波音 (BA) 2020 Q4 法說會逐字稿

Thank you for standing by.

Good day, everyone, and welcome to the Boeing Company's Fourth Quarter 2020 Earnings Conference Call.

Today's call is being recorded.

The management discussion and slide presentation plus the analyst question-and-answer session are being broadcast live over the Internet.

(Operator Instructions)

At this time, for opening remarks and introductions, I'm turning the call over to Ms. Maurita Sutedja, Vice President of Investor Relations for the Boeing Company.

Ms. Sutedja, please go ahead.

Thank you, John.

Good morning.

Welcome to Boeing's Fourth Quarter 2020 Earnings Call.

I'm Maurita Sutedja.

And with me today are David Calhoun, Boeing's President and Chief Executive Officer; and Greg Smith, Boeing Executive Vice President of Enterprise Operations and Chief Financial Officer.

As a reminder, you can follow today's broadcast and slide presentation through our website at boeing.com.

As always, we have provided detailed financial information in our press release issued earlier today.

Projections, estimates and goals we included in our discussion this morning are likely to involve risks, which are detailed in our news release, in our various SEC filings and the forward-looking statements disclaimer at the end of this web presentation.

In addition, we refer you to our earnings release and presentation for disclosure and reconciliation of certain non-GAAP measures.

Now I will turn the call over to David Calhoun.

Yes.

Thank you, Maurita.

Good morning, everyone.

2020 was a historically challenging year for our world, for our industry, for our business and our communities.

I hope you are all staying safe.

We are managing our operations each and every day the best that we can to minimize disruption while always protecting the well-being of our associates.

A lot has happened in the last few months.

So let me begin by sharing some of the highlights starting with the 737 MAX on the next chart.

We made significant progress on the 737 program this quarter.

The FAA in the United States, ANAC in Brazil, Transport Canada and just this morning, EASA in Europe have approved the resumption of 737 MAX operations, marking important milestones on our return to service journey.

I would encourage all of you to read the various reports issued by our regulators regarding the intense scrutiny they put our airplanes through.

This is the culmination of a comprehensive effort, including roughly 400,000 engineering hours, 1,400 test and check flights and over 3,000 flight hours completed on the airplane.

Following one of the most rigorous certification efforts in aviation history, we're confident in the safety of our airplane.

We continue to work with global regulators and our customers to safely return the airplane to service worldwide.

We've assumed that the remaining non-U.

S. regulatory approvals will occur during the first half of 2021, and we will continue to follow their lead in the steps ahead.

Our first priority is assisting our customers with return to service for their existing parked fleet.

Every airline has different operational considerations for returning planes to revenue service and time lines for training their pilots.

We're supporting each of them as they go through their process.

Next, we're focused on safely delivering our 737 MAX airplanes that are in inventory, which began in December of last year.

Prior to the delivery, teams are performing all the necessary tests and ensuring each airplane receives customized care and rolls into a delivery stall ready for customer acceptance and FAA review.

Since the FAA's approval to return the operations on November 18, we've delivered more than 40 737 MAX aircraft to our customers, and 5 airlines have safely returned their fleets to service, safely flying over 2,700 flights and approximately 5,500 flight hours as of January 25.

Based on conversations with our customers, passenger load factors to date have been relatively consistent with the airline total fleet averages.

We're encouraged by the progress to date and also pleased with the confidence our customers have placed in us and the airplane, highlighted most recently by Ryanair and Alaska Air announcements.

In addition to our 737 progress, we continue delivering for our defense, space and services customers.

Let me highlight a few of these accomplishments.

Our defense, security and space team achieved first flight of the MQ-25 unmanned aircraft with an aerial refueling store and completed engineering design review for Wideband Global SATCOM-11+ communications satellite.

Our global services team was awarded a performance-based logistics contract for the Singapore F-15SG fleet and selected to provide P-8A training for the Royal New Zealand Air Force.

Now let's turn to the next slide to discuss the industry environment.

Overall, the government services and defense and space businesses remain significant and relatively stable.

And we continue to see solid global demand for our major programs.

Nevertheless, the scale of government spending on COVID-19 response has the potential to add pressure to global defense spending in the years ahead.

Broad support for our defense portfolio is underscored by the $5 billion of orders BDS booked in the fourth quarter across key franchise platforms.

Just this month, we also received the contract awards for Lot 6 and Lot 7, which include 27 additional KC-46 Tankers for the U.S. Air Force.

Additionally, the fiscal year 2021 defense bill includes investments in products and services from across our defense, space and government services business.

The diversity of our portfolio will continue to help provide critical stability for us as we move forward.

In the commercial market, while many of our key long-term fundamentals remain intact, we continue to see near-term market pressure due to COVID-19.

Despite solid progress on the vaccine front, the next 6 to 9 months will remain very challenging for our airline customers and the entire industry.

COVID-19 case rates continue to be high and travel restrictions remain in place, putting significant pressure on passenger traffic.

Similar to the trends we saw last quarter, the domestic market is leading the recovery, albeit a slow pace.

Domestic traffic in November improved slightly to 41% below 2019.

On the other hand, international operations continued to be depressed, with November traffic still 88% below the prior year.

Recovery in the international segment has been weak due in large part to the absence of coordinated global policies on cross-border entry protocols.

The uncertainty in the international markets has meant that the active fleet is still around 3/4 the size of its precrisis level.

Coupled with utilization rates that are below historical averages, airlines are flying just about half of their normal operations at the global level.

Regionally, we're seeing case rates and government travel restrictions continue to evolve, resulting in different recovery trajectories.

China domestic passenger traffic, for example, has rebounded significantly, although it's not without risk.

Europe is experiencing a pullback because of the resurgence of COVID-19 and related government restrictions.

And then finally, in North America, traffic remains more than 60% below our 2019 levels, and these dynamics continue to drive a very uneven recovery.

As anticipated, the number of aircraft being retired from the active fleet continues to grow, 1,300 and growing.

We expect this trend to continue as our customers focus on retiring their oldest and least efficient airplanes and replacing them with new airplanes that will be as much as 25% to 40% more fuel efficient and better for the environment.

The longer it takes to put COVID in the rearview mirror, the more retirements we will see.

As for the freighter market, we're seeing an interesting dynamic with more freighters flying today than before the pandemic due to the limited belly cargo capacity from passenger airplanes.

While overall cargo traffic showed a year-on-year decline, yields have remained elevated.

The dramatic growth of e-commerce in the past year has fueled express freighter expansion.

