boeing commercial airplanes - library.corporate-ir.netcopyright © 2006 boeing. all rights reserved....

BOEING is a trademark of Boeing Management Company.Copyright © 2006 Boeing. All rights reserved. 1

Boeing Commercial Airplanes


Alan MulallyExecutive Vice President, The Boeing Company President and Chief Executive Officer, Commercial Airplanes

May 17, 2006

Copyright © 2006 Boeing. All rights reserved. 2

Annual Investor Conference | Boeing Commercial Airplanes


Performance

Business Environment

Near and Long-term

Product Development

Airplanes, Services and Solutions

Productivity

Lean Global Enterprise

BOEING is a trademark of Boeing Management Company.Copyright © 2006 Boeing. All rights reserved. 3


BCA 2005 Accomplishments as of 5/17/2006 | 3

2005

Our Journey Continues

Slideshow is not viewed on webcast



Billions~27.5

29.5 – 30.5

21.0

S30

$20

$10

$0

22.7

> 9%

6.3%

> 10%10%

4%

6%

8%

0%

2%

3.6%

100

04 05 06E 07E

290

~395

440 - 445

500

400

300

200

0

285

04 05 06E 07E 04 05 06E 07E

Delivering growth and profitability

Performance and Outlook

MarginsRevenuesAirplane Deliveries

Delivering growth and profitability



People Working Together as a Global Enterprise for Aerospace Leadership

as measured by:

GoalCreating value through profitable growth for all

Customer,

Employee,

Investor,

& Communitysatisfaction

Prefer Boeing

Top quartile

Good neighbor

Top quartile



Creating Value Roadmap

BusinessEnvironment & Opportunities

Plan andPerformance

Strategy

Continuously Exploiting

Growth Opportunities

• Geopolitical• Markets• Customers• Competition• Partners• Technology

• Detailed customer knowledge

• Large-scale system integration

• Lean global enterprise

• Revenue/Share• Earnings/Margins• Assets/Turns• EP/Cash/Value• Opportunities and Risks

Core Competencies

• Products• Process• People

Creating the future … todayCreating the future … today

Copyright © 2006 Boeing. All rights reserved.


Global Business Environment

Good long-term global marketTraffic outpacing capacity growthYields and productivity risingAirlines profitable despite high fuel costsU.S. airlines restructuringIndustry continues to restructure

LiberalizationTechnologyNew business models

Fuel prices, terrorism, securityContinued aggressive competitionGrowth opportunities

Industry growth is broad-basedIndustry growth is broad-based



Long-Term Global Growth Market

0

2,000

4,000

6,000

8,000

10,000

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Trav

el -

Bill

ions

RPK

s

Long-Term Growth Rates:GDP = 3%

Passengers = 5%Cargo = 6%

Long-Term Growth Rates:GDP = 3%

Passengers = 5%Cargo = 6%

Gulf WarCrisis

Sept 11 SARSIraq

• Liberalization• Technology• Fragmentation



Long-Term Traffic Growth Trends Continue

Airlines will continue to address passenger desires for non-stops and frequencies

Airlines will continue to address passenger desires for non-stops and frequencies

0

200

400

600

800

1000

1200

1980 1990 2000 2010 2020

Index (1980=100) Nonstop markets>3,000 statute miles

ASKsFrequency GrowthAirport PairsAirplane Size in Seats



Detailed Customer Knowledge and Focus

AmericasAmericasEurope/Africa/Mid East

Europe/Africa/Mid East

Asia Pacific



Continuous quality and productivity improvementEfficiently produce through cyclesLarge-scale systems integrationLean global enterprise

Market-driving products and servicesPoint-to-point…nonstop…frequencySimplified product familyServices and business solutions

Detailed customer knowledge and focusUnderstand and shape the market Valued relationshipsCustomer preferred solutionsSuperior customer experience

Skilled and motivated teamWorking TogetherHighest ethical standards

Strategy

Delivering valueDelivering value




$2.1 Trillion25,700 Airplanes

over the next 20 years380

737

320

340

330

787

777

747

Single-Aisle39%

Single-Aisle39%

Large11%

Intermediate Twin-Aisle

45%


45%

Regional Jets

767

7175%

E190

350

Competing successfullyCompeting successfully


Market-Driving Products and Services



Market-Driving Products and Services

CAS

Completing the Family

Even more Value

Breakthrough Capability,Comfort & Economics

Growing Our Business

More Efficiency and Capability

Simplified product family enabling more frequent, non-stop services with breakthrough economics and technology

Simplified product family enabling more frequent, non-stop services with breakthrough economics and technology




