Thank you for standing by. Good day, everyone, and welcome to The Boeing Company's Fourth Quarter 2017 Earnings Conference Call. Today's call is being recorded. The management discussion and slide presentation plus the analyst and media question-and-answer sessions are being broadcast live over the Internet. 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. Please go ahead.

Thank you and good morning. Welcome to Boeing's Fourth Quarter 2017 Earnings Call. I'm Maurita Sutedja, and with me today is Dennis Muilenburg, Boeing's Chairman, President and Chief Executive Officer; and Greg Smith, Boeing's Chief Financial Officer and Executive Vice President of Enterprise Performance and Strategy. After management comments, we will take your questions. In fairness to others on the call, we ask that you limit yourself to one question. We have provided detailed financial information in today's press release and you can follow the broadcast and presentation through our website at boeing.com. Before we begin, I need to remind you that any projections and goals in our discussions today are likely to involve risk, which is detailed in our News Release, various SEC filings, and the forward-looking statement disclaimer in the presentation. In addition, we refer you to our Earnings Release and presentations for disclosures and reconciliation of non-GAAP measures that we use when discussing our results and outlook. Now I will turn the call over to Dennis Muilenburg.

Thank you, Maurita, and good morning. Let me begin today with a brief overview of our 2017 operating performance followed by an update on the business environment and our expectations going forward. After that Greg will walk you through the details for our finance results and outlook. Now let’s move to Slide 2. Thanks to the dedicated efforts of employees throughout our company, Boeing delivered 2017 finance results that included record earnings, record cash flow and record commercial aircraft deliveries. Furthermore, all three of our businesses increased their backlog in 2017. We sharpened our focus on profitable, sustained long-term growth strategies. Disciplined execution of our production and development programs, delivering greater lifecycle value, including growing our services business and driving further quality and productivity gains across the enterprise. We also demonstrated our commitment to our customers and to ongoing investment in our people and our business, well, once again returning significant value to our shareholders. For the full-year, we generated record operating cash flow of $13.3 billion. We repurchased 46.1 million shares or $9.2 billion and made dividend payments totaling $3.4 billion in 2017. In December, we reinforced our commitment to returning value to shareholders as our Board of Directors authorized our new $18 billion share repurchase program and a 20% increase in our quarterly dividend. The increases are part of our balanced cash deployment strategy and reflect the confidence we have in our strong line of products and services and the long-term outlook for the business. Turning to our core operating performance for the year, Boeing Commercial Airplanes reported revenue of $56.7 billion driven by record 763 deliveries, including the delivery of the first 74 737 MAX airplanes. This was our sixth consecutive year of leadership in airplane deliveries. Net new commercial airplane orders were healthy 912 and brought…

Great. Thanks, Dennis. Good morning everybody. Let’s turn to slide four and we’ll discuss our full year results. Revenue for the year was a strong $93.4 billion on record commercial aircraft deliveries and continued growth in services and solid defense base of security execution. Core earnings per share totaled $12.04 for the full year another record reflecting strong operating performance across the company and favorable tax reform impact of a $1.74 per share. The tax reform earnings impact primarily resulted from the re-measurement of our net US deferred tax liability in the fourth quarter to reflect the reduction in the federal income tax rate from 35% to 21%. Operating cash flow for the year was also a record at $13.3 billion. The robust cash generation is largely driven by strong operating performance across all businesses. Let’s move now to our quarterly results on slide five. Fourth quarter revenue increased to $25.4 billion driven by growth in all three businesses while core earnings per share grew to $4.80 driven by strong operating performance across the portfolio as well as favorable tax reforms impact as I mentioned of $1.74 per share. Let’s now discuss commercial airplanes on slide six. Our commercial airplane business revenue increased to $15.5 billion during the quarter on higher planned production rates and delivery mix. BCA operating margins increased to 11.5% on strong execution across all programs. BCA captured $25 billion in net orders during the fourth quarter and the backlog remains very strong at $421 billion and now more than 5,800 aircrafts equating to around seven years of production. On the 787 programs, we delivered 36 aircrafts in the quarter and booked 94 net orders for the year. The deferred production balance declined as planned by $591 million in the quarter. Our teams remain focused on improving…