This has supported the demand for our cargo aircraft as seen in recent orders from DHL for 8 777 freighters and for -- and from Atlas Air for 4 747 freighters.

We also added incremental freighter conversion orders to our global services backlog.

And over the long run, cargo demand will continue to be driven by global trade and GDP growth and recovery.

We're encouraged by the speed of vaccine development and efficacy rates.

These trends bolster our medium-term outlook and support our belief in the long-term trend -- strength of the market.

Consistent with what we've shared previously as well as IATA and other industry groups, we expect it will take around 3 years for travel to return to the 2019 levels and a few years beyond that to return to our long-term growth trends.

Again, we see the recovery in 3 phases.

First, we're seeing domestic traffic improving in places like Brazil, the United States, India and other large domestic markets.

Next, regional markets should begin to recover such as intra-Asia, intra-Europe and intra-Americas flights.

And then finally, long-haul international routes, which require the most coordination, will be the last to bounce back.

Therefore, demand for narrowbody aircraft is expected to recover quite a bit faster while widebody demand will remain challenged for a longer period.

As we move forward, testing mechanisms, progress on vaccine distribution and coordinated government interactions will be key drivers of the recovery.

We will continue working with the industry through our Confident Travel Initiative.

Industry and academic studies continue to demonstrate that with multiple layers of protection, including HEPA filters, enhanced cleaning procedures and the use of personal face coverings, that the risk of transmission while flying is quite low.

Collaboration between governments is an important element for implementing new screening protocols, which can even further reduce the risk of transmission.

In the commercial services market, we saw modest incremental demand improvement in the fourth quarter.

Although we are starting to see some stability, the recovery has been slow and we continue to anticipate will take multiple years to reach our previous demand levels.

Accelerated retirements will also result in newer fleets when we emerge from the pandemic.

That will reduce service demand and prolong their recovery.

Given the challenging environment, managing liquidity continues to be vital to the aerospace industry to bridge us to recovery.

Despite the unprecedented situation, there generally continues to be liquidity in the market for our customers and for Boeing.

Financiers and investors understand the long-term value proposition of aircraft and the fundamental need to connect the world.

And this has been demonstrated by the broad global interest in the space and the new entrants into the market over the past several years.

We supported the COVID relief and stimulus packages passed by Congress last year and similar efforts underway globally.

These relief programs, including access to financing, have been helpful to our customers as well as a number of our suppliers.

And we believe that support will help enable a faster recover -- recovery for the industry as we are navigating the pandemic.

As we see airlines adapt to these market realities, product differentiation and versatility will be key.

Our product lineup remains well positioned to meet our customer needs and support airline plans to gain efficiencies and reach emission goals.

For example, our digital solutions continue to provide important capabilities to our customers, as highlighted by Frontier Airlines' recent decision to sign a 10-year digital services agreement with us for their fleet.

Our attractive portfolio and the diversity of our backlog provide a strong foundation as we prepare to recover and grow in the future.

Now let's turn to commercial airplane production rates on Slide 4. We're closely coordinating with our customers to understand their fleet needs while monitoring the broader market environment to ensure we're aligning supply with demand.

Let me provide some key updates across our programs.

Starting with the 787 program.

As we've shared, we're conducting comprehensive inspections on undelivered airplanes, both in Everett and in South Carolina.

Since last quarter, we've expanded the scope of those inspections, including work done at our supplier partners.

Our assessment shows that none of the issues identified represent safety of flight concerns.

Nevertheless, we remain committed to taking the time to ensure each airplane meets our rigorous engineering specifications.

And although this work has a near-term impact for us, in terms of both schedule and cost, it is the right thing to do.

And we continue to be in coordination with the FAA and our customers throughout the process.

Transparency is clear.

Through our analysis, we've been able to determine the resolution for the majority of previously identified areas, including our major join sections.

In some cases, this requires inspections and rework, while in other areas, no further action is required.

We've made good progress and are now completing analysis on a few remaining areas to validate the next steps.

As we see it today, this work may take a few more weeks, but we will provide our engineers the time they need to complete that analysis.

We are implementing changes in the production process to ensure newly built airplanes meet our specifications and do not require further inspection.

This is consistent with our determination to eliminate rework from our production system to position us on stronger footing when the market recovers.

We're looking forward to resuming 787 deliveries to our customers.

But as I discussed, there's still work to be done.

Based on what we know today, we expect 787 deliveries to resume later this quarter.

However, it will be back-end loaded with no delivery this month and most likely very few, if any, in February.

Also, based on what we know today, we still expect to deliver the vast majority of the 787 aircraft inventory by the end of the year.

We will keep you updated on the progress.

As we've previously shared, given the widebody market environment, we're in the process of transitioning to a rate of 5 per month in March, at which point, 787 final assembly will be consolidated to Boeing South Carolina.

On the 777, 777X programs, we now anticipate that the first 777X delivery will occur in late 2023.

This schedule and the financial impact to the program this quarter reflect a number of factors, including an updated assessment of global certification requirements, the latest assessment of COVID-19 impacts on market demand and discussions with our customers with respect to delivery timing.

We're working closely with global regulators on all aspects of the 777X development.

This involves listening to all their feedback and applying lessons learned from our experiences on the 737 MAX program recertification and applying to our 777X certification plan.

It also involves making prudent design modifications as necessary to meet the various global regulators' expectations.

As part of our assessment, we've made the decision to implement certain modifications to the aircraft design.

Our decision to make these modifications, which will involve firmware and hardware changes to the actuator control electronics, reflects our current judgment of global regulators' compliance expectations.

This decision has led to these revised schedule assumptions.

COVID-19 has had a significant impact on passenger traffic, particularly international long-haul routes serviced by large widebodies such as the 777X, which has shifted the anticipated replacement wave and overall demand for widebody airplanes to the right.

Additionally, the challenging business climate is impacting our 777X customers.

These broader market factors, coupled with our conversations with our customers about preferred delivery timing, informed our current assumptions.

As a result of these updated program assumptions, we booked a $6.5 billion pretax charge in the quarter, a significant component of which is driven by a reduction in the program's initial accounting quantity.

Greg will go through the financial impact in greater detail a little later.

Despite the challenges we and the industry are facing, we are confident in the 777X airplane and the unmatched capability it will offer our customers.

With the most payload capacity and lowest operating cost per seat of any widebody, the 777X completes our market-leading widebody family with a distinct competitive advantage.

