Risk factor changes · BA

What changed in Boeing's risk factors

Item 1A (Risk Factors) of Boeing's FY2025 10-K compared with its FY2024 10-K, sentence by sentence.

Newer: 10-K filed 2026-01-30 · Older: 10-K filed 2025-02-03

New in the latest 10-K 35

• As a result, our ability to deliver aircraft on time, satisfy regulatory and customer requirements, and achieve or maintain, as applicable, program profitability is subject to significant risks.
• For example, the 777X program, which launched in 2013 and is currently expecting first delivery in 2027, recognized additional reach-forward losses of $4.9 billion and $3.5 billion in 2025 and 2024, primarily due to production challenges, certification and delivery delays, and higher estimated labor and supplier costs.
• These plans include increasing the 737 production rate to 47 per month in 2026, as well as further production rate increases that will require a new production line.
• There is risk that planned production rate increases may be delayed or not occur at all if our production health key performance indicators and rate readiness process guided by our Safety Management System do not support increasing production rates or we are unable to obtain FAA concurrence.
• Similarly, there is risk that planned 787 production rate increases may be delayed or not occur at all.
• These actions, as well as our recent acquisition of Spirit (Spirit Acquisition), significantly impacted our financial position, results of operations and cash flows.
• These factors have and may continue to reduce overall productivity and adversely impact our financial position, results of operations and cash flows.
• If we and our suppliers are unable to adjust to these changing acquisition priorities and policies, our revenues and market share could be impacted.
• As of December 31, 2025, we had 32 independent agreements with nine different unions in the U.S., and we had agreements with 18 employee representative bodies internationally.
• We cannot predict how stable our union relationships will be or whether we will be able to meet the unions requirements.
• During 2024, employees represented by International Association of Machinists and Aerospace Workers (IAM) District 751, which represents over 30,000 Boeing manufacturing employees primarily located in Washington state, went out on strike for 53 days, halting production of most of our commercial aircraft and certain of our Defense, Space & Security products, and materially adversely impacting our business and financial position.
• During 2025, employees represented by IAM District 837, which represents approximately 3,200 employees at our St.
• Louis area sites, went out on strike for 101 days, disrupting our St.
• Louis operations and impacting programs including F/A-18, F-15, T-7A, MQ-25 and Weapons.
• Both the IAM District 751 and the IAM District 837 strikes occurred despite having in each case reached a tentative agreement with union leadership on the terms of the proposed contract and union leadership having recommended its members vote to ratify the proposed contract.
• If we are unable to successfully negotiate successor agreements with our unions that our employees will ratify 9 Table of Contents (including with Society of Professional Engineering Employees in Aerospace who have two contracts expiring in October 2026), we may experience additional work stoppages in the future, which could materially adversely affect our business, financial position, results of operations and cash flows and result in the diversion of management s attention from other ongoing business concerns.
• New union contracts have in the past and could in the future adversely impact our financial position, results of operations and cash flows.
• The global trade environment remains highly dynamic and continues to evolve.
• Current U.S. trade policy includes the imposition of baseline, sectoral or country-specific tariffs on imports.
• Other countries have announced retaliatory actions or plans for retaliatory actions.
• Tariffs and any retaliatory actions could significantly increase the cost of our products and, particularly with respect to our commercial aircraft, result in lower demand for our products, delivery delays, and terminations of orders by customers.
• Overall, the U.S.-China trade relationship is challenged due to tariffs, sanctions, and export restrictions, as well as other economic and national security concerns.
• For example, in the second quarter of 2025, certain customers in China paused accepting our deliveries in response to ongoing tariff negotiations between the U.S. and China.
• As part of our portfolio management, we also may make strategic divestitures from time to time, such as our recent divestiture of portions of our Digital Aviation Solutions business.
• In connection with acquisitions or divestitures, we may have obligations to, or rely on the performance of, unrelated third parties, including pursuant to transitional or longer-term services agreements and/or guarantees or other financial arrangements, and nonperformance or underperformance of such agreements could affect our future financial results.
• For example, in connection with the Spirit Acquisition, we are required to provide services to buyers of divested Spirit businesses, including 12 Table of Contents Airbus, and if we are unable to satisfy our obligations to these third parties or if they assert claims against us, our business and financial condition could be adversely affected.
• Risks Related to Our Contracts We conduct a significant portion of our business pursuant to U.S. government contracts, which are subject to unique risks.
• Estimating the costs, including labor costs, and time for us and our suppliers to complete fixed-price development and follow-on production contracts is inherently uncertain and subject to significant variability as a result of highly complex designs and technical requirements as well as extended periods of performance.
• This uncertainty requires us to make significant judgments and assumptions about future operational and technical performance.
• The outcome of customer and/or supplier contractual negotiations could increase costs and lower margins.
• Similarly, complex technical requirements can often change over time or may not be well understood at the outset of the contract.
• Actual performance and/or contractual outcomes could be different than previously assumed, creating financial risk that could trigger additional material earnings charges, termination provisions, order cancellations or other significant financial exposures.
• The amount of insurance coverage we maintain may be inadequate to cover these or other claims or liabilities. 18 Table of Contents The issuance of our common stock upon conversion of our Mandatory convertible preferred stock, and the exchange of the Spirit Exchangeable Notes, as well as any other issuances of our common stock, could dilute the interests of our existing shareholders.
• We may also issue shares of our common stock upon the exchange of the $230 million of 3.250% Exchangeable Notes, maturing November 1, 2028 (the Spirit Exchangeable Notes), that we assumed in connection with the Spirit Acquisition.
• For additional information on the Spirit Exchangeable Notes, see Note 17 to our Consolidated Financial Statements in Part II Item 8 of this Form 10-K.