Thank you, Greg. As I reflect on 2017, this first full year of our second century was a year of strong performance and record results on many different fronts both operational and financial. We would not have been able to do it without the hard work and dedication of our employees and the great partnership we have with our customers. In addition to the stabilizing commercial airplane market dynamics I mentioned earlier in my remarks, we’ve also taken our own actions to reduce cyclicality in our business. including remaining disciplined in our production rate decisions, de-risking our pension liabilities, strategically pacing our research and development spending, creating labor stability with the long-term contracts and expanding our services business which is also less cyclical. We have executed on our long-term strategy for robust and continuing organic growth investments and returning value to shareholders complimented by strategic acquisitions that enhance and accelerate our growth plans. As we look to 2018, our teams remain focused on further driving both growth and productivity. As the world’s largest commercial airplane maker, our nation’s second largest defense contractor, a global leader in spaceflight and a growing force in lifecycle services we are optimistic about our future and the future of our industry as we have ever been. Our priorities going forward are to leverage our unique One Boeing advantages, continue building strength on strength to deliver and improve on our commitments, and to stretch beyond those plans and sharpen and accelerate our pace of progress on key enterprise growth and productivity efforts. Achieving these objectives will require a clear and consistent focus on a profitable ramp up in our commercial airplane production, continuing to strengthen our defense and space business, growing our integrated services business and leveraging the power of our three business unit strategy, delivering on our development programs, driving world-class levels of productivity and performance throughout the enterprise to fund in innovation and growth, disciplined leading edge investments and balance value creating cash deployment and continuing to develop and maintain the best team and talent in the industry. All of which positioned Boeing for continued market leadership, sustained top and bottom line growth, and increasing value for our customers, shareholders, employees, and other stakeholders. With that, we'd be happy to take your questions.

[Operator Instructions] Our first question is from Carter Copeland with Melius Research. Please go ahead.

Just a quick clarification and question, Greg, on the unit versus program net differences were small, I wondered if you could just tell us if there was anything on a gross program basis that was significant in that and if you took any margin revisions on the various programs this quarter? And then on Boeing Global Services, you’ve got some variability around the margin and at least the quarterly data that we've seen to-date and you commented about mix having an impact there and just in terms of understanding the algorithm, the profit algorithm here, how much variability should we expect in those sorts of numbers and how much mix impact could we see quarter-to-quarter in that business, just help us understand that one if you would?

Yeah. It’s a good question because you're right, it's obviously considering the type of portfolio on the contract and the number of contracts, you are going to see variability just through whether customer mix or product offering mix quarter-over-quarter. But I think the ranges that you've seen it in and then as we kind of restated the numbers you get a good sense of kind of where it operates, but on a quarter-to-quarter basis, yeah, we’re going to see some variability in there. But I would say that the team's very focused as we brought these units together and we talked about this prior is the cost structure. And so, they're not only are kind of working on what they're offering in the marketplace, but they're also working across the enterprise on the synergy opportunities as they bring the defense and the commercial, say, backroom services together there. So, part of the objective here obviously is to grow the margin profile, but you're going to see variability just because of the nature of the business.

On program margin we had a couple of moving pieces, we have the last early builds 787 deliver and then we have a couple of the 737-test aircraft in flow for fourth quarter. But other than that, we had margin expansion across all BCA programs. And Carter the only thing I'll add on the BGS front is, both Greg and I says we’re focused on long-term profitable growth. So, while you see some variability on margins depending on particular contracts in customer frameworks, we expect to grow both top and bottom line and we are focused on that at top line growth will be profitable growth.

Our next question is from Seth Seifman with JPMorgan. Please go ahead.

So, another question about services and just thinking about growing in excess of the market at 3.5% and looking at maybe 5% this year which is kind of what we were expecting. But, you could grow 5% for a very long time and not get close to $50 billion. And so just wondering if acquisitions are playing a greater role and your longer-term outlook for the services business?

