Brian West: Yes. Thanks, Jason. Let me start with the quantum and the 2025, 2026 time frame. It’s $10 billion. And we continue to have line of sight to hitting that target. I think that’s most important. In terms of how we get from where we land in 2023 to that moment, yes, going to be some things we’ve got to deal with, not going to be linear, but we’ve got some things that feel good about in terms of momentum. Let me just highlight a few. Of course, we’ll be more specific in January on next year’s free cash flow guidance. But we expect to be higher. It’s too early to be that specific, but it will be underwritten by higher BCA deliveries, both on the 37 and the 87. We’ll have made progress on the inventory wind down that Dave mentioned.
And we’re also going to factor in the 777X ramp. So those things are pretty discrete, and we just got to follow our ability to deliver in a stable environment. BGS will be steady. BDS, as you point out, we expect cash flows next year to be better than there this year, but still likely a drag, mostly factoring in the impact of some of the charges that you mentioned that we just got to put behind us. So, we’ll spell all of this out in January once we finish our planning cycle and get through 2023. But the most important thing to remember is that quantum in 2025, 2026 is $10 billion. And all of the levers that we have to go from where we land this year to at that point are still very clear to us and underwritten by execution, and we know how to do that.
Jason Gursky: Okay. And then, Brian, just if you don’t mind, the $10 billion quantum out in 2025, 2026, can you talk about the potential for – where we might go from there? What are some of the puts and takes that we might see from a growth perspective beyond that $10 billion?
Brian West: Yes. We’re still looking forward to that stability, as Dave called it, in the 2025, 2026 time frame in that $10 billion. That’s where we’re laser-like focused. Anything beyond that is going to be outside of our planning window. And hopefully, it’s going to be underwritten by a very attractive robust demand environment, but let’s get there first.
Jason Gursky: Great. Thanks.
Operator: Thank you. The next question is from Peter Arment from RW Baird. Please go ahead.
Peter Arment: Yes, thanks. Good morning Dave and Brian.
Dave Calhoun: Hi Peter.
Peter Arment: Hey Brian, maybe just to talk about stability there because you just brought it up on – if we look at just the remaining two months of the year, if you’re going to deliver about 15 737s in the – in October, that kind of implies that you need to deliver high 30s or high 40s if you’re going to be at the upper end of your range. Just kind of the confidence level around that for November, December, I mean. And if you could update us on when you talked about the – in September, I think about the 75% of the MAX aircraft in storage had to be inspected. What’s the latest there? And just lastly, is there – is the – getting to 38 a month later in the year, does that impact any of your rate break decisions when you’re thinking about 2024? Thanks again.
Brian West: Yes, sure. So October will be a little bit light, as I mentioned, with November and December being picked up. Remember, we had a number of airplanes that were ready to be delivered prior to this latest spear NOE, and now we have to work them through the system. We do have a good line of sight to finish in the year, and the team is laser-like focused on meeting this updated set of numbers. And then, of course, we feel good about the free cash flow that will be dragged along with that. In terms of the 75%, that is still the way to think about how we have to touch those inventory airplanes. As we’ve mentioned, we know the scope. We know what’s got to happen, and we’re working our way through finishing that work across that cohort of airplanes.
So that has remained unchanged, and it’s just all the work we have to do in front of us, clear line of sight. And in terms of the rate breaks, largely speaking, we’ve had a master schedule out there for some time with the required rate breaks. Of course, we’re trying to get our way to 50 per month by the 2025, 2026 time frame. None of that’s changed. And we’re still focused on executing that once we can get to that 38 as we exit this year and then move the supply chain with us considering everything Dave described about how we see the supply chain coordinating going forward.
Peter Arment: Appreciate the color. Thanks guys.
Operator: The next question is from the line of Myles Walton from Wolfe Research. Please go ahead.
Myles Walton: Hi guys, good morning. Brian or Dave, looking at the $10 billion target for 2025, 2026, is there a way that we can have confidence yet that even if BDS is nearly neutral that the rest of the organization can still get to that number? And then also, if you can just highlight the space satellite constellation charge. I’m always a little bit curious when I first hear about it if I’m going to hear about it again, so maybe just lay out the trajectory of that program. Thanks.
Brian West: Sure. So I’ll take the last one first. This is a particular contract with the customer that really isn’t in the category of development. The way we talk about the fixed price development contracts is very different. We are completing the requirements for the customer. We have additional work to do to make this constellation very robust with new technology. It’s very innovative, and we have to work our way through, and we will in short order. This is not going to be one that’s going to be dragged out for a long period of time. And in terms of the 10 billion, we always built that with some understanding that not every piece was going to go exactly correct. There were going to be some puts and takes and we provide ourselves the room with which we could have certain things not go quite perfectly.
And in the case of BDS, even though it might be a bit different than we had thought even a year ago, it’s still within the quantum of us being able to deliver that 10 billion. And we have a lot of confidence that they will be contributing to that 10 billion. Maybe not quite as much, but they’re going to be positive. And of course, BGS remains strong. BCA, we always get more and more confident. So we still have a path to that 10 billion and just reinforce how confident we are in get – being able to get the whole enterprise there.
Myles Walton: Okay. Thank you.
Operator: Thank you. And the next question is from the line of Sheila Kahyaoglu from Jefferies. Please go ahead.
Sheila Kahyaoglu: Good morning, Dave, Brian, and Matt. Thanks so much. And I just wanted to dig into commercial airplanes and just the operating loss there of $678 million. Brian, I know you’ve been out there in the trenches working with suppliers. You called out another loss in Q4. So maybe as you think about the production rates normalizing, can you maybe parse out how much of the losses are linked to concessions, pricing, supply chain constraints, and how you expect that to turn?
Brian West: Yes. Thanks, Sheila. So it’s largely – the fact that we were negative again in the quarter is all the spirit impact that we’ve described. And fourth quarter is going to be sequentially better, but it’s still going to be negative. And that’s again, as we work our way through this factory disruption and we still have this abnormal running through the BCA P&L. I will tell you that in 2024, we expect margins to be positive and that’s going to be underwritten by two things primarily BCA. It’s going to be driven by higher volume for sure. And remember all this abnormal will be essentially done which has been a drag on the BCA margins for quite some time. So we just got to work our way out of that, which we will by the end of this year, and then work towards executing on the delivery targets for next year.
