George Shapiro

George Shapiro of Shapiro Research asked what it will take to resolve the Airbus negotiations and questioned if the recent operating margin pressure was temporary or a long-term structural issue.

Answer

CEO Pat Shanahan stated that threats are not effective with Airbus and that resolution will come from partnership, though it may require a few more 'family meetings.' He stressed that financial risk becomes operational risk. CFO Mark Suchinski addressed the margin question, explaining the pressure is from near-term, one-time investments in the new inspection process and should not have a long-term negative impact on profitability.

George Shapiro of Shapiro Research asked what it will take to resolve the Airbus negotiations and questioned the drivers behind the decline in underlying operating margin.

Answer

CEO Pat Shanahan stated that threats are ineffective and that partnership and 'real family meetings' are needed, emphasizing that financial risk becomes operational risk. CFO Mark Suchinski explained the margin pressure is a near-term result of the disruptive but necessary investment in the new inspection process, which he does not expect to have a long-term negative impact.

Questioned why the Q4 commercial margin was lower than Q1 despite higher 737 deliveries and asked if the higher Q4 CapEx spend would benefit 2024 cash flow.

Answer

Management confirmed the Q4 margin was depressed by significant investments made to stabilize the factory and recover the schedule. They also agreed that the accelerated CapEx spend in Q4 would provide some benefit to 2024.