Yeah. Seth, let me take and cut it down quicker. First of all, you’re right for the total year we performed at about 5% growth versus 3.5% in the market. Saw a bit of acceleration beyond that in the fourth quarter, note that we just launched the business in the middle of the year, so we’ve got six months under our belt. So, I’d say that a good start but a lot of work is still ahead of us. We have set that longer-term $50 billion target for growth in this business achieving that over the next 10 years we’ve been very focused on achieving that. We still see organic growth as a primary engine here. And continuing to outpace the market, growing at 5% to 6% a year at the start is a good start, we see some opportunities to accelerate that as we expand our parts business. Our engineering mods and maintenance business has some significant potential, our training business and then as we ramp up digital solutions in particular we see that as an enabler. Again, we’re at the early part of that digital growth, we surpassed the $1 billion milestone just this past quarter in terms of volume in our digital business. That’s a market meeting position that still has a lot of headroom. We see organic growth is our primary engine as we head towards that $50 billion mark. We see an opportunity to complement that with M&A to your point, but we don’t see the M&A is the primary growth engine here. It’s primarily organic growth with complementary actions. I think a good example of that is the seats JV that we announced with Adient during this past quarter, that’s the way for us to generate lifecycle value for our customers. It’s something that complements our product line platform businesses and it’s a services growth enabler for the longer-term. And we’re going to continue to look for those kind of partnership or acquisitions to augment our services and business. Also, as we build out our vertical capabilities with both organic and inorganic actions, we expect those verticals capabilities to transition into lifecycle value or services growth.

Next, we’ll go to Doug Harned with Bernstein. Please go ahead.

I wanted to go back to BCA margins because when you look at guidance you’re guiding to above 11% for 2018 that would be the best that I think maybe ever. Now, when you go there how do you see the different programs progressing to get you there and then when you look longer term out for 2020, you’ve talked about getting to around 15% margins. Is that still the trajectory you’re looking at and what needs to happen to get you to a target like that?

Yeah, Doug let me jump on that first thing, Greg and I [indiscernible] on the program specific. First of all, Doug that 15% margin target mid-teens target remains our clear focus and getting there towards the end of the decade and we are unwavering in that focus and I think what you see is this progress along that path in 2017. You see our guidance in 2018 as another step towards that. As we mentioned before we expect our progress to be steady over a multi-year timeframe to achieve that long-term target. That includes actions we ‘ve taken throughout the enterprise to reduce our cost structure, market-based actions, reducing every element of our cost structure both in terms of direct labor cost and also significantly in our supply chain, we’ve made some significant progress and are partnering for success initiative but we have more ahead of us than what’s behind us. We see that as a significant lever for the future, balanced R&D deployment and making sure we’re continuing to execute on the development programs as another complement of that. And then also on the pricing side, ensuring that our pricing is holding up in the marketplace by bringing in the highest value products. So, we’re on a solid trajectory, we remain very focused on the end goal here, lot of hard work to go yet but it's an achievable target and one that we will relentlessly pursue. Greg do you want to add anything?

Yeah, just maybe a little bit detail on the programs. Obviously, we’re expecting 787 to improve through time and I think the team has done a great job getting us to this point but the amount of initiatives that they have in place as they look forward is key to capturing that margin and I think again off to a great start and frankly setting some standards for our company about best practices, right down in the factory floor reducing flow time and improving first time quality in all aspects of the operations. So that’s obviously going to prove in the mix Doug as we’ve talked about we’ll have a different mix profile on the 787 line that will also be favorable. You now 737 managing through the implementation of the math, team has done a great job, done a great job a lot of de-risking done upfront, that’s really helped us from a margin perspective and just an overall cost objective as we made that transition and that obviously is off to a great start and will continue that momentum as we get more MAX aircraft in the line and that’s more than offsetting the investments we’re making in 777-X and then this transition between the rates on 777 to 777-X. So, and that beyond and then the other things that Dennis mentioned around period cost and the overall broader one company initiatives where we’re leveraging best practices and getting them implemented and a reminder we’re all on one company score here and so that’s the primary driver. So, we’re really embedding these best practices and bringing them across whether it's from states, fighters to commercial or vice versa really trying to amp that up because we’ve got some great practices in segments of our business that we really went to leverage more going forward.

