Boeing (BA) — Q3 2026 Earnings Preview
Key Points
| Factor | Details |
|---|---|
| Forward Consensus (Q3 2026) | Revenue: $24,958M; EPS (GAAP): $0.01; Net Income: -$152M |
| Prior Year Q3 Actual (Q3 2025) | Revenue: $23,270M; EPS (GAAP): -$7.14; Net Loss: -$5,339M |
| Guidance for FY 2026 | Free Cash Flow: $1B–$3B; BCA Deliveries: 500 737s, 90–100 787s; BDS margin: ~2.5% |
| Most Important Watch Items | Progress on 737/787 production rates and deliveries, 777X/737-10 certification, FCF ramp |
| Y/Y Comparable | Easing: Q3 2025 included a $4.9B 777X charge, resulting in a very tough prior-year comp |
| Intra-quarter Commentary | 737 at 47/month, North Line in Everett started, 777X/737-10 certs progressing, BDS stable |
Summary and Conclusions
- Boeing is set up for a much easier y/y comparable in Q3 2026: Q3 2025 was heavily impacted by a $4.9B 777X charge and negative free cash flow. Q3 2026 consensus expects a return to near-breakeven EPS and positive net income, with revenue growth of +7% YoY.
- Key focus areas for the upcoming print:
- Execution on production rate increases: 737 MAX ramp to 47/month, North Line in Everett, and progress toward 52/month.
- Certification milestones: 737-10 and 777X remain critical; management has indicated both are on track for 2027 deliveries.
- Free cash flow trajectory: Management reaffirmed $1B–$3B FCF for FY 2026, with Q3 expected to be positive despite a $700M DOJ payment.
- BDS margin improvement: Excluding VC-25B, BDS margins have improved to 3.5% in Q2; full-year guidance is ~2.5%, with sequential improvement expected.
- Inventory and working capital: Inventory remains elevated but is expected to be a net source of cash in H2 as deliveries ramp.
- Labor negotiations: SPEEA contract vote is a near-term risk; a strike could disrupt 777X certification and 737 production.
Q3 2026 Preview — Most Important Factors to Watch
| Factor | What to Watch/Why It Matters |
|---|---|
| 737 Production Rate | Confirmation of stable 47/month output; progress on North Line/Everett; readiness for 52/month in 2027 |
| 737-10 & 777X Certification | Any updates on FAA/EASA approvals, timeline for first deliveries in 2027, and risk of further delays |
| 787 Deliveries & Supply Chain | Ability to deliver 90–100 units in FY26; seat certification and engine supply chain recovery |
| Free Cash Flow (FCF) | Q3 FCF expected to be positive (low hundreds of millions) even after DOJ payment; path to $1–$3B for FY26 |
| BDS Margins & Charges | Margin progression (targeting ~2.5% for FY26); any new charges, especially on VC-25B, T-7, MQ-25, Starliner |
| Working Capital/Inventory | Evidence of inventory drawdown and advances as a net source of cash in H2 |
| Labor Relations | Outcome of SPEEA contract vote; contingency plans for potential work stoppage |
| Backlog & Orders | Continued strength in commercial and defense backlog; conversion of China orders to firm backlog |
Quarterly Financials — Actuals vs. Consensus
Quarterly Results (Actuals and Consensus)
| Quarter | Revenue ($M) | YoY Growth | Net Income ($M) | EPS (GAAP) | Free Cash Flow ($M) | Notes |
|---|---|---|---|---|---|---|
| Q2 2026 | 24,561 | +8% | -429 | -0.67 | 631 | Highest quarterly deliveries since 2018 |
| Q1 2026 | 22,217 | +14% | -7 | -0.11 | -1,454 | FCF usage, seasonal outflow |
| Q4 2025 | 23,948 | +57% | 8,220 | 10.23 | 375 | Includes $9.6B gain on Digital Aviation |
| Q3 2025 | 23,270 | +30% | -5,339 | -7.14 | 238 | $4.9B 777X charge |
| Q3 2026E* | 24,958 | +7% | -152 | 0.01 | Consensus estimate |
*Consensus figures are not actuals.
Full-Year Financials — Actuals and Guidance
| Fiscal Year | Revenue ($M) | Net Income ($M) | EPS (GAAP) | Free Cash Flow ($M) | Guidance/Consensus | Notes |
|---|---|---|---|---|---|---|
| 2026E* | 97,966 | -846 | -0.27 | 1,000–3,000 | Guidance | FCF midpoint ~$2B; $10B+ long-term FCF |
| 2025 | 89,463 | 2,238 | 2.48 | -1,877 | Actual | Includes $9.6B gain on sale |
| 2024 | 66,517 | -11,829 | -18.36 | -14,310 | Actual |
*Consensus/Guidance for FY 2026.
