Boeing Turns Cash Flow Positive as 737 Output Climbs to 47 a Month
Boeing (BA) generated $631 million in free cash flow and lifted 737 production to 47 jets a month, even as a defense charge kept the company in the red.
Boeing (BA) posted positive operating and free cash flow for the first time in several quarters, a milestone that overshadowed a narrower but still negative bottom line. The commercial-aircraft maker reported free cash flow of $631 million and operating cash flow of $1.4 billion, reversing the negative $1.5 billion and negative $179 million, respectively, it posted in the first quarter of 2026.
The cash turnaround came alongside a production ramp that has been building for two quarters. Boeing raised its 737 output rate to 47 airplanes a month, up from 42 in both the first quarter of 2026 and the fourth quarter of 2025, and activated low-rate initial production on its North Line in July. Commercial Airplanes deliveries rose 14% year over year to 171 jets, up from 143 in the prior quarter, and the segment's operating margin improved to negative 2.7% from negative 6.1% sequentially. Certification flight testing for the 737-7 and 737-10 was complete as of July, advancing from the first quarter when the 737-10 had only entered Type Inspection Authorization 2; both variants remain on track for 2026 certification and 2027 first delivery. The 777X program cleared FAA Type Inspection Authorization 4B, progressing from TIA 4a in the first quarter, with first delivery still guided to 2027.
Revenue rose 8% year over year to $24.6 billion, a deceleration from 14% growth in the first quarter and 57% growth in the fourth quarter of 2025, when results were inflated by the Spirit AeroSystems acquisition and an easier prior-year comparison. GAAP operating margin improved to 0.6% from negative 0.8% a year earlier but slipped from 2.0% in the first quarter, and core operating earnings reached breakeven at $1 million, up from a core loss of $433 million a year ago but down from $293 million in the prior quarter. Net loss per share narrowed to $0.67 from $0.92 a year earlier, though it widened from $0.11 in the first quarter. The sharp year-over-year normalization in margins and earnings reflects a one-time $9.6 billion gain on the fourth-quarter 2025 sale of its Digital Aviation Solutions unit, which added $11.83 to that quarter's GAAP earnings per share.
Defense, Space & Security swung to an operating loss of $15 million, a margin of negative 0.2%, from earnings of $233 million and a 3.1% margin in the first quarter, after Boeing booked $280 million in new losses on the VC-25B presidential aircraft program tied to added production and certification costs; first delivery remains held at 2028. Global Services margin compressed to 18.1% from 19.9% a year earlier, due to the Digital Aviation Solutions divestiture, higher costs and unfavorable mix, while revenue growth in that segment slowed to 1% year over year from prior mid-single-digit rates.
Commercial demand kept building even as defense results weakened. Boeing booked 246 net commercial orders in the quarter, up from 140 in the first quarter, pushing the commercial backlog to a record $597 billion across more than 6,200 airplanes, up from $576 billion and roughly 6,100 airplanes. Total company backlog reached $715 billion, a record that extends a multi-quarter climb from $695 billion in the first quarter and $682 billion at the end of 2025.
Boeing used the quarter's cash generation to keep paying down debt taken on for the Spirit AeroSystems deal. Consolidated debt fell to $45.9 billion from $47.2 billion in the first quarter and $54.1 billion at the end of 2025, while cash and marketable securities declined to $20.0 billion from $20.9 billion at the start of the quarter and from $29.4 billion at the end of 2025. Capital spending on property, plant and equipment rose to $733 million from $427 million a year earlier, reflecting continued investment in Charleston and St. Louis, though it remained well below the $1.275 billion spent in the first quarter.