Across the total widebody market of more than 8,000 projected deliveries over the next 2 decades, we see replacement demand for over 1,500 large widebody airplanes, which are well suited for the 777X.

We also continue to see strong freighter demand and good delivery pace for our current 777 freighter.

Our production rate expectations for the combined 777, 777X program remains at 2 per month in 2021.

We continue to assess our production plans to efficiently transition to the 777X.

Turning now to the 737 program.

We're currently producing at a low rate and expect to gradually increase the rate to 31 per month in early 2022.

And we expect further gradual increases to correspond with market demand.

We will continue to assess the delivery profile for 2021 as it will help inform our 737 production ramp -- our ramp plan, and we will continue to communicate transparently with our supply chain to ensure stability.

At the end of the quarter, we had approximately 3,300 aircraft in our 737 backlog.

There's no change to our production rate plan for the 747 or the 767.

The market continues to be dynamic, and we will monitor closely as we prudently balance supply and demand across all of our programs.

Although this remains an unprecedented and uncertain time, we are confident air travel will return.

And when it does, we will be ready to support our customers with a well-positioned family of airplanes.

Now let's quickly look at our 2021 priorities on Slide 5. As you'll see, our priorities remain consistent.

Navigating through this global pandemic and rebuilding stronger on the other side continues to be a key focus, along with safely returning the 737 to service worldwide, building on our efforts over the past 2 years.

We remain committed to working closely with all of our stakeholders to rebuild trust one day at a time, one airplane at a time.

And we'll do that by living our values, demonstrating transparency every step of the way and delivering on our commitments.

As part of our continued commitment to safety, we recently announced our first Chief Aerospace Safety Officer.

Consistent with these values is our focus on sustainability.

We continue to make great strides in our efforts, innovating and operating to make the world better.

We achieved net carbon -- net 0 carbon emissions at our manufacturing and work sites in 2020 by expanding conservation and renewable energy use while tapping into responsible offsets for the remaining greenhouse gas emissions.

Additionally, we've committed that our commercial airplanes will be capable and certified to fly on 100% sustainable aviation fuels by 2030.

Operational excellence is about how we work to deliver safe products and services to our customers while continuously striving for first-time quality.

We are also taking steps to restore the health of our production system.

As we calibrate our production rates to the market impacts of COVID-19, we're taking the opportunity to implement quality, workplace safety and productivity improvement projects to bring stability to our factories.

And as Greg will cover later, this also extends to our engagement with suppliers.

And last but not least, we will not lose sight of our future and the innovations that will reshape air travel.

We continue to invest in our areas that are critical to our business, focusing on design practices and manufacturing technology that will position us for growth.

We're also continuing to invest in our people.

We recently announced that we will be providing most of our employees a onetime stock grant that will vest in 3 years as we recover and grow the business.

To close, our guiding principle here is that every decision we must -- that we make must help us navigate through this difficult period while not diminishing our future competitiveness.

We will take action to protect our business and our people by closely managing liquidity and driving lasting transformational change to make our business stronger and more resilient than ever.

And with that, let me turn it over to Greg.

Greg?

Great.

Thanks, Dave, and good morning, everyone.

Let's turn now to Slide 6. Our revenue of $58.2 billion and core earnings per share of negative $23.25 reflected lower commercial delivery and service volume primarily due to COVID-19 as well as 787 production issues, partially offset by lower 737 MAX customer consideration charges when compared to 2019.

Full year earnings were also impacted by the $6.5 billion pretax charge on the 777X program, additional tax valuation allowance and abnormal production costs related to the 737 MAX program.

Operating cash flow of negative $18.4 billion reflected lower commercial deliveries and service volume as well as timing of receipts and expenditures.

With that, let's turn to Slide 7 for our fourth quarter results.

Consistent with the full year results, revenue of $15.3 billion reflected lower commercial airplane deliveries and commercial service volume, partially offset by a lower 737 MAX customer consideration charge.

Earnings in the quarter were also impacted by the charge on the 777X program, a $744 million charge related to the previously announced agreement between Boeing and the U.S. Department of Justice and 737 abnormal production costs.

Income tax in the quarter reflected the impact of an additional valuation allowance on deferred income tax assets, partially offset by the 5-year net operating loss carryback provision in the CARES Act.

The $2.5 billion of noncash valuation allowance booked in the quarter was based on the required accounting analysis to assess recoverability of our deferred tax assets against future sources of taxable income.

This is an accounting assessment, which places a lot of weight on our recent losses leading to the charge this quarter.

Important to note that this valuation allowance does not limit our ability to utilize deferred tax assets in the future periods.

It does not change our outlook on future company results and has no impact on cash flows or future tax returns.

When income generation returns to more normal levels, we can expect to see the allowance reverse and increase reported earnings.

Let's now move to Commercial Airplanes on Slide 8. Revenue was $4.7 billion driven by lower widebody delivery volume, partially offset by higher 737 deliveries and a lower 737 MAX customer consideration charge in the quarter compared to the same period last year.

Operating margins declined driven by the charge on the 777X program, lower delivery volume and a $468 million of abnormal production costs related to the 737 program, again, partially offset by lower 737 MAX customer consideration charge.

As Dave mentioned, we began to receive regulatory approvals to resume 737 MAX operations in the fourth quarter, and we restarted 737 MAX deliveries in December last year.

Last quarter, we shared with you that we had about 450 737 MAX aircraft built and stored in inventory.

With deliveries of 27 aircraft in December and now 40 to date, this number has been reduced to approximately 410 aircraft in inventory.

As we previously communicated, we expect to have to remarket some of these aircraft and potentially reconfigure them.

Deliveries from storage will continue to be our priority after assisting our customers with their return to service as we continue to work closely with our customers based on their fleet needs.

Our estimated timing of 737 deliveries from storage has not changed since last quarter.

That said, we expect delivery timing and production rate ramp-up profile to continue to be dynamic given the pandemic.

There are no material change to our estimate total abnormal costs of $5 billion.

During the fourth quarter, we expensed $468 million of abnormal production costs, which brought the cumulative abnormal cost expensed to date to $2.6 billion.

We expect the remainder of this cost to be expensed as incurred largely in 2021.

Our assessment of the liability for estimated 737 MAX potential concessions and other considerations to customers and the expected cash impact timing did not change significantly in the fourth quarter from our previous assessment.

Cumulatively, we've accrued a $9.6 billion liability for the estimated potential concessions and other considerations.

To date, we've made $3.7 billion of payments to customers in cash and other forms of compensation, including $600 million we paid this quarter.

