Thank you for standing by. Good day everyone, and welcome to the Boeing Company's Fourth Quarter 2020 Earnings Conference Call. Today's call is being recorded. The management discussion and slide presentation, plus the analyst question-and-answer session, are being broadcast live over the Internet. [Operator Instructions] At this time, for opening remarks and introductions, I am turning the call over to Ms. Maurita Sutedja, Vice President of Investor Relations for the Boeing Company. Ms. Sutedja, please go ahead.

Thank you, John, good morning. Welcome to Boeing's fourth quarter 2020 earnings call. I'm Maurita Sutedja, and with me today are David Calhoun, Boeing's President and Chief Executive Officer; and Greg Smith, Boeing's Executive Vice President of Enterprise Operations and Chief Financial Officer. As a reminder, you can follow today’s broadcast and slide presentation through our website at boeing.com. As always, we have provided detailed financial information in our press release issued earlier today. Projections, estimates and goals we include in our discussion this morning are likely to involve risks, which are detailed in our news release, in our various SEC filings, and in the forward-looking statement disclaimer at the end of this web presentation. In addition, we refer you to our earnings release and presentation for disclosures and reconciliation of certain non-GAAP measures. Now, I will turn the call over to Dave Calhoun.

Yes, thank you, Maurita. Good morning, everyone. 2020 was a historically challenging year for our world, for our industry, for our business and our communities. I hope you are all staying safe. We are managing our operations each and every day the best that we can to minimize disruption, while always protecting the well-being of our associates. A lot has happened in the last few months. So, let me begin by sharing some of the highlights starting with the 737 MAX on the next chart. We made significant progress on the 737 program this quarter. The FAA in the United States, ANAC in Brazil, Transport Canada, and just this morning EASA in Europe have approved the resumption of 737 MAX operations, marking important milestones on our return to service journey. I would encourage all of you to read the various reports issued by our regulators regarding the intense scrutiny they put our airplanes through. This is the culmination of a comprehensive effort, including roughly 400,000 engineering hours, 1,400 test and check flights, and over 3,000 flight hours completed on the airplane. Following one of the most rigorous certification efforts in aviation history we're confident in the safety of our airplane. We continue to work with global regulators and our customers to safely return the airplane to service worldwide. We’ve assumed that the remaining non-U.S. regulatory approvals will occur during the first half of 2021, and we will continue to follow their lead in the steps ahead. Our first priority is assisting our customers with return to service for their existing parked fleet. Every airline has different operational considerations for returning planes to revenue service, and timelines for training their pilots. We're supporting each of them as they go through their process. Next, we're focused on safely delivering our 737 MAX…

Great. Thanks, Dave and good morning everyone. Let's turn now to Slide 6. Our revenue of 58.2 billion in core earnings per share of negative $23.25 reflected lower commercial delivery and service volume primarily due to COVID-19, as well as 787 production issues, partially offset by lower 737 MAX customer consideration charges when compared to 2019. Full-year earnings were also impacted by the $6.5 billion pre-tax charge on the 777X program, additional tax valuation allowance, and abnormal production costs related to the 737 MAX program. Operating cash flow of negative 18.4 billion reflected lower commercial deliveries and service volume, as well as timing of receipts and expenditures. With that, let's turn to Slide 7 for our fourth quarter results. Consistent with the full-year results, revenue of 15.3 billion reflected lower commercial airplane deliveries and commercial service volume, partially offset by a lower 737 MAX customer consideration charge. Earnings in the quarter were also impacted by the charge on the 777X program, a $744 million charge related to the previously announced agreement between Boeing and the U.S. Department of Justice, and abnormal production costs. Income tax in the quarter reflected the impact of an additional valuation allowance on deferred income tax assets, partially offset by the five-year net operating loss carry back provision in the CARES Act. The 2.5 billion of non-cash valuation allowance booked in the quarter was based on the required accounting analysis to assess recoverability of our deferred tax assets against future sources of taxable income. This is an accounting assessment, which places a lot of weight on our recent losses, leading to the charge this quarter. Important to note, that this valuation allowance does not limit our ability to utilize deferred tax assets in the future periods. It does not change our outlook on future company results…