And to Greg’s last point there, Doug as you recall, we launched Boeing analytics during the past year and we’re just starting to see some of the benefits of applying those advanced analytics tools across our whole enterprise as another way to optimize, close, gain efficiencies in our factories, take out cost and I think we're just beginning to see the benefits of what those high-powered analytics tools can bring to our overall enterprise operations. So that will be another important ingredient going forward.

Next, we’ll go to George Shapiro with Shapiro Research. Please go ahead.

Yes, good morning. One for you Dennis and then one for Greg. The question for you Dennis is, with the seat venture that you have and you’re talking of, doing some avionics. Do you have an objective is to how much you want to build internally now versus how much you outsourced to suppliers and how that mix might change? And then the one for you Greg, is this R&D in 2017 was $400 million less than your initial guide. Did all of that get shifted into 2018 or was there just some underspending in 2018 has some of that for something else? Thanks.

Hey, George. On your first question regarding the verticals, that strategy is one that we launched this past year and we focused in on some key areas where we believe deepening our vertical capability will add value for both Boeing and our customers and at the same time produce lifecycle value to grow our services business. And so, we really began to focus that in the few areas that we see is as needle movers for us. One key area is in actuation, as you noted previously, we've stood up operations at Boeing Sheffield and Boeing Portland to begin building actuators for 777 and 737s, we expect to continue to grow scale in that vertical area. We see avionics as an attractive area both hardware and software and stand up of Boeing avionics this past year. That’s scaled up now to several hundred engineers and we’re working together across the enterprise and with our supply chain in that area. We see interiors selectively in the interiors area as a growth segment, that's where the seats JV comes into play as an example. And so, we're going to continue to invest in these vertical areas. We're going to be disciplined about it. We don't intend to be vertical everywhere, but where we can add vertical capability that's not able for Boeing and customers and creates long-term services value, we're going to invest. And in some cases, that will be done in partnership with existing suppliers, in some cases we may be looking at shifting more content between internal work and our supply base. Again, we’ll do that in a disciplined manner in a way that produces value. Greg, do you want to take the second question?

Yeah, yeah. Really good question on R&D, I mean frankly, it's a little bit of both. I mean, there's some timing that we moved into 2018 and we've incorporated that, but there was also some underrun in as you know, this R&D expenditure, all elements of that, we've got very strong discipline and oversight in place. So, we are working and when we talk about affordability, R&D is a key element of that. So again, little underspending and then some shifting into 2018.

Okay. If I’m still on, Dennis could I pin you down just maybe a little bit like seating. Do you have an objective as to how much seating you rather supply yourself versus buying from outsiders?

That balance is to be determined over time, George. We're going to start by ramping up this joint venture. We know we have some pinch points in the current supply chain and we can release some of those pinch points with this capability. We think we can bring unique value to customers and the scale of that business will be determined over time. It will be balanced between internal and external capabilities, but we intend to produce value here and we’re very serious about these investments.

Next, we’ll go to Sheila Kahyaoglu with Jefferies. Please go ahead.

I guess could you comment on working capital assumptions for 2018. How we should think about that and then the moving pieces there and particularly with regards to the 777 and inventory impact and any offset to that. Thank you.

Yeah. No, question Sheila. This is the [indiscernible] this transition between 777 and 777-X and building the static aircraft as well as the test aircraft, there is more headwind with regards to working capital on 777. That’s more than offset by the elements that I talked about where 87 is getting better, 37 productions will improve. On top of I’ll say the productivity initiatives, tanker and I mentioned as well. So, all of those more than offsetting the inventory build as we work through transaction from 777 to 777-X. And then lastly as I mentioned even though the tax rate has come down and we are going to pay more cash taxes in 2018 as a result of the improving unit cost performance on the 787. So those are the big moving pieces, but we’re very steely eyed on all the elements of working capital and as I mentioned in my remarks that this is a top priority and you’ve seen it in our results and you’re going to continue to see it in our results going forward that we’ve got again everybody diligently focused and it’s on everybody's scorecard around working capital, inventory, payables, receivables. And so, we’re going to continue to work that engine as we work through these great transitions, product transitions and rate increases.