We have settlement agreements covering approximately $3 billion of the remaining liability balance of $5 billion.

Turning now to 787.

As we've discussed, we continue to complete the inspections on our 787 program in our factories and in our supply chain.

We have approximately 80 undelivered 787 aircraft in inventory.

Based on what we know today, we anticipate that we will unwind the vast majority of these aircraft during '21 and are working with our customers to facilitate this.

But as Dave mentioned, we still have some work ahead of us on this, and we will keep you posted on the progress.

Our latest assessment of the financial impact of this effort and delivery delays have been included in our fourth quarter closing position.

As we've previously disclosed, the 787 program has near breakeven gross margins due to the previously announced reductions in production rates and program accounting quantity.

If we are required to further reduce the accounting quantity and/or production rates or experience other factors that could result in lower margin, the program could reach forward loss in future periods.

However, on a cash basis, the 787 unit margin has held up relatively well even with these lower production rates, and many of the underlying productivity and profitability drivers remain in place.

As Dave mentioned, we expect first delivery of the 777X to now occur in late 2023, and we recorded a $6.5 billion reach-forward loss on the program.

Our decision to implement certain modifications to the aircraft design has added time to the schedule and result in additional costs.

In addition to that factor, other key elements contributing to the reach-forward loss include the following: one, an updated assessment of the market demand and customers' preferences on delivery timing based on continued dialogue with our customers; two, resulting adjustments to planned production rates and reduction in program accounting quantity to 350 aircraft.

As a reminder, initial accounting quantity doesn't represent the long-term potential size of the program.

We see replacement demand for over 1,500 larger widebody aircraft, which will be well suited to the 777X.

The approach we used to establish the accounting quantity is consistent with what we've used on other programs.

And as part of our closing process, we always evaluate the initial accounting quantity on a quarterly basis even in program development to test that the program is not in a reach-forward loss position.

And lastly, other cost elements include increased change in corporation costs along with associated customer and supply chain impacts.

The combination of these factors created significant pressure on the 777X program's revenue and cost estimates, resulting in the reach-forward loss for the program.

We still expect peak use of cash for the 777X program to be in 2020.

The changes to the 777X program time line will result in some cash flow headwinds in '21 and '22.

But we expect cash flow to improve as we get closer to EIS and begin deliveries in late '23.

We anticipate the program to turn cash flow positive approximately 1 to 2 years after starting initial deliveries.

Commercial Airplanes backlog included more than 4,000 aircraft valued at $282 billion.

The decline in backlog in the fourth quarter reflected aircraft order cancellations and removal of aircraft orders from our backlog due to ASC 606 accounting standard, including our most recent assessment of 777X backlog due to the revised schedule.

Given the significant headwinds that remain in the market, BCA margin progression will be highly dependent upon future production rates and will take time.

However, we are taking action today to make foundational lasting change through our business transformation efforts in order to help offset those headwinds as much as possible.

Let's now move to Defense, Space & Security on Slide 9. Fourth quarter revenue increased to $6.8 billion primarily driven by higher volume as well as a charge on the Commercial Crew program in the fourth quarter of 2019.

Fourth quarter operating margins of 7.4% include $275 million pretax charge on the KC-46A Tanker program primarily due to production inefficiencies, including the impacts of COVID-19 disruption.

We received $5 billion in orders in the quarter, including a contract for 2 KC-46A aircraft from Japan, AEW&C upgrades for the Republic of Korea Air Force and key proprietary space programs, bringing the backlog now to $61 billion.

Let's now turn to Global Services results on Slide 10.

In the fourth quarter, Global Services revenue declined to $3.7 billion driven by lower commercial services volume due to COVID-19.

Operating margins decreased to 3.8% due to lower commercial service volume and $290 million of pretax charges related to asset impairments primarily to reflect the updated fleet retirement assumptions driven by COVID.

During the quarter, BGS won key contracts worth approximately $7 billion, which brings its backlog now to $21 billion.

Although we saw a slight uptick in commercial service demand in the fourth quarter, we continue to expect the recovery to take multiple years.

We continue to position our services business for the future, taking actions to rightsize our operations.

In addition, we are shaping our portfolio to ensure that we have the right solutions to help our customers and industry navigate the downturn and prepare for market recovery.

The result of our efforts have already started to positively impact our operating margin performance.

Let's now turn to cash flow on Slide 11.

The disruption caused by COVID-19 on our airlines and global economy continues to put significant pressure on our cash receipts.

Operating cash flow for the quarter was negative $4 billion driven by lower commercial airplane delivery volume, advanced payment timing and commercial service volume.

Let's now move to Slide 12 to discuss our liquidity position.

We continue to proactively manage our cash position and assess our liquidity throughout this pandemic.

We ended the fourth quarter with strong liquidity, including $25.6 billion of cash and marketable securities on our balance sheet and have access to our $9.5 billion bank credit facility, which remains undrawn as well continued access to capital markets.

Our debt balance at the end of the quarter was $63.6 billion, reflecting our $4.9 billion bond issuance as well as debt repayments in the quarter.

As we've discussed previously, we've been taking many actions to enhance liquidity, including suspending our dividend; reducing discretionary spending; matching 401(k) contributions in stock, prefunding pension with stock; and most recently, awarding most of our employees a onetime stock grant that will vest in 3 years in lieu of merit increases this year.

These actions reflect our continued derisking strategy and are part of our balanced approach to ensuring we're proactively meeting our obligations.

We worked hard in the past to maintain disciplined cash management while seeking opportunities to strengthen our balance sheet, and we will continue to do so.

Once cash flow generation returns to more normal levels, reducing our debt levels will be a key focus area.

We believe we currently have sufficient liquidity and are not planning to increase our debt levels.

However, we will continue to actively manage our balance sheet, including refinancing debt maturities.

Our investment-grade credit rating is important to us, and we'll continue to consider all aspects of our capital structure to strengthen our balance sheet.

Let's turn to the next slide.

As we look forward into '21, I'd like to provide you with some insight into some of the key drivers, which are informed by the current market recovery expectations and customer discussions to date.

2021 will continue to be a challenging year.

That said, we expect upward trends from 2020.

Based on what we know, we'd expect to see 2021 revenue improve from 2020.

This will be driven mainly by higher 737 and 787 deliveries as we plan to unwind inventory and deliver from the production lines.

We expect BDS to generate low to single-digit growth in '21 revenue compared to 2020.

Excluding onetime events, we anticipate modest revenue growth.