Yeah, thanks, Greg. Listen, 2020 was a year like no other. Our world, our industry, our business, and our communities were facing unprecedented challenges and we're still in the midst of it. In addition to navigating COVID-19, we also made important progress on the 737 as we engage transparently and comprehensively with regulators, government leaders, customers, suppliers, and our teams. Having done that, we’ll be that much more prepared for airplane certification efforts going forward. The return to service of the 737 was a key step for us as we make fundamental changes to how we operate and rebuild trust one airplanes, one interaction, one day at a time. I’m proud of our team and I thank them for the resilience and dedication that they've demonstrated as we've navigated through this really difficult moment together. 2021 is an inflection point for our industry and certainly for Boeing. We have been through tough times before. We know how to overcome challenges and to adapt, and we will stand by our customers throughout this process. Driven by our values and with a focus on quality, safety, integrity, and transparency, we will emerge from this moment stronger and more competitive for the long-term. And with that, Greg and I will be happy to take a few questions. Thank you.

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

Hey, good morning, guys.

Good morning.

Greg, I wondered if you could just give us some more color on the 6.5 billion on the 777X and how much of that was the accounting quantity? You mentioned 350 units, but I don't think you've mentioned, you know what that changed from, I don't know if that was 500 or, you know what that number was. So, just give us a sense of how big that was, and how it compares to the other pieces, be it change incorp and the modifications that you mentioned, or customer settlements? Thanks.

Yeah, absolutely. Yeah, I kind of put it into four major categories. Certainly, you know the plant production rates associated with the schedule move. And as you said, the reduction in the accounting quantity. And as I, as I mentioned, you know, every quarter, we go through this assessment, but as a result of what we're seeing in the marketplace, and, you know with the current pandemic, as well as kind of how we're seeing the market shift in the near term, we reduced our assumptions around the accounting quantity for this quarter. But again, pretty consistent from certainly consistent process, but pretty consistent with what we've seen on some of the other programs when we've established an accounting quantity. And then, of course, we talked about, you know, change incorp costs for the aircraft that are currently built, as well as we'll have the rate much lower through this period between now and 2023, and the change incorp associated with those. And I'd say, you know last one would be, you know, customer and supply chain impacts, considering the delays. Single I say largest one in there Carter is around the accounting quantity.

Okay, so those were in order – rank order, and then just, can you give us a sense of how much of a decrease in the accounting quantity that the move to 350 represented?

Yeah, from prior quarter, we had 50 additional units in there. So, we had a quantity of 400 we assumed.

Okay, thanks.

The only other point is, it's really important to know that the 50 that move out are the ones at the tail-end, and those are where cash margins are significant. So, you end up with a little bit of a double-whammy there.

Understood. Thank you.

Yeah. You're welcome.

Our next question is from Myles Walton with UBS. Please go ahead.

Thanks. Good morning. Hey, on the 787 Greg, I think in early December, you were looking for a restart of deliveries into year-end, and obviously, there must have been some incremental discoveries and re-checking, just curious, what's the level of confidence now versus then? And then also, is there any FAA requirement for sign off on what you're looking to do and improve prior to the restarted deliveries? Thanks.

Yeah, I mean, I’d put it into a couple of categories, one of which is, you know, some of the inspections have taken longer, and they've also expanded, you know for complete thoroughness across not only our factors within the supply chain, so that's taken longer. Look, from day one, we've been engaged with the FAA and continue to be engaged as we work through this process and we'll continue to right up until we're ready to resume delivery. So, you know, complete transparency there, of course and clarity around what we're doing, how we're doing it, and the path to recovery again, when we resumed deliveries. I don’t know Dave, if you had anything you want to add?