Reworded 68

Removed words are struck through; added words are highlighted.

• These risk factors should be carefully reviewed in conjunction with the other information in this report, including Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements Consolidated Financial Statements and related notes.
• Our customers fleet decisions and financial position are also impacted by fuel and other costs, as well as inflationary pressures. 6 Table of Contents Our Commercial Airplanes business depends on our ability to maintain a healthy production system, ensure every airplane in our production system conforms to exacting specifications, 6 Table of Contents achieve planned production rate targets, successfully develop and certify new aircraft or new derivative aircraft, and meet or exceed stringent performance and reliability standards.
• The commercial aircraft business is extremely complex, involving extensive coordination and integration with suppliers, highly-skilled labor performed by thousands of employees of ours and other partners, employees, and stringent and evolving regulatory requirements and performance and reliability standards.
• As For example, as part of our plan to improve safety and quality and to address the issues identified by the FAA, FAA following the 737-9 door plug accident in January 2024, we slowed 737 production rates and delayed planned production rate increases to reduce traveled work in our factory and at our suppliers.
• The introduction of new aircraft programs and/or derivatives, such as the 777X, 737-7 and 737-10, takes years and involves significant risks associated with meeting development, testing, certification certification, and production schedules.
• We are following follow the lead of the FAA as we work through the certification process, and the FAA will ultimately determine determines the timing of certification and entry into service.
• There have been significant delays on each of these development programs and if we experience additional delays in achieving certification, certification or meeting customer commitments, or if we or our suppliers are unable to timely and effectively address issues discovered during certification and testing and/or efficiently and cost-effectively incorporate required design changes into production aircraft, our financial position, results of operations and cash flows would be adversely impacted.
• We must minimize disruption caused by production changes, achieve and maintain operational stability and implement productivity improvements in order to meet customer demand and maintain our profitability.
• We have previously announced plans to adjust increase production rates on several of our commercial aircraft programs. programs, while continuing ongoing development and production of new or derivative aircraft.
• In addition, we We also continue to seek opportunities to reduce the costs of building our aircraft, including working with our suppliers to reduce supplier costs, identifying and implementing productivity improvements and optimizing how we manage inventory.
• If production rate changes at on any of our commercial aircraft assembly facilities programs are delayed or create significant disruption to our production system, or if our suppliers cannot timely deliver components that comply with design specifications to us at the cost and rates necessary to achieve our targets, we may be unable to meet delivery schedules and/or the financial performance of one or more of our programs may suffer.
• Operational issues, including delivery and/or certification delays or and/or delivery delays, quality issues, labor instability, supply chain constraints, defects in supplier components, failure to meet internal performance plans, or delays or failures to achieve required regulatory approval, results result in additional out-of-sequence work and increased production costs, as well as delayed deliveries to customers, impacts to aircraft performance and/or increased warranty or fleet 7 Table of Contents support costs.
• We and our suppliers are experiencing have experienced supply chain disruptions and constraints, labor instability and inflationary pressures.
• These factors have and may continue to reduce overall productivity and adversely impact our financial position, results of operations and cash flows. 7 Table of Contents If our commercial aircraft fail to satisfy performance and reliability requirements and/or potentially required sustainability standards, we could face additional costs and/or lower revenues.
• Changes in levels of U.S. government defense spending or acquisition priorities, as well as significant delays in U.S. government appropriations, could negatively impact our business, financial position and position, results of operations. operations and cash flows.