As for BGS, while we anticipate solid growth in our government services business in '21, our commercial services will continue to be challenged due to COVID-19 impacts.

[We expect] BGS revenue to be relatively stable '21 versus 2020.

On the P&L side, we also expect improvement in '21 primarily driven by higher commercial deliveries, absence of 2020 charges, improved performance and benefits from continued business transformation efforts.

These impacts will be primarily offset by higher interest expense.

Also (inaudible) BCA will continue to book significant abnormal production costs for the 737 program in 2021.

Moving to cash flow.

We continue to expect 2021 operating cash to be much improved from 2020 driven mainly by inventory burn down associated with 737 and 787 programs.

While higher deliveries will be a tailwind, the timing of advanced payments and burn down of excess advance payments, along with 737 customer settlement payments and higher interest payments, will continue to be headwinds.

The revised 777X schedule also creates headwind to our current cash profile versus our prior assumptions.

Bringing this all together, based on what we know today, we continue to expect 2021 to still be a use of cash and to be cash flow positive in 2022.

We expect cash improvements from '21 to '22 to be driven by continued improvement on the 737 program due to lower customer considerations and higher delivery payments as well as commercial services.

And as I just outlined, our commercial delivery volume is a key driver for improvements from 2020 to 2021.

Therefore, the drivers clearly hinge on the pace of commercial market recovery.

Given the dynamic environment, we will continue to diligently work opportunities and monitor risk factors and keep you posted on further developments.

Now let's move to the last slide.

Since the beginning of the pandemic, we have taken prudent and decisive action to get ahead, to preserve cash so that we can navigate this crisis and also reshape our business so that we can emerge as a sharper, resilient, leaner enterprise.

In addition to taking actions to derisk our portfolio and bolster liquidity, we have also made operational changes to lower our production rates and adjust our workforce to align with the new market reality.

We have taken production rates for the 787 and 777 programs down by approximately half due to COVID impact and also moderated the ramp of the 737 production rate.

We continue to take steps to reach our previously shared plan to bring our overall staffing levels to approximately 130,000 by the end of '21.

As you know, we are progressing through extensive business transformation efforts that are introduced [some] quarters ago.

The financial objectives we've established are measured in billions of dollars, and we expect them to be executed over a multiyear period.

We expect the majority of our efforts will result in enduring lasting changes that will enable us to be more efficient in the long term, laying the foundation for recovery, future margin expansion and cash flow generation as the market recovers.

A combination of all of our actions in 2020 helped us generate more than $10 billion of liquidity, which was (inaudible) as we navigate this very challenging environment.

Approximately half of our transformation efforts are focused on reducing structural costs versus variable.

We continue to make progress across all 5 pillars as we utilize a low production rate environment to transform and improve our business processes.

Projects to improve operational stability, implement first-time quality initiatives shape our portfolio with core markets, simplify our organizational structure and reduce bureaucracy are all examples of efforts meant to create meaningful and lasting change to how we operate as well as our cost structure.

Through our portfolio and investment prioritization, we reduced R&D and CapEx by $1.3 billion in '20 from prior year.

We also took out over $1 billion of indirect (inaudible) reducing expenditures in areas such as freight logistics, purchase, services (inaudible).

And as part of our footprint optimization, we sold or closed over 240,000 square (inaudible) [over the next year].

There are a number of other initiatives (inaudible).

While we talk often about our transformation at the operational production level, every support organization in our company is on this journey.

Our team, the human resources, finance, IT and more are all recalibrating their structures and operating models to simplify processes, eliminate unnecessary spending, reduce bureaucracy and improve long-term performance and competitiveness.

For example, we have been (inaudible) providing opportunities to form or expand strategic partnerships with vendors that allow us to simplify and optimize our operations and reduce overall costs.

We're also evolving the way we work with our [12,000] suppliers.

This began with our Boeing supplier (inaudible), which expanded (inaudible) can strengthen the relationship, yield improvement in quality, affordability, performance, on-time delivery.

These principles are built on success, feedback and (inaudible) throughout our supply chain.

And as we take action, we're ensuring that every step only further drives key [improvements] and efforts in safety, quality and [delivery, building on our] commitments.

We've got the right team in place, and we're confident that we have the right actions put together, all supporting our future and our competitiveness.

With that, I'll turn it back over to Dave for some closing comments.

Yes.

Thanks, Greg.

Listen, 2020 was a year like no other.

Our world, our industry, our business and our communities were facing unprecedented challenges, and we're still in the midst of it.

In addition to navigating COVID-19, we also made important progress on the 737 as we engage transparently and comprehensively with regulators, government leaders, customers, suppliers and our teams.

Having done that, we'll be that much more prepared for airplane certification efforts going forward.

The return to service of the 737 was a key step for us as we make fundamental changes to how we operate and rebuild trust one airplane, one interaction, one day at a time.

I'm proud of our team, and I thank them for the resilience and dedication that they've demonstrated as we've navigated through this really difficult moment together.

2021 is an inflection point for our industry and certainly for Boeing.

We have been through tough times before.

We know how to overcome challenges and to adapt, and we will stand by our customers throughout this process.

Driven by our values and with a focus on quality, safety, integrity and transparency, we will emerge from this moment stronger, more competitive for the long term.

And with that, Greg and I will be happy to take a few questions.

Thank you.

(Operator Instructions) Our first question comes from Carter Copeland with Melius Research.

Greg, I wondered if you could just give us some more color on the $6.5 billion on the 777X and how much of that was the accounting quantity.

You mentioned 350 units, but I don't think you've mentioned what that changed from.

I don't know if that was 500 or what that number was.

So just give us a sense of how big that was and how it compares to the other pieces, be it change in corp and the modifications that you mentioned or customer settlements.

Yes, yes, absolutely.

Yes.

I kind of put it into 4 major categories.

Certainly, the planned production rates associated with the schedule move and, as you said, the reduction in the accounting quantity.

And as I mentioned, every quarter, we go through this assessment.

But as a result of what we're seeing in the marketplace and with the current pandemic as well as kind of how we're seeing the marketplace shift in the near term, we reduced our assumptions around the accounting quantity for this quarter.

But again, pretty consistent from -- certainly consistent process, but pretty consistent with what we've seen on some of the other programs when we've established an accounting quantity.

And then, of course, we talked about change in corp costs for the aircraft that are currently built as well as we'll have the rate much lower through this period between now and '23 and the change in corp associated with those.