Well, there won't be a formal sign off in that regard. But without a doubt, we will make sure the FAA is comfortable with every act we've taken and I’ll only add the comment that, you know, this expansion of inspection and quality assurance and all those things, you know, maybe I'll take a hit on that one, but this is a moment where we get to fix some things and do some things, you know, the way we would like to do them. And so, I have put very little pressure on the production and engineering team to resolve things too quickly. I'd want it to be thorough and done, and I want to prevent future re-work around this stuff. And I have to tell you, these specs are incredibly exacting. So, I'm proud of the design. The design principles that we've used in it, but anyway, we're just – probably take stepping it up a bit.

Okay. All right. Thank you.

Next question is from Noah Poponak with Goldman Sachs. Please go ahead.

Hi, good morning, everyone.

Good morning.

Good morning.

Greg, there's a lot of debate out there about the aircraft unit margins. You know, a few years down the road when things are a little bit more normal. You know, the 777 is obviously in a unique situation, but you know, with the MAX and the 787 there are questions about, if you're having to give on price on the MAX, and then, you know, if these really impressive cash margins you had for a while, and each I think can hold it at the lower rate. So, I wondered if you could spend a little bit of time on that. I mean, how can we think about where those airplane margins can be a few years down the road at more normal rates, compared to, you know, pre-pandemic pre-grounding?

Yeah, I mean, you know, clearly, as you said, you know, volume is going to play – is going to be key in that. So, as we've talked about, as we see 737 increasing, you know, in production and delivery, that's going to play right into, clearly, you know, the unit cash margin, and that profile, you know, pretty much aligns with, you know, delivery profile and rate projections that we have. On the 787, as I mentioned, you know, even at these low rates on a unit basis, cash is pretty good. And, you know, that's the efforts of the past for sure, and having a good product mix between 8s, 9s, and 10s. And again, that's going to go up with volume. And that obviously, not taking into consideration the advances that will come with that increased volume on both of those programs, but by far, those are the two, you know, single drivers to, you know, to the cash flow positive in particularly in 2022 and beyond. And then beyond that, it's the 777X as we talk about, you know, getting out of use of cash and into positive cash, as I just mentioned. Those three elements, again, are going to be key to the cash trajectory, you know, between now, and you know, 2023 and 2024 and beyond.

So, I mean, if we're in 2023, and the MAX rate is, you know, hypothetically in the low 40s, a month and 87 hypothetically, you know, six a month, can those unit cash margins actually be fairly close to where they were pre-pandemic pre-grounding, based on all the cost action and keeping pricing pretty similar, or is that unrealistic?

Well, I mean, that's certainly the objective, and a lot of part of the transformation effort that we're doing is trying to, you know, lean ourselves in, and we'll work to that profile, but you know, volume is going to be key. So, you know, if you get to those rates, like I said, the cash is going to follow that and this, you know the environment we're in today, how that recovers and the assumptions that our customers have, and therefore [Technical Difficulty] that’s got to stick, and if it sticks then you'll see the trajectory on cash go with those production rates by no question. But at the same time, these transformation efforts, as I said, they go over multiple years, and that's the objective. Certainly, you know, lean ourselves out, get ourselves even more competitive on the other side of this and really reduce the structural costs within our company. So, we can be more efficient. All that also is going to play out, you know, in the cash profile over that time period.

Maybe if I could just comment on the pricing question, which is an important question. I do anticipate us being through our inventory in 2022 on the MAX, I think we can stay disciplined every step of that way, and indications are that we can. And then when we get into 2023, which is where the question is, I see no reason why that competitive dynamics are any different. I really don't. The value with these two airplane competitors, the value of their airplanes is – not much has changed. We will have demonstrated performance on the MAX that is very good for the applications that it competes for. And [there our plane] will have advantages on other applications. But I'm confident in that competitive dynamic and believe we'll get right back to where we were, if not something better in, I know Greg's, I'm not sure if his restructuring discussion broke up on you like it did for me when I was listening to it, but the structural changes that we're making and the cost advantages that we intend to get from it, you know, something in that $5 billion range, these were accrued to our airplanes. And anyway, I'm optimistic, I'm quite optimistic, and there's nothing about the market right now that [has been] switched off on that, but we are talking about 2023. You know, it's going to take that long for us to sort of work our way out of the COVID world.