Backlog

Model

Single-Aisle32%

Single-Aisle32%


61%


61%

Large7%

Large7%

747

777

737

767

787

$64$70

$124$132

0

30

60

90

120

150

2003 2004 2005 1Q06$-

Bill

ions

Backlog

Region

Asia Pacific

Americas

AmericasAmericas

Europe & Central Asia

Europe & Central Asia

Leasing & Gov'tLeasing & Gov't

Southeast Asia

Southeast Asia

Middle East & Africa

Middle East & Africa

Asia PacificAsia Pacific

Healthy backlog from established customers… continuing to growHealthy backlog from established customers… continuing to grow




787 Worldwide Market Interest Strong29 Customers 393 Announced Orders & CommitmentsAnnual Investor Conference | Boeing Commercial Airplanes



20052002

787-8FirstFlight

787-8 Enters Service

AirplaneAnnouncement

Firm Configuration

Program Launch

Authorityto Offer

2003 2004 2006 2007 2008 2009 2010

787-3Enters

Service

787-9EntersService

Start of Major

Assembly


787 Proceeding On Schedule



GOLDCAREGOLDCARE


Commercial Aviation Services



Moving to Business Solutions

Maintenance, Repair& Overhaul

Integrated Materials Management

Safety Reliability Cost

BSAS

Integrated Operations Center

Airplane Health ManagementElectronic Flight Bag




Continuous Quality and Productivity Improvement Lean Global Enterprise

World-class, large-scale system integration

Customer preferred options and shorter order to delivery flow time

Fewer and simpler assemblies that go together easier and faster

Engineering, production, supplier management and customer support aligned and globalized

Fewer and simpler parts and assemblies

Engine Assembly

Bulkhead Assembly

Moving Line

QualityCostDeliverySafetyMorale




Lean Global Enterprise737 and 777 Assembly

50% factory flow time reduction

62% work in process inventory reduction

61% Engineering quality improvement

57% Engineering productivity improvement

29% Factory productivity improvement

15% cycle time reduction

30% inventory turns increase

20% cost of quality reduction




Lean Global Enterprise Fewer and Simpler Parts and Assemblies

Machining Cell

48% factory flow time reduction

49% work in process inventory reduction

20% final assembly footprint (ft) reduction

59% cell footprint (ft) reduction

56% standard hours reduction

Monolithic aluminum and carbon structure Reduced part countLower cost materials

777-300ER Empennage Design for Manufacturing




Passenger Seat Supplier

1st Operation Moving Line

Cycle Time Reduction 24%

Introduced new tooling, point of use parts, some visual controls

Plan to repeat analysis / kaizen/ rebalancing for all operations on entire line

Lean Global EnterpriseGlobal Partnerships Annual Investor Conference | Boeing Commercial Airplanes



Lean Global Enterprise

1998 2005 Future State

Airplane Deliveries 563 290 More efficient atany level

Order to Delivery (Mos.) 14 10 6

Suppliers/Partners 3,750 1,190 900

Employment 119,000 50,000 Stable

Facilities Sq Ft (M) 71 38 Continuedconsolidation

Productivity… our foundation for competitivenessProductivity… our foundation for competitiveness




Lean+

EngineeringEngineering

Lean Resource CenterLean Resource Center

ManufacturingManufacturing

QualityQuality HR &HR &AdminAdmin LawLaw

OIGOIGFinanceFinance

TechnologyTechnologyCommunicationsCommunications DCDCOperationsOperations

IntInt’’llRelationsRelations

BusinessBusinessDevelopmentDevelopment

Best Practices Best Practices -- Website Website -- Toolkit Toolkit -- Opportunities Opportunities -- Team Team -- Training Training -- ResourcesResources

BCABCA IDSIDS CBBCBB

Achieving the Business PlanAchieving the Business Plan

GlobalGlobalPartnersPartners




Lean+ in Action

CFO Deep Dive 11/30/05Contracts Value Stream Mapping

CFO Quarterly Deep Dive -Accounting

“Lean in Action”2/24/06

“Lean Accounting for the Lean Enterprise Seminar”2/15-17/06BCA, IDS, SSG & Corporate participation

Lean AccountingSeminar 4/5-7/06Airplane Production, Finance, PMO & Contracts, Engineering & Manufacturing, 787, Lean Office, SSG, CAS and Corporate participation




Managing the Upturn

Applying lessons learned

Disciplined management processes

Robust production system

Healthy and aligned partners

Successful rate increases

Production system supporting growth and margin expansionProduction system supporting growth and margin expansion




Performance

2005 2006 2007

Deliveries 290 ~395 440 - 445

Revenue $22.7B ~$27.5B $29.5B - $30.5B

Margins 6.3% >9.0% >10.0%

Delivering value and investing for the futureDelivering value and investing for the future




Summary

Good long-term market

Intense customer focus… aggressive competition

Preferred products, services and solutions

Aggressively capturing the current up-cycle

Disciplined rate increases

Growing Products and Services

Continuing lean operations

Focused investments… execution

Skilled and motivated team

Profitable growthProfitable growth


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