And I'd say last one would be customer and supply chain impacts considering the delays.

Single, I'd say, largest one in there, Carter, is around the accounting quantity.

Okay.

So those were in order -- rank order?

And then just can you give us a sense of how much of a decrease in the accounting quantity that -- the move to 350 represented?

Yes.

From prior quarter, we had 50 additional units in there.

So we had a quantity of 400 units.

It's -- the only other point is it's really important to know that the 50 that moved out are the ones at the tail end, and those are where cash margins are significant.

So you end up with a little bit of a double whammy there.

Our next question is from Myles Walton with UBS.

On the 787, Greg, I think in early December, you were looking for a restart of deliveries into year-end.

Obviously, there must have been some incremental discoveries and rechecking.

So just curious, what's the level of confidence now versus then?

And then also, is there any FAA requirement for sign-off on what you're looking to do and approved prior to the restart of deliveries?

Yes.

I mean I'd put it into a couple of categories.

One of which is some of the inspections have taken longer, and they've also expanded for complete thoroughness across not only our factories but in the supply chain.

So that's taken longer.

Look, from day 1, we've been engaged with the FAA and continue to be engaged as we work through this process.

And we'll continue to [rate up] until we're ready to resume deliveries.

So complete transparency there, of course, and clarity around what we're doing, how we're doing it and the path to recovery, again, when we resume deliveries.

I don't know, Dave, if you had anything you want to add.

Well, there's -- there won't be a formal sign-off in that regard.

But without a doubt, we will make sure the FAA is comfortable with every act we've taken.

And I'll only add the comment that this expansion of inspection and quality assurance and all those things, maybe I'll take a hit on that one.

But this is a moment where we get to fix some things and do some things the way we would like to do them.

And so I have put very little pressure on the production and engineering team to resolve things too quickly.

I want it to be thorough and done, and I want to prevent future rework around this stuff.

And I have to tell you, these specs are incredibly exacting.

So I'm proud of the design principles that we've used in it.

But anyway, we're just -- probably take stepping it up a bit.

Next question is from Noah Poponak with Goldman Sachs.

Greg, there's a lot of debate out there about the aircraft unit margins a few years down the road when things are a little bit more normal.

The 777 is in a -- is obviously in a unique situation.

But with the MAX and the 787, there are questions about if you're having to give on price on the MAX and then if these really impressive cash margins you had for a while and the 87 can hold it at the lower rate.

So I wonder if you could spend a little bit of time on that.

I mean how can we think about where those airplane margins can be a few years down the road at more normal rates compared to prepandemic, pregrounding?

Yes.

I mean, clearly, as you said, volume is going to play -- is going to be key in that.

So as we've talked about, as we see 737 increasing in production and delivery, that's going to play right into clearly the unit cash margin, and that profile pretty much aligns with delivery profile and rate projections that we have.

On the 787, as I mentioned, even at these low rates on a unit basis, cash is pretty good.

And that's the efforts of the past for sure and having a good product mix between 8s, 9s and 10s.

And again, that's going to go up with volume.

And that's obviously not taken into consideration the advances that will come with that increased volume on both of those programs.

But by far, those are the 2 single drivers to the cash flow positive and particularly in '22 and beyond.

And then beyond that, it's the 777X as we talked about, getting out of use of cash and into positive cash as I just mentioned.

Those 3 elements, again, are going to be key to the cash trajectory between now and '23 and '24 and beyond.

So I mean if we're in '23 and the MAX rate is hypothetically in the low 40s a month and the 87s hypothetically 6 a month, can those unit cash margins actually be fairly close to where they were prepandemic, pregrounding based on all the cost action and keeping pricing pretty similar?

Or is that unrealistic?

Well, I mean that's certainly the objective, and a lot of part of the transformation effort that we're doing is trying to lean ourselves up.

And we'll work to that profile, but volume is going to be key.

So if you get to those rates, like I said, the cash is going to follow that.

And this -- the environment we're in today, how that recovers, the assumptions that our customers have and therefore we have, that's got to stick.

And if it sticks, then you'll see the trajectory on cash go with those production rates then by -- no question.

But at the same time, these transformation efforts, as I said, they go over multiple years, and that's the objective.

Certainly, lean ourselves out, get ourselves even more competitive on the other side of this and really reduce the structural cost within our company so we can be more efficient.

All that also is going to play out in the cash profile over that time period.

Yes.

Maybe if I could just comment on the pricing question, which is an important question.

I do anticipate us being through our inventory in '22 on the MAX.

I think we can stay disciplined every step of that way, and indications are that we can.

And then when we get into '23, which is where the question is, I see no reason why the competitive dynamics are any different.

I really don't.

The value of these 2 airplane competitors, the value of their airplanes is not much has changed.

We will have demonstrated performance on the MAX that is very good for the applications that it competes for.

And their airplane will have advantages on other applications.

But I'm confident in that competitive dynamic and believe we'll get right back to where we were if not something better.

And I know Greg, I'm not sure if his restructuring discussion broke up on you like it did for me when I was listening to it.

A little bit, yes.

But the structural changes that we're making and the cost advantages that we intend to get from it at something in that $5 billion range, these will accrue to our airplanes.

And anyway, I'm optimistic.

I'm quite optimistic.

There's nothing about the market right now that has me switched off on that, but we are talking about 2023.

It's going to take that long for us to sort of work our way out of the COVID world.

Our next question is from Cai von Rumohr from Cowen and Company.

So you said $5 billion in abnormal production cost.

You've done $2.9 billion to date.

And yet sequentially, those abnormal costs came down throughout the year.

I think they ended at $3.30 billion in the fourth quarter.

I mean if you have $2.1 billion to go, which is what the math suggests, it would suggest it moves up.

So can you give us some idea of the profile moving forward?

And secondly, some idea in terms of the delivery cadence?

I mean I could understand that maybe you have very strong MAX deliveries now because people haven't gotten them and then maybe they fall off in '22, '23.

Yes.

So kind of on the abnormal cost, Cai, like I said, it can be bumpy or lumpy from quarter-to-quarter.

But like we said, we're on a profile to kind of wrap that up as we increase rates.

So it's directly tied to the rate where we'll stop to book -- booking abnormal costs, and it will move back into the program.

I think on the delivery profile, certainly, we've got a delivery profile laid out in detail for the balance of the year and going into '22 and '23.

We don't see any reduction taking place there, as Dave indicated, on the production rates that we've established, not only delivering out of inventory which, as you know, is our priority 1, but also increasing those rates as we go forward.