Yeah, thanks. Thank you.

Our next question is from Cai Von Rumohr with Cowen & Company. Please go ahead.

Yes, thanks so much. So, you said 5 billion in that normal production cost, you've done [29 to date], and yet, sequentially, those abnormal costs came down throughout the year, I think they ended at [330] in the fourth quarter. I mean, if you have 2.1 billion to go, which is what the math suggests, it would suggest it moves up. So, can you give us some idea of the profile moving forward? And secondly, some idea in terms of the delivery cadence, I mean, I could understand that maybe you have a very strong MAX deliveries now because people haven't gotten them. And then maybe they fall off in 2022, 2023. Thanks.

Yeah. So, kind of on the abnormal cost Cai. Like I said, you know, it can be, you know, bumpy or lumpy from quarter-to-quarter, but like we said, we're on a profile to kind of wrap that up, as we increase rates. So, it's directly tied to the rate where we'll stop booking abnormal costs, and it'll move back into the program. I think on a delivery profile, you know, certainly we've got a delivery profile laid out in detail for the balance of the year, and going into 2022 and 2023. We don't see a reduction taking place there, as Dave indicated on the production rates, that we've established not only delivering out of inventory, which as you know, is our priority one, but also increasing those rates as we go forward. So that profile continues in delivering off, like I said, the backlog, but also, you know, delivering off the inventory that we've got on the ramp, and I don't know whether it was picked up earlier or not, but all the deliveries, we've had to date, the 40 aircraft have all come out of inventory. So, again, it'll be a combination, but the priority will continue to be on those inventory to aircraft. So, received strong demand for the aircraft and again tied to the recovery, and team's position to deliver at that high rates, we've certainly got the capital and the capacity and the capability to do that. It'll really be informed by our customer’s ability to take them in a specific time period.

Thank you.

You're welcome.

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

Hey, thanks very much. Good morning. I wanted to ask about 787, and I think, Greg, you mentioned about 80 aircraft in inventory, what's sort of the normal level of aircraft in inventory? And as we think about, you know continuing to produce over 60 aircraft this year, and the state of the widebody market, you know, how do you not end the year with still having aircraft in inventory and going into 2022?

Yeah, you're right. So, we'll have some. That's what I was mentioning earlier that we expect to deliver the majority of that 80, you know, through the balance of 2021. And it'll be back loaded, as Dave indicated on our current assumptions of when we believe we can start delivery. So, there’ll still be some burn-off in 2022, but like I said, the majority of that will be in 2021, and be back loaded associated with that.

But does that mean all – does that mean the vast majority of the 80 plus all of what is produced?

Yes. Yeah.

Our next question is from Peter Arment with Baird Armand. Please go ahead.

Yes. Good morning, Dave, Greg.

Hey, Peter.

Good morning.

Hey, Greg, maybe just if you could just highlight, you know, your assumptions, or at least trying to understand the dynamics of the use of cash in 2021, I mean, the cadence, should we expect it to kind of improve throughout the year or maybe just any color there and as we get into 2022? Thanks.

Yeah. Now, as you kind of look at it over a quarterly basis, you know Q1 will be, you know, the more challenging quarter, really again, you know, tied to the inventory burn off on the 787, in particular. And then just, I'll say the cadence of deliveries on the MAX, so Q1 will be the biggest use and little bit less in Q2 and then will start to moderate through Q3 and Q4. So, look for, you know, look for a big use of cash in Q1. But again, all tied, you know, to those two programs predominantly. So, [added resumed] deliveries on the 787 will start to burn that inventory down, you'll see the benefit of that in the second, third, and fourth quarter.