And just a follow up, how do we think about advances and the assumptions there?

Yeah. There is not a big impact on advances from 2017 to 2018. Again, there is some moving pieces in there, but certainly not a big contributor to the cash flow profile year-over-year from 2017 to 2018.

Our next question is from Pete Skibitski with Drexel Hamilton. Please go ahead.

Just curious on the MAX integration into the three lines – and do you have the MAX on all three lines right now or maybe not quite yet since it’s not half of the total deliveries. And as we going through that are you seeing any execution problems at all, the yellow or red on the risk register or looking now to CNE and your suppliers. Just wanted to get more color there given the ramp.

Yeah. Pete the ramp continues to be right on track. We delivered 74 MAXs during the past year. Greg mentioned in his comments as we ramp up -- continue to ramp up production overall going to 47 a month to 52 a month this coming year during the rest of 2018 and then 57 a month next year. That rate planned ramps up are continuing on track. This year we expect deliveries -- MAX deliveries to be about 40% to 45% of the total 737 deliveries. So, implementations on the lines is right on track. I’ll tell you what I’m just very impressed by what our 737 team is doing. I had a chance to be on the line again just recently and they’re implementing productivity improvements, production lines, flow improvements, tax time improvements, all while rolling the MAX into the line. So, while it’s a challenging situation it’s a high-volume line, fast moving line, we’re continuing to ramp up while we introduce the MAX into the line. It requires daily focus and daily attention; the ramp up continues on track and we’re not seeing issues or any problems that are out of the ordinary. And we remain confident that we’ll achieve our MAX ramp up cost for 2018.

That’s right, good to hear. One quick one in the 787-10 certification, congrats on that number one. But maybe for Greg, Greg given how you guys have talked about the cost structure on the -10, should we expect to see kind of an immediate improvements to 787 unit margins as that kind of gives you a more meaningful part of the mix or is it going to take maybe a couple of years before that impacts the year.

It's going to take a little bit of time Pete, as we bring it into the production system and it becomes I’ll say more heavily weighted versus the overall delivery. But I tell you what, when you look at again to Dennis’s point like 37 MAX implementations how the team has implemented the -10 in the factory and minimize disruption in that, you remember that objective we have around commonality has really paid off. So as its transitioning through the factory and the cruiser cycling, the amount of disruption is really minimized and frankly I would characterize it as the best practice going from one derivative to another. And so that’s really going to help the overall margin profile and the flow of the aircraft in all other I’ll say operational aspects of the business. So, they’re off to a great start bringing that aircraft into the production system but you’ll see more of that as a weighted as the overall deliveries going forward.

Our next question is from Rajeev Lalvani with Morgan Stanley. Please go ahead.

Honestly there is a lot out there on middle of the market aircraft maybe even return of the 767 passengers. Just with tax reform coming through, how does that impact the thinking as far as how you’re purchasing the middle of the market in particular and should we expect some sort of decision this year as to whether or not you’re moving forward?

Yeah, Rajeev we continue to have productive discussions with our customers on middle of the market more than 50 customers have engaged, we’re continuing to expand those discussions. We still this as an airplane if we launch it is one that would enter into service in the 2024, 2025 timeframe. So, we haven’t made any changes there. As you’ve probably noticed over the last couple of quarters, we did stand up a program management team with Mark leading the day by day program activity. So that’s a serious investment on our part as we get more into the details of the program, not only the specifics around the airplane and the systems but taking a look at production systems and all elements of the business model. We still have time to do the work and determine the business case, we’re not going to launch this airplane unless the business case makes good sense for both us and our customers and we also have some enterprise transformation objectives that we wanted to achieve as we look at our second century production and supply chain systems. So, all of that is interwoven and we haven’t change the timeline we’re going to continue to have a very disciplined process on how we evaluate this and we still have time to do our homework and make the right decisions. So, we’re not going to be rushed into a decision here. I will say with the tax reform as Greg pointed out, it does increase our ability to invest in innovation and in the future not only in product lines but also the underlying production and supply chain systems and that will just help us further solidify the business case and if we launch give us even additional confidence.