So that profile continues in delivering off, like I said, the backlog, but also delivering off the inventory that we've got in the ramp.

And I don't know whether it was picked up earlier or not, but all the deliveries we've had to date, the 40 aircraft have all come out of inventory.

So again, it will be a combination, but the priority will continue to be on those inventory aircraft.

So we see strong demand for the aircraft and again, tied to the recovery.

And the team's positioned to deliver at high rates.

We've certainly got the capital and the capacity and the capability to do that.

It will really be informed by our customers' ability to take them in a specific time period.

Our next question is from Seth Seifman with JPMorgan.

I wanted to ask about 787, and I think, Greg, you mentioned about 80 aircraft in inventory.

What's sort of the normal level of aircraft in inventory?

And as we think about continuing to produce over 60 aircraft this year and the state of the widebody market, how do you not end the year with still having aircraft in inventory and going into '22?

Yes.

You're right, Seth.

We'll have some.

That's what I was mentioning earlier that we expect to deliver the majority of that 80 through the balance of '21.

And it will be backloaded, as Dave indicated, on our current assumptions of when we believe we can start delivery.

So there'll still be some burn off in '22.

But like I said, the majority of that will be in '21 and be backloaded associated with that.

But does that mean all -- does that mean the vast majority of the 80 plus all of what is produced?

Yes.

Yes.

Our next question is from Peter Arment with Baird.

Greg, maybe just if you could just highlight your assumptions or at least trying to understand the dynamics of the use of cash in '21.

I mean the cadence.

Should we expect it to kind of improve throughout the year?

Or maybe just any color there and as we get into '22.

Yes.

No, as you kind of look at it over a quarterly basis, Q1 will be the more challenging quarter, really, again, tied to the inventory burn off on the 787 in particular.

And then just, I'll say, the cadence of deliveries on the MAX.

So Q1 will be the biggest use, a little bit less in Q2, and then it will start to moderate through Q3 and Q4.

So look for a big use of cash in Q1, but again, all tied to those 2 programs predominantly.

So as we resume deliveries on the 787, we'll start to burn that inventory down.

You'll see the benefit of that in the second, third and fourth quarter.

And next, we'll go to Doug Harned with Bernstein.

If I go back a year ago on this call, Dave, you talked about -- that's when you put the NMA kind of aside, on hold and were relooking at how to think about development.

Right now, you talked about the competitiveness of the MAX versus the competition, the A320neo.

And certainly can see that certainly at the MAX 8 if you look for transcon flights, very competitive airplane.

But Airbus has been very successful with the 321XLR, which can do a lot of the 757 missions and can't really see how the MAX can compete up on those missions.

So when you look forward, are you ready to see that market now?

How do you think of these sort of narrow transatlantic routes, situations like that?

How will you approach that over the long term?

Well, over the near term, it is what it is.

And again, I think about a portfolio of airplanes, not just any one.

And while we take all of the faceoffs that we go through in order and in those routes that you described for the 321, we -- I get it completely, so does our team.

Broadly speaking and on balance across the portfolio, we like where our portfolio plays with the MAX at the lower end and the 87 at the higher end and very successful airplanes.

So that just said -- all that means is we're going to take our time.

I'm pretty sure you're in the right space, although I'm not going to point design today.

I think you're pretty much in the right space with respect to where next development efforts lean.

But I don't want to call it out just yet.

And I'll go right back to the comment I made in the beginning.

We are really progressing well on our engineering and manufacturing forward technology development so that we're ready when that moment comes to offer a really differentiated product.

So I'm sure it's not a lot of rocket science for you to add up and guess where things end up.

But we're not going to call out that point design.

This isn't the moment.

We're going to take a little time, and we don't feel significantly disadvantaged with our portfolio versus their portfolio.

So anyway, that's how we think about it.

And we are thinking long term, that's for sure.

Any time frame you can suggest?

I mean given the cash pressure now, near term seems hard, but what kind of time frame in the future?

Or how would engines play into that timing?

Yes.

Well, engines always play into it.

I don't think they're going to play into it anywhere near the extent to which they used to simply because the demands on that propulsion system in the next go around I don't think are going to be as significant.

And now I'm just -- I'm going to, I think, speak to the industry and what I know they are capable of doing or not.

So therefore, differentiation at the airframe level itself is really, really important in the next run, which means that these technologies that we are working with and trying to demonstrate to ourselves at scale with determinant assembly, those are the things that we'll differentiate.

And believe it or not, that becomes the most important criteria for us with respect to announcing that next airplane.

It's got to depend on these advanced technologies, and it will.

So -- and I don't feel in any way, shape or form that 1 year or 2 years more in the market to learn more is going to hold us back in any way, shape or form or hurt The Boeing Company in any way, shape or form.

So that's the perspective I'd put on it.

Right now, we're getting no pressure, as you might imagine, from airlines to run forward as fast as we can.

And that's a bit of a luxury on this subject.

But the most important thing for me and the Boeing team is to get these underlying technologies proven, demonstrated at scale so that when we call that point design, we're ready and we'll deliver.

Next, we'll go to Hunter Keay with Wolfe Research.

Greg, as you think about free cash flow beyond '21, how will orders over the next 12 months impact your decisions on rates, which, of course, also inform the cadence of advances?

So holding other things constant like the concession payments and the timing of PDPs, can you help me better understand sort of what your expectations are for order activity and how that will dovetail into production rate decisions and advances through the cash flow line?

Yes.

And to your point, I mean, we've taken that into consideration with the current rates that Dave talked about through that period.

So the advanced time line associated with that is tied rate to how we see at least near term those production rates.

So obviously, if we modify those in any way, it will have an impact on advances.

But I would say separate from that, the delivery profile of 87 and 737 are going to be the biggest contributors to the growth of cash flow.

Now certainly, advances will help as we get lead time away on rate increases, but delivery profile alone will be one of the more significant drivers.

So as I said before, looking from the outside, watch the delivery profile on both of those programs in particular, and they'll align right to our cash flow profiles and projections we've had going forward.

And then advances will be a little further out from this time period just because of the rate increases, particularly on the 37, as we burn off some of the X's advances.

And then the advances on the 87 will be, again, tied to the rate increases beyond the '21, '22 frame.

Yes.

Maybe I'll add an ounce of color.

Of course, we expect and believe that the demand for our current 777 freighter is still significant.

And we hope and believe that we'll continue to see ordering activity broadly on that one.