Segment Performance — Q2 2026
| Segment | Revenue ($M) | Op. Margin (%) | Deliveries | YoY Growth | Notes |
|---|---|---|---|---|---|
| Commercial Airplanes | 11,751 | -2.7 | 171 | +14% | 737 at 47/month, North Line started |
| Defense, Space & Sec. | 7,483 | -0.2 | 35 | +13% | VC-25B charge, strong classified/missile |
| Global Services | 5,344 | 18.1 | +1% | Double-digit margins, robust backlog |
Guidance and Management Commentary
FY 2026 Guidance Table
| Metric | Guidance (FY 2026) | Context/Notes |
|---|---|---|
| Free Cash Flow | $1B–$3B | Q3 FCF to be positive post-DOJ payment; Q4 strongest |
| 737 Deliveries | ~500 units | 47/month stable, North Line in Everett, -10s ramping in H2 |
| 787 Deliveries | 90–100 units | Seat certs, engine supply key; lumpy deliveries expected |
| BDS Operating Margin | ~2.5% (full year) | Ex-VC-25B, Q2 at 3.5%; sequential improvement expected |
| CapEx | ~$4B | Charleston, St. Louis, Spirit integration |
| 777X First Delivery | 2027 | 55% flight test complete; ETOPS approval pending |
| 737-10 Certification | 2026 | Deliveries start 2027 |
| 787 Production Rate | 8/month, targeting 10 | Engine supply gating factor; seat certs ongoing |
| 737 Production Rate | 47/month, targeting 52 | North Line certification required for 52/month |
| BDS Margin Target (long-term) | High single digits (by 2030) | Sequential annual improvement expected |
| Long-term FCF Target | $10B+ | "Very attainable" as rates, margins, and mix improve |
Management Commentary — Recent and Intra-Quarter
- Production Rates: "We're now ramping to 47 airplanes per month after a successful capstone review in May and expect factory rollouts to reach 47 per month this summer... North Line in Everett enables us to reach our next planned rate break of 52 per month."
- Certification: "On 737-7, testing is done and we expect to receive an amended type cert from the FAA very soon. On 737-10, we recently completed our final test flight and expect certification following the -7."
- 777X: "We remain on plan for first delivery in 2027. In June, we received approval from the FAA for the next phase of the certification flight test called TIA 4B... expect approval to start ETOPS testing later this year."
- BDS: "Excluding the impact of the VC-25B adjustment, BDS operating margin was 3.5% in the quarter, reflecting better operating performance across the rest of the business and in line with our expectations for steady margin improvement."
- Free Cash Flow: "Regarding free cash flow, we remain on track to achieve our outlook of $1 billion to $3 billion. First half performance came in better than expected, driven by favorable receipt timing within the year."
- Labor: "We're working very hard to try to avoid any kind of a work stoppage... If we did have a strike, essentially the 777 certification program shuts down until we get the engineers back and it will have ripple effect even into our production."
What Changed / What to Watch
- Easier y/y comp: Q3 2025 had a massive 777X charge; Q3 2026 should show marked improvement in profitability and FCF.
- Production ramp: 737 at 47/month, North Line in Everett, and 787 at 8/month are all critical for hitting delivery and FCF targets.
- Certification milestones: 737-10 and 777X certifications are on track but remain key risks.
- BDS margin recovery: Sequential improvement is expected, with high single-digit margins targeted by decade-end.
- Inventory drawdown: Working capital is expected to be a net source of cash in H2 as deliveries accelerate.
- Labor negotiations: SPEEA contract outcome is a near-term risk; a strike would disrupt certification and production.
- Backlog strength: Record $715B company backlog, with >6,200 commercial aircraft, supports multi-year growth runway.
Conclusion
Boeing enters Q3 2026 earnings with strong momentum, easier comparables, and clear operational and financial targets. The most important factors for the upcoming report are execution on production and delivery ramps, certification progress, free cash flow delivery, and continued margin improvement in BDS. Risks include labor negotiations and any slippage in certification or supply chain recovery. The setup is for a positive inflection versus last year, with consensus expecting a return to near-breakeven EPS and positive FCF.