All right. Operator, we have time for just one more analyst question.

Thank you and that will be from Jon Raviv with Citi. Please go ahead.

Hey, curious you’d talked about higher R&D, you also have higher CapEx ticking up a little bit, you mentioned some timing elements there? What do you see as the long-term trajectory for CapEx and how much of that growth is defense versus how much commercial, I guess especially on the defense side where you're seeing growth comeback on some of those budget mark-ups and where do [indiscernible] of DCs pointed to even higher growth ahead?

Yeah, well, right now, obviously, it’s predominantly weighted to BCA, really supporting the rate increases that we've talked about. And at the same time, I would say there's some enterprise initiatives and business initiatives around investments in things like automation and I’ll say lean efforts of where we can optimize the factory. So, there's some investments in productivity, balanced with investments in growth. So that kind of what you're seeing in there right now. I mentioned this is that 2.2 is kind of more of a normalized level. It's going to shift year-over-year depending on our growth opportunities that come. So that you'll see more capital going into services as an example. But as you mentioned in defense as we see opportunities there, if they make sense and they deliver value back to the bottom line, we're going to make the right, the prudent investments in capital in that business. So as those opportunities come up on themselves, frankly, if we have an opportunity to get ahead of it and de-risk some of those initiatives or investments, we’ll do that as well. We have -- again we’ve got a firepower to do that which I think positions us uniquely, but we're going to be really smart, and prudent about it as we have been for the last number of years. So that discipline is going to continue to be in place when we see these opportunities in the future.

Ladies and gentle that completes the analysts question-and-answer session. [Operator Instructions] I’ll now return you to the Boeing Company for Introductory remarks by Mr. Phil Musser, Senior Vice President of Communications. Mr. Musser, please go ahead.

Thank you very much. Good morning, everybody. We're going to continue now with media questions for Dennis and Greg. And if you have questions following this part of the session, please follow-up with our Media Relations team by calling the office or emailing us directly. Operator, we’re ready for the first question in the interest of time, and we’d ask that you limit your questions to just one question. So, let’s go ahead and enroll.

And we’ll go to Doug Cameron with The Wall Street Journal. Please go ahead.

So, to press I'm asking what appears to be the first tax question after 1,700 analyst questions, but its Greg's fault, so Greg you kind of pin some things you might do with the tax benefits, but at the same time you said that R&D would be relatively stable, CapEx is turning to more normalized level. So, the kind of simplistic question is what's changed? Will you actually do this different if R&D is relatively safe stable and CapEx is going through a more normalized level, I don't quite understand it.

Doug, let me comment on that, and then I’ll let Greg to jump in too. Couple of things on tax reform benefits and how we're rolling that into our plans going forward. One is, some very targeted investment in our workforce, our workplace and our communities and that’s a previous announcement we made on $300 million investment with more opportunities ahead, but those are very important investments for us on the talent side, on training for the future, enabling our employees with advance capabilities, workplace improvements that will enhance productivity and investing in our communities along important lines like veterans and veterans' support. We will also complement that with significant additional investments in innovation and while we said R&D stable note that was R&D stable relative as a percentage of revenue. So, we’re growing revenue, we’re also going to be growing R&D and the tax reform benefit will allow us to accelerate some of that work on advance prototyping activities and we’ll accelerate work on productivity initiatives and our factory spaces, some of what we call our second century design and manufacturing capabilities, analytics, building out some of the vertical capabilities that we talked about earlier. You saw some of those items on Greg’s cash deployment chart. And we will be ramping up our investment and innovation as a result tax reform in a meaningful way. Greg, you want to say anything.

