Jason Gursky: Hey, good morning everybody. Brian, just maybe a quick clarification or maybe, Dave, and then a question on defense. The clarification on the rate 38 a month, you guys still firing some blanks so that the number that you’re actually producing is a little bit less than that? Just kind of curious what rate 38 means. And then on defense, Brian, you’ve historically broken things down into that 60, 25, 15 bucket. You talked a little bit about the 25% bucket and the 15% bucket in your remarks. So, I was wondering if you can just comment on the 60%, the remaining part of the portfolio and how that’s performing and where maybe margins are in that slug of business at this point? Thanks.
Brian West: Sure, I’ll take the first one. Yes, we’ve cycled to 38 per month. We said that. Keep in mind, it always takes time for that to equate it to deliveries, but we’re not firing blanks. On your question on the 60% of the portfolio on BDS, look, they’ve consistently quarter in, quarter out has still been able to deliver some very good performance on some products that the customers need. And you know the laundry list that we talked about, things like Apache and all that sort of stuff, missiles and weapons, things that are needed right now in this environment that we live in. And they’re performing well and they’re in that mid to high single-digit margin rate. And when we step back, if we think about going from where BDS is with margins, two things have to happen.
That 25% that’s wrapped around fighters and satellites, that has to get better. We expect it to get better and look a lot like it used to. So, then you’ve got 85% of your portfolio clicking at stable, consistent mid- to high single-digit rates. And we know we can get there. And then you’ve got this 15% of the portfolio on fixed-price development programs that we expect to be less of a drag as we retire risk over time. And we expect that to play out.
Jason Gursky: Great. Thanks.
Operator: Thank you. Your next question is from Doug Harned from Bernstein. Please go ahead.
Doug Harned: Good morning. Thank you.
Dave Calhoun: Hi Doug.
Doug Harned: Hi. I want to go back to the MAX 7 and the MAX 10 certification. And the question I have is when you look forward and given there is uncertainty on the timing of the certification of each one of those, and you look at both the mix and your customer demand. And certainly, you’ve had more demand than you can respond to, given supply chain issues. First, let’s say that mix changes because of the timing of certification on those two variants. Are you still — do you still see your line as full because it could be moved around between -7s, 8s, 9s, 10s? And then second, what kind of operational challenges, if any, do you have when you have to have some flexibility about what variant you’re producing?
Dave Calhoun: Doug, I’ll just start by saying I think it’s manageable. We will have this — if there’s a delay in any way, we’re not going to know at the last second. We’re going to know with a considerable timeframe in my view. And by the way, right now, the status on the 7 and the 10 was progressing reasonably well. I don’t believe the FAA has taken anybody off the course, and we haven’t taken anybody off the course and so they are making real progress. And I think we were almost close to the finish line had we not pulled the time-limited exemption. So, I don’t — again, I’m never going to suggest a date or anything like that for the FAA. But they’re working diligently on it, and they know how to separate these two — these — the issue we’re wrestling within our factory from the cert efforts.
And I believe we’re going to have plenty of time, and we’ll be able to manage our product mix reasonably well. There won’t be anything dramatic by way of change. If there are some change from quarter-to-quarter, first or second, you’ll know it pretty early, and so will we and I think it’s quite manageable.
Doug Harned: So, is it fair to say that the supply chain ramp is probably still the governing constraint on your production ramp, not things like mix here?
Dave Calhoun: Yes. Although I will say, if this pause goes on for a little while, I like — I don’t want to pause my customers. But the pause is going to be helpful for us in so many ways in the sense that, that supply chain, they’re going to keep running according to that master schedule. It’s good for us if some buffers get developed and some of the more stressed suppliers get ahead of the game. So there is important progress that will get made despite this momentary pause.
Doug Harned: Very good. Thank you.
Dave Calhoun: Thanks Doug.
Operator: The next question is from the line of Ron Epstein from Bank of America. Please go ahead.
Ron Epstein: Hey, good morning. How are you? If I may, I got a two-part question if that’s okay. The first one, if you guys could walk through 787 a little bit. You mentioned the rate — what’s going on in that line, that sort of thing. We get questions about that. And then I’ll come back with the second part in a second.
Brian West: Yes. So, on the 787, there’s nothing new on the 87. Team is doing a very nice job. We’ll produce at the five per month rate like we described. We expect to steadily increase those rates over time and liquidate a lot of inventory, a lot of inventory. And we’ll give more dimensions around the specifics in line with normal guidance, but the program is doing just fine and the backlog is big.
