility for 787 production, specifically what is needed to increase rates to 12-14 per month, whether current investments are for rate 10 or higher, and the projected CapEx trajectory.

Answer

President and CEO Dave Calhoun confirmed that Boeing is already making steps for higher rates, beyond 10 per month. He stated that the company plans to double the manufacturing footprint in Charleston, which is necessary for rates higher than 10, with full utilization expected around 2028. He indicated that CapEx related to this expansion, as well as growth in St. Louis, is expected to increase in 2026.

Doug Harnett asked about the stable mix of business jet deliveries, inquiring if it's constrained by demand or capacity, and how the demand mix (corporate vs. high net worth) has shifted from the beginning of the year given the dynamic economic outlook.

Answer

Scott Donnelly, Chairman, President, and CEO of Textron, indicated that the delivery mix is primarily a capacity issue, with steady end-market demand across all products, often influenced by new product launches. He noted remarkable stability in demand across segments despite economic noise, attributing it to long lead times that encourage buyers to look beyond immediate market conditions.

Doug Harnett observed that the mix of business jet deliveries has been stable over the last two years, contrary to an expected shift towards Latitude and Longitude, and asked if this mix is constrained by demand or capacity. He also inquired about any shifts in demand mix between corporate and high-net-worth individuals over the past nine months, despite the dynamic economic outlook.

Answer

Scott Donnelly, Chairman, President, and CEO, clarified that the delivery mix is currently more of a capacity issue, as end-market demand remains stable across the entire product portfolio. He noted that new product launches, such as the CJ4 Gen 2 and Ascend, often create spikes in order activity, extending lead times. Mr. Donnelly also remarked on the remarkable stability of demand across all segments (corporate and high-net-worth) despite economic noise, attributing it partly to long lead times that encourage customers to look beyond current market fluctuations.

Doug Harned asked for an update on the Sentinel program, its restructuring process, how the delayed IOC affects production timing, any ties to Northrop Grumman's performance, and potential opportunities for expanded work scope. He also inquired about the allocation of new money in the 2026 budget for Sentinel.

Answer

Kathy Warden, Chair, CEO, and President, stated that Northrop Grumman is partnering with the Air Force on an execution framework for the Sentinel program's restructure, noting positive impacts from decisions like creating new silos. She mentioned establishing a new program baseline will define production timing. She highlighted recent progress, including the full-scale qualification test of the stage two solid rocket motor and completion of the critical design review for the launch support system. For 2026 funding, she expects it to support both government entities (e.g., Army Corps of Engineers) and the industry team.

Doug Harned asked about Raytheon's margins, which exceeded 12% this quarter, and whether there is further upside from higher volumes, international mix, and mature fixed-price work in the coming years.

Answer

CEO Chris Calio expressed satisfaction with Raytheon's position, highlighting strong demand and the growing international portion of the backlog (44%). He mentioned potential additions to the backlog from munitions replenishment. He emphasized that future upside hinges on supply chain health (deconflicting suppliers, bringing in new ones) to meet higher production rates, rather than demand or backlog composition.

Doug Harned asked about Raytheon's margins, which surpassed the 12% level, and whether the company sees further upside from higher volumes, increased international mix, and mature fixed-price work, or if they are already at their desired margin level.

Answer

CEO and Chairman Chris Calio expressed satisfaction with Raytheon's performance, highlighting the growing international backlog (44%) and the composition of orders in core capabilities as positive tailwinds. He stated that potential for further upside is contingent on continued supply chain health, deconflicting suppliers, and bringing new suppliers to meet higher production rates.

Doug Harned questioned the confidence in the LEAP services margin outlook for 2028, particularly given the early stage of PRSVs and understanding full shop visit costs, and how price and cost factors contribute to this trajectory.

Answer

Larry Culp, Chairman and CEO, and Rahul Ghai, CFO, expressed confidence in the LEAP margin roadmap to 2028, citing ongoing field performance improvements, FLIGHT DECK operational enhancements, better material availability, supply base advancements, and the impact of the LEAP-1A durability kit. They highlighted expected continued 30% year-over-year internal shop visit growth, a doubling of external channel activity, and investments in repair technology to reduce costs.

Doug Harned asked for confidence drivers behind GE Aerospace's projected LEAP services margin improvement to overall services margins by 2028, considering the early stages of PRSVs and understanding full shop visit costs, and how price and cost factors contribute.

Answer

Chairman and CEO Larry Culp stated that the roadmap to 2028 is managed daily, combining field performance and FlightDeck operational improvements in material availability and cost reductions. CFO Rahul Ghai added that continued 30% year-over-year internal shop visit growth, external channel expansion, and investments in repair technology, alongside durability kit introductions, provide confidence in the LEAP trajectory.