Yeah. Doug there is some of that in the CapEx as well, obviously as Dennis indicated more of it in the R&D, but the CapEx without tax reform would have been slightly lower. And so, we are making some strategic investments in there and utilizing those resources to really feel winning in the marketplace at the same time making the investments in productivity, training and development as Dennis indicated. So, I think we’ve really taken a hard look at this and looked at what’s the best use of our capital to win in the marketplace. At the same time, meet our overall objectives that is to drive profitability that again will allow us to continue to invest in the business. So, that’s kind of the cycle I’ll say the streams that these investments need to go through, but we have to, Dennis' point increase on both.

Our next question is from Julie Johnsson with Bloomberg. Please go ahead.

I just had a quick question on about the ITC decision on Friday and the rather measured response by the commerce secretary. So, where does this leave Boeing? And at this point do you have any regrets for pursuing the anti-dumping case given the outcome?

Yeah. Julie, first of all as you noted in our statement we were disappointed with the outcome of the ITC ruling. Frankly, we won’t have the details until the full ruling is released later in February. So, all we know at the moment is the outcome, we await the details of the ruling and that will help us understand some of the rationale behind it and allow us to make decisions on our path forward. I will say that we remain firm in our stance on the need for fair global trade, it’s really important for the future that we all play by the same rules. We may consistent on that team for years, we will continue to be consistent on that team. And when we see practices that are not consistent with everybody playing by same rules, we’re going to raise the issue. And you can count on that in the case going forward as well. Regarding the ITC matter, we’ll take a look when we get the outcomes here in the middle of February.

Our next question from Gillian Rich with Investor's Business Daily. Please go ahead.

Hi. So, I had a question, I know that you raised your dividend buyback in December. If you have any plans to raise it -- increase the dividend or buyback this year at all and can you give me an update on the timeline for CST-ST 100 Starliner?

Sure, I’ll take the first one. Yeah, like I mentioned we got authorization from our Board to increase to a $18 billion share repurchase program. So obviously that will give us some time period here two to three years of repurchasing opportunity so that will continue throughout this year and in to next year and a little bit into the further. So that kind of step I would think of it that way Gillian. And then on the dividend, that’s something honestly, we will review on an annual basis as you’ve heard me mention we’ve made some pretty significant investments in our dividend or increases in our dividend. So, we continue to monitor that from a competitive perspective with our peers outside of our peers, talk to our shareholders that’s an annual process. So, as we get closer to the end of the year we’ll do another assessment and then we’ll decide what we want to do with the dividend. But again, we have been very committed to returning cash to shareholders as I indicated 100% of our free cash flow we’ve committed to delivering back to shareholders while at the same time making some significant investments in future growth opportunities for the company. So, it’s a balanced approach that we have in place and you shouldn’t expect that to change going forward.

And then on the commercial crew Starliner effort, we’re continuing to march smartly through the development program. As I noted we just completed the design certification review which is a major milestone in the program, we’re continuing through the test program and we had plans in place for a first launch later this year and we’re continuing to work this very closely with our NASA customers. And more broadly we see human space exploration as a very important marketplace for us for the future and we’ve led in that market since it was created and we intend to be a leader in human space like going forward and the Starliner effort is a key part of that.

The next question is from Dominic Gates from Seattle Times. Please go ahead.

Hi good morning, another question related to Bombardier and that decision with the ITC, it seems that the loss last week was possibly because of the details of the delta order where you didn’t have a plan competing in that particular campaign. So, if Bombardier, there is an expectation that after that results Bombardier will begin to sell in to the US market. We expect orders possibly pretty soon. If they were to sell this CS-300 the bigger airplane would you possibly reignite the ITC case large and longer one? And then secondly expecting Bombardier to start selling into the US market where does that leave you with Embraer and your discussions with Embraer? How do you see -- what are your plans if you get Embraer to counter what Bombardier will do which of course will become Airbus?