• We derive a substantial portion of our revenue from the U.S. government, primarily from defense related programs with the United States Department of Defense (U.S. War (DoW) and contracts with other government agencies, including NASA.
• DoD, In the event of a prolonged shutdown, requirements to furlough employees in the DoW, the Department of Transportation, including the FAA, or other government agencies could result in payment delays, impair our ability to deliver commercial airplanes or perform work on existing contracts, delays in the certification of new aircraft or otherwise impact our operations, negatively impact future orders, and/or cause other disruptions or delays.
• DoD In addition, there continues to be uncertainty with respect to future acquisition priorities and program-level appropriations for the DoW, NASA and other government agencies (including NASA), agencies, including changes to national security and defense priorities, and tension between modernization investments, sustainment investments, and investments in new technologies or emergent capabilities.
• Future investment priority changes or budget cuts, including changes associated with the authorizations and appropriations process, could result in reductions, cancellations, and/or delays of existing contracts or programs or 8 Table of Contents future program opportunities.
• DoD As a result of the significant ongoing uncertainty with respect to both U.S. defense spending and the evolving nature of the national security threat environment, we also expect the DoW to continue to emphasize affordability, innovation, cybersecurity and delivery of technical data and software in its procurement processes, including the implementation of cybersecurity compliance requirements on the Defense Industrial Base, for which the supply chain may not be fully prepared.
• If we and our suppliers are unable to adjust to these changing acquisition priorities and policies, our revenues and market share could be impacted. 8 Table of Contents Our ability to deliver products and services that satisfy customer requirements is heavily dependent on the performance and financial stability of our subcontractors and suppliers, as well as on the availability of highly skilled labor, raw materials and other components.
• Approximately 58,000 72,000 employees, which constitute 34% or 40% of our total workforce, were union represented as of December 31, 2024 2025, under collective bargaining agreements with varying durations and expiration dates.
• Work stoppages and instability in our and our suppliers union relationships have in the past and could in the future delay the production and/or development of our products, which could strain relationships with customers and result in lower revenues.
• The markets in which we operate are highly competitive and one or more of our competitors may have more extensive or more specialized engineering, manufacturing and marketing capabilities than we do 9 Table of Contents in some areas.
• In our BDS business, we anticipate that the effects of defense industry consolidation, shifting acquisition and budget priorities, the entry and growth of private capital-backed and other non-traditional defense companies, and continued cost pressure at our U.S. DoW and non-U.S. customers will intensify competition for many of our BDS products.
• We derive a significant portion of our revenues from non-U.S. sales and are subject to the risks of doing business in other countries. countries, including those related to tariffs, trade restrictions and government actions.
• In 2024, 2025, non-U.S. customers, which include foreign military sales Foreign Military Sales through the U.S. government (FMS), accounted for approximately 46% of our revenues. total revenues and 60% of Commercial Airplanes revenue from customer contracts.
• We expect that non-U.S. sales will continue to account for a significant portion of our revenues for the foreseeable future.