The 76 similarly, there's an awful lot of freighter demand for the 76.

And then when you get to the 87, the only wildcard that is more upside than downside is if there is a [date, time] if you will, with respect to the trade agreements between the United States and China.

And the agreements are in place.

It's just a question of whether the posture changes in any way that allows for that Phase 1 deal to move forward.

It's a big plus for any administration in light of the number of jobs it supports in the United States, and so we're optimistic on that front.

But if that panned out and panned out reasonably quickly, that's more up than down.

And next, we'll go to Jon Raviv with Citi.

You mentioned that defense is a critical source of stability here.

I know it's not talked about too much because I agree that's not where a lot of the delta is these days.

But nevertheless, what is your perspective on underlying growth there?

And then your perspective on why Boeing defense, at least from our -- from externally looking at it, has not participated in the same growth that others have seen?

Others have been growing mid to high single digits, still looking at maybe low to mid-single-digits growth in 2021.

You guys are still looking at maybe low or very modest growth.

So what's your perspective on that?

And then also looking forward, is there an opportunity for sales growth to accelerate perhaps based on some of those big new wins that you've lodged over the last few years?

And what would the impact on the margin be as those programs ramp up?

Greg, can I start?

You can fill in as you...

Yes.

Sure thing.

Yes.

So it has been, and we continue to believe that we're going to have stable growth and admittedly at the lower end of the single digits.

And that's the best guidance we can talk about because we do think there is pressure that will ultimately come down as a result of all the COVID spending here in the United States.

But a large part of our business now is international markets.

And the order activity in those international markets has pushed to the right somewhat and almost entirely because of COVID-related stuff, not because of any competitive issue one way or the other.

So we still like our position because we have an awful lot of ongoing programs that the military and, of course, our defense bills have been kind to in each and every one of their moments.

And this last bill was a good one for us in pretty much every respect.

So it's hard to commit to a big uptick in any way on growth rates anytime soon in light of what I think are the pressures.

The only other comment I would make is there's a big segment of work that we do in the classified world that is incredibly encouraging and incredibly important to us.

And anyway, I believe not just for our defense world, but also ultimately derivative technologies for the commercial world that, that's going to be a big source of competitive advantage for Boeing.

So we're high on it, but I'm very reticent to want to suggest the market is going to get any better or that we're going to differentiate ourselves any further than what we have been.

And next, we'll go to David Strauss with Barclays.

I want to go back and touch on 787.

Could you just talk about the 80 aircraft that you have in storage?

How many at this point, if any, have been reworked?

What exactly is involved in that, the costs involved?

Is there any sort of customer compensation that you're assuming given the delays on these aircraft?

Yes.

The cost associated with it, David, we've provisioned for that in our bookkeeping.

So that's why we've got it well understood and covered.

I don't have the specific number of aircraft that have been reworked, but there's a number that are complete.

As Dave said, we've still got some work to do, our engineering team does with final dispositions that will inform whether we have additional rework or not.

And we'll adjust the schedule accordingly.

But we've made a provision in there for what we think are associated costs related to the delay into any rework associated with these inspections.

Okay.

Greg, can you give a little bit more detail on what exactly is involved in the rework?

Is it just exterior?

Or is there a fair amount of interior work that's got to be done as well to get the airplanes back to spec?

Yes.

I mean it's around the structure.

As you -- as we've talked about, you've seen around certain areas of the joint that the team's got to go back -- go in and inspect and potentially rework within the structure.

That's primarily it.

So it's nothing outside of that as far as interior.

It's around some of those joints.

And like we talked earlier, we have been expanding the expansion back into the supply chain as well, but all kind of around the joint areas where we've got multiple buildups of different materials.and do we have the appropriate shims in there and if we need to do any additional rework or inspection, that's what's essentially what's taking place.

Okay.

And I think there were some airplanes that -- a handful of airplanes that were grounded, but do you think there are any additional implications to the installed base from what you've found?

Not at this time.

No.

No.

And those ones that were grounded and ultimately proven okay involved more than what we're working on now.

It was a combination of factors.

And we know one of those factors have been eliminated.

Yes.

And next, we'll go to Rob Spingarn with Credit Suisse.

Dave, I wasn't going to ask on product development, but your answer to Doug makes it somewhat more compelling now.

When you distinguish between engine advances and airframe and production advances, does this mean that the next aircraft is not necessarily a platform to introduce a future propulsion technology like they're talking about in Europe, and therefore, that the next plane would be conventionally powered?

Yes, I believe that.

Yes.

And I'm on the record of saying that.

Hydrogen power, I just believe, has a much longer time line than the time line that at least I've read like you did.

I have a fair amount of experience with hydrogen.

Our company has an incredible amount of experience with hydrogen, at least in the size of airframe that we're all talking about.

We can experiment down at the very low end, but that's not going to be a meaningful market here.

And the advent of sustainable fuel, already we're capable of living with that sustainable fuel.

I believe that's going to be the 15-year answer to 2050 guidelines and approaches because we've all worked with it, experimented with it.

We know it works, and now we've got to develop a supply line for it.

But I believe it's the only answer between now and 2050.

Operator, we have time for one more question.

And that will be from Sheila Kahyaoglu with Jefferies.

Greg, you mentioned last quarter, PDP significantly impact 2021 free cash flow.

Just in light of the additional 787 build that we're seeing here and the MAX line, is it fair to say you unwind a majority of those 787s that are sitting there right now and 200 MAXes, you get an $8 billion inventory benefit.

And then the advances or the PDPs are a similar offset in '21?

And then how does that look into 2022?

Yes.

Yes, you're right.

I mean as you look at '20 to '21, certainly, the largest driver of the improvement in cash flow there will be the 787 and the MAX.

And as we talked about, it'll be more backloaded.

We'll obviously have the increase in the 737 deliveries.

But as you indicated, the -- we have excess PDPs.

So they're being utilized and will be utilized in some of these deliveries.

So you really won't see the, I'll say, true-up of that until you move from '21 into '22.

But when you look at the growth profile, '21 to '22, again, 737 is a key driver to that.

So back to my comments earlier around the rate profile and the delivery of the aircraft off the ramp, that is the single biggest driver as you look at '21 to '22 as it sits here today.

So -- and the advances start to true up in that time period as well, and I'll say, kind of get more to a normalized level of advances, but those are ultimately the key drivers year-over-year.

All right.

That completes The Boeing Company's Fourth Quarter 2020 Earnings Conference Call.

Thank you all for joining.

Thank you.