Yeah, Dominic to your first question, its important again to note that we haven’t seen the details of the ruling or the vote that was taken last week. So, we need to see those details before we can make any decisions on plans forward. I think it's important to note that the department of commerce did make an earlier ruling regarding dumping behavior and a result identified the tariffs. That ruling still stands. As to the ITC hearing it has to show harm and imminent import and until we see the details of that ruling we simply don’t know the rationale behind it. So more to come when we determine that. I think for the longer term, again the important principle here is we stand for fair global trade and. And as always, we're all playing by the same rules we are more than happy to compete. But it's important that we play by the same rules. That will be our standard for any future decisions that we make. And the opportunity with Embraer, we do think is, it’s an important one, it's a great strategic fit. We continue to have productive discussions on that topic. We know that the government of Brazil has raised some concerns or issues that we fully respect and we're working through the details of potential options going forward and doing that in a very diligent way. So, I'm hopeful that we can bring that feel to conclusion, but more work to go on that front. Even if that doesn't happen, we have a very strong plan for the future. We have a solid strategy, we know exactly how we're going to grow for the future, we've got the right investments to identified, we are ready to compete and win in the future regardless of the outcomes of these trade matters and where the potential deal with Embraer and we're going to stay very focused on executing that strategy. It's a winning strategy.

Our next question is from Alwyn Scott with Reuters. Please go ahead.

Hi everyone. I just wanted to follow-up. Boeing has talked a lot about in the past about the competition from Airbus, Bombardier, COMAC, serious threats, which prompted cost cutting including job cutting, but given your strong performance now in your outlook, how do you see over the competitive environment is now? Is it not really so difficult as you thought? Are there any risks that you see and related to that Boeing reduced employment 6% last year, but you just said at the start of the call that the tax cuts give you an opportunity to create more quality jobs? Does Boeing plan to add significantly to its employment this year and if so, where and why? Thanks.

Alwyn on the first part of your question, the competitive environment is tougher than ever. And it's not getting any easier. The fact is we operate in a very attractive market space. It's about $7.5 trillion market over the next ten years. It's a growing market. I’d say it's probably the most attractive industrial market in the world. And as a result, it's attracting more competition both at the OEM level and at the supply chain level. So, we expect the competition to only get tougher. And our focus is to make Boeing ever tougher from a completive standpoint as well. So, it's really important that we continue to drive our competitive efforts, our affordability actions. So that we can compete and win in the marketplace. And really important to note that as we drive our affordability actions that creates our fuel for the future. Our business is based on self-generated R&D and innovation and investment. And that is a cycle that we need to continue to stay in front of them. We’re going to continue to drive affordability so that we can invest in the future. Now regarding employment levels, you're right, we have come down significantly over the last few years. We've done that in a way that is respectful as possible of our people, managing it through primarily through natural attrition and voluntary layoffs. While we’ve had reductions in that we've also continued to hire on the front end of our talent pipeline, literally thousands of people over the last three years as we continue to refresh our talent pipeline. We're going to continue that balanced approach as well. More of an employment plateau in the near-term, but we still have reductions in some areas, other areas where we'll increase. Those are natural ebbs and flows of our various programs. But while we do that we're going to continue to keep our talent pipeline fresh and continue to invest in our people. So that we can win in the future.

And we’ll go to Jon Ostrower with CNN. Please go ahead.

Question about the discussions with Embraer. How much of the outcome of that strategic plan is coupled with completing the business case for NMA? Is that a large component of your thinking around a new airplane for 2024, 2025. And in terms of bigger and broader question on the tie up, how is this particular strategic arrangement going to position you with China in mind specifically as the future competitors given what Alwyn was asking?

Hi, Jon. First of all, the work that we’re doing on middle of the market and the Embraer action are two separate activities, they’re not dependent on each other or influencing each other. And I would expect that to continue to be case. Now that said, our discussions with Embraer, those are discussions that have been going for a relatively long period because we do see complementary combination between our companies with complementary product lines, verticals capabilities, services capabilities and innovation and talent investments. But those are all advantages that would span multiple marketplaces around the globe. Certainly, that combination could make us more competitive globally, but our strategy is not dependent on it. And our primary focus for the future will continue to be organic growth investments as our primary strategic growth path.

Okay. I think operator that wraps our call. Thank you very much for everyone being with us today. And I think that concludes the end of our earnings call for fourth quarter 2017. Thank you very much.