• We are subject to risks of doing business internationally, including: changes in regulatory requirements or other executive branch actions, such as Executive Orders; changes in the global trade environment, including potential deterioration in geopolitical or trade relations between countries; disputes with authorities in non-U.S. jurisdictions, including international trade authorities; imposition of domestic and international taxes, export controls, tariffs, duties, embargoes, sanctions and other trade restrictions; tariffs, duties or penalties other costs attributable to the importation of raw materials, parts, products and services, which could impact sales and/or delivery of products and services outside the U.S. and/or impose increased costs on us, our suppliers supply chain or our customers; changes to U.S. and non-U.S. government policies, including sourcing restrictions, requirements to expend a portion of program funds locally and governmental industrial cooperation or participation requirements; fluctuations in international currency exchange rates; 10 Table of Contents volatility in international political and economic environments and changes in non-U.S. national priorities and budgets, which can lead to delays or fluctuations in orders; the complexity and necessity of using non-U.S. representatives and consultants; the uncertainty of the ability of non-U.S. customers to finance purchases, including the availability of financing from the Export-Import Bank of the United States; uncertainties and restrictions concerning the availability of funding credit or guarantees; imposition of domestic and international taxes, export controls, tariffs, embargoes, sanctions and other trade restrictions; the difficulty of management and operation of an enterprise spread over many countries; compliance with a variety of non-U.S. laws, as well as U.S. laws affecting the activities of U.S. companies abroad; and unforeseen developments and conditions, including terrorism, war, epidemics and international tensions and conflicts.
• While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our operations in the future. operations.
• China is a significant market for commercial aircraft and we have long-standing relationships with our Chinese customers, who represent a key component of our commercial aircraft backlog. customers.
• If Although deliveries to those customers have since resumed, if we are unable to deliver aircraft to customers in China consistent with our assumptions and/or obtain additional orders from China in the future, we may experience reduced deliveries and/or lower market share.
• Impacts from future potential deterioration in geopolitical or trade relations relationships between the U.S. and one or more other countries countries, particularly China and European Union member states, including as a result of the risks described above, could have a material adverse impact on our financial position, results of operations and/or cash flows.
• With respect to each of our commercial aircraft programs, inventoriable production costs (including 11 Table of Contents overhead), program tooling and other non-recurring costs and routine warranty costs are accumulated and charged as cost of sales by program instead of by individual units or contracts.
• Changes to customer or model mix, production costs and rates, learning curve, changes to price escalation indices, costs of derivative aircraft, supplier performance, customer and supplier negotiations/settlements, supplier claims and/or certification issues can impact these estimates.
• For additional information on our accounting policies for recognizing sales and profits, see our discussion under Management s Discussion and Analysis of Financial Condition and Results of Operations Critical 11 Table of Contents Accounting Estimates Accounting for Long-term Contracts/Program Accounting on pages 49 - 51 50 and Note 1 to our Consolidated Financial Statements on pages 60 - 70 of this Form 10-K.
• Difficulties The Spirit Acquisition closed in December 2025, and difficulties in integrating Spirit may result in the failure to realize anticipated benefits of the acquisition (including anticipated synergies and safety and quality improvements) in the expected timeframe or at all, as well as operational challenges, the diversion of management s attention from other ongoing business concerns, and unforeseen expenses, which may have an adverse impact on our operations and our financial position, results of operations, operations and cash flows.
• For additional information on the acquisition, relating to environmental contingencies, see Note 2 15 to our Consolidated Financial Statements.
• Whether we realize the anticipated benefits from these acquisitions, including our acquisition of Spirit, and related activities depends, in part, upon our ability to integrate the operations of the acquired business, the performance of the underlying product and service portfolio, and the performance of the management team and other personnel of the acquired operations.
• Accordingly, our financial results could be adversely affected by unanticipated performance issues, legacy liabilities, cybersecurity issues or vulnerabilities, transaction-related charges, amortization of expenses related to intangibles, charges for impairment of long-term assets, credit guarantees, partner performance and indemnifications. indemnification obligations.

