By Karl Sinclair
Brian West, CFO of Boeing.
March 20, 2025, © Leeham News: Boeing (BA) Executive Vice President and Chief Financial Officer (CFO) Brian West, was optimistic about Boeing’s path for recovery and appeared unworried about any near-term impacts of tariffs imposed by President Trump on aluminum and steel during an appearance yesterday at the Bank of America Global Industrials Conference.
West was optimistic that in the short-term, Boeing would face little trouble in dealing with the turmoil caused by the tariff war started by President Trump.
“On the supply side, we don’t see material impact (from the tariffs)”, said West.
According to him, the aluminum that Boeing uses is nearly all domestically sourced and makes up 1% to 2% of the average cost of an aircraft.
As well, 80% of all parts and materials used at BCA and 90% at BDS, are from domestic suppliers.
West also pointed to the large buffer in inventory, purchased pre-tariffs, which mitigates any short-term pain the company may face.
“We think we’ve got that pretty well managed”, West summed up, but concerns still exist.
“We do worry about parts availability, due to the supply chain”, he said.
While Boeing may be protected in the near-term, many suppliers in the chain do not have the financial capability to stockpile inventory and could be sourcing raw materials from tariffed nations.
There was no mention of who would be on the hook, for any price increases, in that regard.
Backlogs and inventories also “protect” Boeing
A recurring theme throughout the interview by B of A’s aerospace analyst Ron Epstein was the large backlog of aircraft that Boeing has to deliver and the substantial amount of funds invested into inventory, which was protecting the company.
West covered all three divisions of the corporation: Boeing Commercial Aircraft (BCA), Boeing Defense, Space and Security (BDS) and Boeing Global Services (BGS).
However, the current hot-button topics facing Boeing, and the industry at-large, were front and center.
Namely, the on-again, off-again, on-again tariffs that Trump is threatening to impose on the world, and the destructive fire at SPS Technologies.
On the aircraft demand side of the equation, West mentioned the large order backlog and how it would be used to re-jig deliveries from airlines that were under reciprocal tariff threat, to those that were not.
In short, Boeing would bump US domestic customers to the front of the delivery line, in lieu of international customers, if airlines and lessors wanted to move around deliveries to avoid tariffs.
According to West it is a short-term solution, which becomes more difficult with a protracted tariff war.
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The other issue threatening the smooth operation of the aviation supply chain, is last months fire at SPS Technologies in Glenside (PA), which resulted in a 10% to 15% production capacity loss of aircraft fasteners, according to Epstein.
Hundreds of employees at SPS have been laid-off, amounting to half its workforce, which hampers any future recovery in the supply chain, as those experienced employees now seek employment elsewhere. In a separate appearance at another banking conference, John Plant, the CEO of supplier Howmet, said his company is ready to up production that would help fill some of the SPS shortfall.
West pivoted again to the supply chain buffer and said, “[T]he master schedule is ahead of the production rate,” which has enabled Boeing to build up sufficient reserves for the short-term.
For the long-term, West reiterated that Boeing was looking at options, when referencing both the tariff threat and fastener fire.
On a side note: In a revealing moment, Epstein detailed that he had visited the SPS plant in the past and looking back, was not surprised that it burned down as “everything was covered in cutting oil.”
Lessons learned in the industry, after it all burns down to the ground.
Company Overview
A few short years ago, when Boeing was posting record financial results, West is on record as saying that the company was committed to returning 100% of free-cash-flow to investors.
In the Bank of America interview, West said, “The success factors for Boeing this year was always going to be about safety, quality and stability.” This is quite a cultural shift.
As far as BCA goes, the target of reaching 2025 delivery rates of 38/mo on the 737 MAX program and 7/mo on the 787 program are still on track, he said.
The 787 shadow factory that is completing the necessary rework on inventoried Dreamliners is nearing an end. The work is done and dismantling the line is underway. This will free up employee resources which will be deployed to other projects, namely the certification efforts on the MAX 7 and MAX 10 variants, as well as the much-delayed 777X program.
West said that the company was pleased with the results of the Key Performance Indicators (KPI), with many of them in the “green” and the others trending in the proper direction. Some of the KPI’s are rework, supplier shortages, noticeable quality escapes, and employee training.
Over at BDS, the focus is on turning the struggling division profitable.
On the recent KC-46 delivery stoppage due to cracks found in the leading edge, West explained that the fix is a fairly simple matter, due to its location. The company foresees no impact in deliveries for the year.
Given the recent political drama the world is currently enduring, there has been much chatter about an increase in global defense spending. However, at the moment, there are no firm orders to announce for Boeing, in that regard.
As expected, not much was mentioned by West about BGS, except to say that it was expected to continue its profitable ways in the future.
A hint about the 1Q numbers
On the first quarter, West commented that company “revenues will be seasonably lighter…expected to be closer to the quarterly average of last year.” This would put 1Q2025 revenues in the $16bn to $17bn range.
There is also expected to be an unspecified, one-time expense of $150m in the quarter, with less “working capital drag,” according to West.
Spin-offs, Spirit acquisition and Certifications
There has been speculation about Boeing selling-off parts of the company to focus on core-competencies. West was specifically queried about Jeppesen and WISK. He reiterated that the list of potential moves was a short one, rather than a long one. The corporation was focused on pruning, as opposed to wholesale changes.
Specifically related to WISK, West said that Boeing was pleased with the technological advances the company received in return for a relatively small investment.
The Spirit AeroSystems acquisition is proceeding according to plan and Boeing is happy with the strides being made there. West specifically mentioned Spirit CEO Patrick Shanahan and noted that there were significant improvements in the quality of products Boeing is receiving from Spirit.
West also commented how the parent company is looking forward to welcoming Spirit back to the Boeing family and pledged to work together with the Wichita-based division.
Expectations are for the deal to close during the summer months.
On the certification front, West once again deferred control of the timeline to the FAA. He noted that the 777X program was in the second phase of flight-testing, with over 3,700 hours currently accrued on the type. Good progress is being made in all certification efforts, according to West, as Boeing looks to begin delivering promised aircraft.
However, LNA is told that operators of the 777-300ER and 777LRFs are extending leases by five or more years, into the 2030 decade, and preparing to order Airbus A350s and Boeing 787s due to uncertainties over delivery dates of the 777X.
Future Clean Sheet
West said that any new aircraft was “a ways off,” without defining what this means. West explained that CEO Kelly Ortberg knows that Boeing is commercial aircraft, but the current focus is on getting current designs certified and into service.
He boiled the near-term future down to returning the company to historical financial results (most likely 2018 levels) by increasing production at BCA, returning BDS to profitability and allowing BGS to continue as it is.
The half-trillion dollar backlog and buffered inventory levels are crucial in that regard.
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