Appreciate it. Thanks.

You're welcome.

And next we’ll got to Doug Harned with Bernstein. Please go ahead.

Good morning, thanks.

Good morning, Doug.

If I go back a year ago, and this, you know, in this call, Dave, you talked about, that's when you put the NMA, kind of a side on hold, and where we’re really looking at how to think about development, right now, you talked about the competitiveness of the MAX versus the competition, the a A320neo. And, you know, certainly can see that certainly at the MAX eight to look for transcon flights, you know, very competitive airplane, but Airbus has been very successful with the 321XLR, which can do a lot of the 757 missions and can't really see how the how the MAX can compete upon on those missions. So, when you look forward, are you ready to see that market now? How do you think of these, sort of narrow transatlantic routes, situations like that? How will you approach that over the long-term?

Well, over the near-term, it is what it is. And again, I think about a portfolio of airplanes, not just any one. And while we take all of those face offs that we go through, in order, and in those routes that you described, for the 321, I get it completely, so does our team. Broadly speaking, and on balance across the portfolio, we like where our portfolio plays with the MAX at the lower end, and at [787] at the higher end, and very, very successful airplanes. So that just said – all that means is, we're going to take our time. I'm pretty sure you're in the right space, although I'm not going to appoint design today, I think you're pretty much in the right space with respect to where next development efforts lean, but I don't want to call it out just yet. And I'll go right back to the comment I made in the beginning, we are really progressing, really progressing well on our engineering and manufacturing forward technology development, so that we're ready when that moment comes to offer a really differentiated products. So, I'm sure it's, you know, it's not a lot of rocket science for you to add up and guess where things end up, but we're not going to call at that point design, this isn't the moment, we're going to take a little time and we don't feel significantly disadvantaged with our portfolio versus their portfolio. So, anyway, that's how we think about it. And we are thinking long-term, that's for sure.

Any timeframe you can suggest, I mean given the cash pressure now, you know, near-term seems hard, but what kind of timeframe in the future or how would engines play into that timing?

Yeah, well, engines always play into it. I don't think they're going to play into it anywhere near the extent to which they used to, simply because the demands on that propulsion system and then MAX go around, I don't think they're going to be as significant. And now I'm just, I'm going to – I think speak to the industry and what I know they're capable of doing or not. So therefore, differentiation at the airframe level itself is really, really important in next run, which means that these technologies that we are working with and try to demonstrate to ourselves at scale, with deterministic assembly, those are the things that will differentiate and believe it or not, that becomes the most important criteria for us, with respect to announcing that next airplane. It's got to depend on these advanced technologies, and it will. So, and I don't feel in any way, shape, or form that one-year or two-years more in the market to learn more is going to hold us back in any way shape, or form, or hurt The Boeing Company in any way, shape, or form. So, you know, that's the perspective I put on it. Right now, we're getting no pressure as you might imagine from airlines to run forward as fast as we can. And that's a bit of a luxury on his subject. But the most important thing for me and the Boeing team is to get these underlying technologies proven demonstrated at scale, so that when we call that point design we're ready and we'll deliver.

Okay, great. Thank you.

Thank you.

Next, we'll go to Hunter Keay with Wolfe Research. Please go ahead.

Thank you. Good morning, everybody.

Good morning.

Hey, Greg, as you think about, you know, free cash flow beyond 2021, how will orders over the next 12 months impact your decisions on rates, which, of course, also inform the cadence of advances? So, holding other things constant, like the concession payments and the timing of PDPs, can you help me better understand, sort of what your expectations are for order activity, and how that will dovetail into production rate decisions and advances through the cash flow line? Thanks.