Removed since the previous 10-K 50

• Airlines also are experiencing increased fuel and other costs, and the global economy has experienced and may continue to experience high inflation.
• We have experienced and may continue to experience production quality issues, including in our supply chain.
• For example, as a result of the Alaska Airlines 737-9 accident in January 2024, the FAA investigated the 737 quality control system, including Spirit, and increased its oversight of our production and quality and safety management systems.
• The FAA identified multiple instances where we and Spirit failed to comply with manufacturing quality control requirements.
• These actions significantly impacted our financial position, results of operations and cash flows during the year ended December 31, 2024, and are expected to continue to impact our financial position, results of operations and cash flows as we work to increase production and improve factory performance.
• We continue to monitor the health and stability of the supply chain.
• DoD) and contracts with other government agencies, including NASA.
• In the event of a prolonged shutdown, requirements to furlough employees in the U.S.
• In addition, there continues to be uncertainty with respect to future acquisition priorities and program-level appropriations for the U.S.
• As a result of the significant ongoing uncertainty with respect to both U.S. defense spending and the evolving nature of the national security threat environment, we also expect the U.S.
• As of December 31, 2024, we had 9 unions in the U.S. with 27 independent agreements and 18 employee representative bodies internationally, and we cannot predict how stable our union relationships will be or whether we will be able to meet the unions requirements.
• On September 12, 2024, our contract with IAM 751, which represents over 30,000 Boeing manufacturing employees primarily located in Washington state, expired and 96% of IAM 751 members voted to initiate a strike.
• On November 4, 2024, members of IAM 751 voted to ratify a new contract, thereby ending the strike.
• As a result of the strike, production of our commercial aircraft, other than the 787 production in Charleston, and certain of our Defense, Space & Security products halted, adversely impacting our business and financial position.
• Net cash used by operating activities for the year ended December 31, 2024, was $12.1 billion and we expect further negative operating cash flows to continue in future quarters as we work to ramp up production and deliveries.
• The new contract with IAM 751 and pay enhancements for certain non-union employees is adversely impacting our financial position, results of operations and cash flows.
• We may experience additional work stoppages in the future, which could adversely affect our business.
• Union actions at suppliers also affect us.
• DoD and non-U.S. customers will intensify competition for many of our BDS products.
• For example, since 2018, the U.S. and China have imposed tariffs on each other s imports.
• Certain aircraft parts and components that Boeing procures are subject to these 10 Table of Contents tariffs.
• We are mitigating import costs through Duty Drawback Customs procedures.
• Overall, the U.S.-China trade relationship remains stalled as economic and national security concerns continue to be a challenge.
• Our pending acquisition of Spirit AeroSystems Holdings, Inc.
• (Spirit) subjects us to various risks and uncertainties, including risks that we may not complete the acquisition or realize the anticipated benefits in the expected timeframe or at all.
• On June 30, 2024, we entered into an Agreement and Plan of Merger (Merger Agreement) to acquire Spirit in an all-stock transaction that will include the assumption of Spirit's net debt at closing.
• Completion of our acquisition of Spirit is subject to a number of conditions set forth in the Merger Agreement.
• On January 31, 2025, Spirit s stockholders approved the Merger Agreement and the related transactions.
• Some of the remaining conditions, such as certain regulatory approvals and the ability of Spirit to enter into definitive agreements relating to the disposition of Spirit operations related to certain Airbus commercial work packages and consummate the related transactions, are beyond our control, which make the completion of our acquisition of Spirit (and the timing thereof) uncertain.
• In addition, if Spirit or Boeing exercise certain termination rights included in the Merger Agreement, the acquisition will not be consummated.
• Furthermore, the governmental authorities from which regulatory approvals related to the acquisition are required may impose burdensome or unacceptable conditions on the completion of the acquisition, require changes to the terms of the Merger Agreement, or prevent or delay the consummation of the acquisition.
• If the acquisition is not completed, our ongoing business may be adversely affected and we will be subject to a number of risks, including expenditure of time and resources, negative reactions from stakeholders, and potential stock price fluctuations.
• If we are successful in completing the acquisition, we will be subject to other risks, including those related to the assumption of Spirit's net debt and other obligations at closing, which could adversely impact our financial position, results of operations and cash flows.
• We also may make strategic divestitures from time to time.
• These transactions may result in continued financial involvement in the divested businesses, such as through guarantees or other financial arrangements, following the transaction.
• Nonperformance by those divested businesses could affect our future financial results through additional payment obligations, higher costs or asset write-downs. 12 Table of Contents Risks Related to Our Contracts We conduct a significant portion of our business pursuant to U.S. government contracts, which are subject to unique risks.
• We continue to experience production disruptions and inefficiencies due to technical challenges, supplier disruption and factory performance.
• These factors have contributed to significant earnings charges on a number of fixed-price development programs which are expected to adversely affect cash flows in future periods, and may result in future earnings charges and adverse cash flow effects.
• Higher supplier pricing, the IAM 751 work stoppage, higher labor costs and an inexperienced workforce also contributed to earnings charges and lower earnings in 2024.
• Estimating costs to complete fixed-price development contracts is generally subject to more uncertainty than fixed-price production contracts.

Source: SEC EDGAR filings, compared sentence by sentence by EdgarStack. Sentence matching is automated and may pair or split passages imperfectly; check the linked filings before relying on any passage. A software tool, not financial advice. Not affiliated with the U.S. Securities and Exchange Commission.