And into [timing], we've taken that into consideration, you know with the current rates that Dave talked about, you know, through that period, so, you know, the advanced timeline associated with that is tied rate to how we [see these near term], those production rates. So obviously, if we modify those in any way, it'll have an impact on advances, but I would say separate from that, you know, the delivery profile of [787 and 737] are going to be the biggest contributors to the growth of cash flow. Now, certainly advances will help as we get lead time away on rate increases, but delivery profile loan will be one of the more significant drivers. So, you know, as I said before, you know, looking from the outside, you know, watch the delivery profile on both of those programs in particular, and they'll align, you know, rate to our cash flow profiles and projections we've had gone forward. And then advances will be a little further out from this time period, just because of, you know, the rate increases, particularly on the [737], as we burn off some of the access advances. And then the advances on the [787] will be again tied to the rate increases, you know, beyond the 2021, 2022 timeframe.

You know, maybe I'll add an [ounce of color]. Of course, we expect and believe that the demand for our current 777 freighter is still significant. And we hope and believe that we'll continue to see ordering activity broadly on that one. The [767] similarly, there's an awful lot of freighter demand for the [767], and then when you get to the [787], the only wild card that is more upside than downside is if there is a daytime, if you will, with respect to the trade agreements between the United States and China, and the agreements are in place, it's just a question of whether the posture changes in any way that allows for that Phase 1 deal to move forward. It's a big plus for any administration in light of the number of jobs it supports in the United States. And so, we're optimistic on that front. But if that panned out and panned out, you know, reasonably quickly, that's more up and down.

Thank you.

Yeah.

Next, we'll go to Jon Raviv with Citi. Please go ahead.

Hey, thank you. Good morning.

Good morning, Jon.

Dave, you mentioned that defense is a critical source of stability here. I noticed you had talked about too much, I agree that's not where a lot of the Delta is these days, but nevertheless, what is your perspective on underlying growth there and then your perspective on why Boeing defense, at least from our – from externally looking at it has not participated in the same growth that others have seen. Others have been growing mid-to-high single digits, still looking at maybe low-to-mid single digits growth in 2021? You guys are still looking at maybe below or very modest growth. So, what's your perspective on that? And then also, looking forward is there an opportunity for sales growth to accelerate perhaps based on some of those big new wins that you've launched over the last few years? And what would the impact on margin be as those programs ramp up? Thank you.

Greg, can I start and you can fill in as you…

Yeah. Sure thing.

So it has been and we continue to believe that we're going to have stable growth and admittedly at the lower end of the single digits, and that's the best guidance we can talk about, because we do think there is pressure that will ultimately come down as a result of all the COVID spending here in the United States. But a large part of our business now is international markets and the order activity in those international markets has pushed to the right, somewhat, and almost entirely because of COVID related stuff, not because of any competitive issue one way or the other. So, we still like our position, because we have an awful lot of ongoing programs that, you know, the military and of course our defense bills have been kind to in each and every one of their moments, and this last bill was a good one for us in pretty much every respect. So, it’s hard to commit to a big uptick in any way on growth rates anytime soon in light of what I think of the pressures. The only other comment I would make is, there is a big segment of work that we do in the classified world that is incredibly encouraging and incredibly important to us. And anyway, I believe, not just for our defense world, but also ultimately derivative technologies for the commercial world, but that’s going to be a big source of competitive advantage for Boeing. So, we’re high on it, but I’m very [indiscernible] suggest the market is going to get any better or that we’re going to differentiate ourselves any further than what we have been.

Thank you

Yes.

And next we’ll go to David Strauss with Barclays. Please go ahead.

Thanks, good morning.

Good morning.

I want to go back and touch on 787, could you just talk about these 80 aircraft that you have in storage? How many at this point if any have been reworked, what exactly is involved in that, the costs involved, is there any sort of customer compensation that you’re assuming, given the delays on these aircraft?

Yes, the cost associated with it, David, we’ve provisioned for that in our [Technical Difficulty]. So, I think, we’ve got well understood and covered. I don’t have the specific number of aircraft that have been reworked, but there is a number that are complete. And as Dave said, we still got some work to do. Our engineering team does with final dispositions that will inform whether we have additional rework or not, and we’ll adjust the schedule accordingly, but we’ve made a provision in there for what we think are associated costs related to the delay into any rework associated with these inspections.

Okay. Greg, can you give a little bit more detail on what exactly is involved in the rework? Is it just exterior? Is there a fair amount of interior work that’s got to be done as well to get the airplanes back to spec?

Yes, I mean, it’s around the structure. As we’ve talked about, you’ve seen around certain areas of the drilling that the team has got to go back – go in and inspect and potentially rework within the structure, that’s primarily it. So, it’s nothing outside of that as far as interior, it’s around some of those joints. And like we talked earlier, we have been expanding the expansion back into the supply chain as well, but all kind of around the joint areas where we’ve got multiple, I’d say, build ups of different materials. And do we have the appropriate [indiscernible] in there, and if we need to do any additional rework or inspection, that’s essentially what’s taking place.

Okay. And I think there were some airplane – handful of airplanes that were grounded, but do you think there are any additional implications to the installed base from what you found?

Not at this time. No.

No. Those ones that were grounded, and ultimately proven okay involved more than what we’re working on now. It was a combination of factors, and we know one of those factors have been eliminated.

Yes. Alright. Thanks very much.

You’re welcome.

And next we’ll go to Rob Spingarn with Credit Suisse. Please go ahead.

Hi, good morning.

Good morning, Rob.

Dave, I wasn’t going to ask on product development, but your answer to Doug makes it somewhat more compelling now. When you distinguish between advances and airframe and production advances, does this mean that the next aircraft is not necessarily a platform to introduce a future propulsion technology like they are talking about in Europe, and therefore that the next plane would be conventionally powered?

Yes, I believe that. Yes, and I’m on the record of saying that. Hydrogen power, I just believe has a much longer timeline than the timeline that, at least, I’ve read like you did. I have a fair amount of experience with hydrogen. Our company has an incredible amount of experience with hydrogen, at least in the size of airframe that we’re all talking about. You can experiment down at a very low end, but that’s not going to be a meaningful market here. And the advent of sustainable fuel, already we’re capable of living with that sustainable fuel. I believe that’s going to be the 15-year answer to 2050 guidelines and approaches, because we’ve all worked with it, experimented with it, we know it works, and now, we’ve got a developer supply line for it. But I believe it’s the only answer between now and 2050.

Okay. Thank you very much. Very helpful.

Operator, we have time for one more question.

And next will be from Sheila Kahyaoglu with Jefferies. Please go ahead.

Hi. Good morning, everyone. Thank you for the time.

Good morning, Sheila.

Greg, you mentioned last quarter PDP significantly impact 2021 free cash flow. Just in light of the additional 787 build that we’re seeing here and the MAX unwind, is it fair to say you unwind a majority of those 787s that are sitting there right now and 200 MAXs? You get an $8 billion inventory benefit, and then the advances or the PDPs are a similar offset in 2021, and then how does that look into 2022?

Yes, you’re right. I mean, if you look at 2020 to 2021, certainly, the largest driver of the improvement in cash flow there will be 787 deliveries. And as we talked about, they will be more back loaded. We’ll obviously have the increase in the 737 deliveries, but as you indicated, we have accessed PDPs. So, they’re being utilized and will be utilized in some of these deliveries. So, you really won’t see the, I’ll say, true-up of that until you move from 2021 into 2022. But when you look at the growth profile, 2021 to 2022, again 737 is a key driver to that. So back to my comments earlier around the rate profile and the delivery of the aircraft off the ramp, that is the single biggest driver, as you look at 2021 to 2022 as it sits here today. So, and the advances start true-up in that time period as well, I’ll say, kind of, get more to a normalized level of advances, but those are ultimately the key drivers year-over-year.

Okay. Thank you.

You’re welcome.

Alright. That completes The Boeing Company’s fourth quarter 2020 earnings conference call. Thank you all for joining us.

Thank you.