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2005 Speeches
James A. Bell

James Bell


Chief Executive Officer

Chief Financial Officer

The Boeing Company

"Address to Shareholders"

Boeing Shareholders Meeting

Chicago, Illinois

May 02, 2005

As [Chairman] Lew [Platt] mentioned, I'm going to review our recent operational and financial performance. And I'll give the outlook for our two major businesses.

Boeing's operational and financial performance is the strongest it's been in some time.

We've increased total shareholder return 39 percent since this time last year. We're creating value and investing for our future growth. By every indication, the operating engine of this company is firing on all cylinders.

Some great things happened in 2004.

The entire Boeing team was responsible for that performance last year. And our leadership team remains focused on maintaining that momentum on all of our key initiatives.

Now let's look at the first quarter of this year.

We're on track to increase revenues nearly 10 percent by year-end.

We had a strong positive cash flow of $1.4 billion ... after contributing 450 million dollars to our pension plans. This cash position gives us the flexibility to continue to invest for future growth.

We're seeing excellent performance in our defense business. IDS added to its large backlog by signing a $6 billion contract expansion for the Future Combat Systems program.

Our defense business also achieved several important milestones:

The commercial airplane business continued to increase its earnings. And as the market cycle turns up, we're receiving outstanding orders and commitments from customers around the world.

Just one year after having introduced the 787 Dreamliner, we have now captured orders and commitments for 237 787s from 19 airlines around the world.

While our businesses have been faced with a number of challenges, we're making substantial progress in turning each unique challenge into an opportunity.

At BCA, the 2001 collapse of the commercial airplane market and the intense competition within that market drove us to make three significant changes in the way we operate.

First, we turned up the gain on our Lean initiatives. BCA has performed extremely well in finding new ways to reduce unit costs and speed cycle times. As a result, it has increased its profits despite a sharp drop in production and deliveries.

In 2004, Boeing delivered 285 commercial airplanes. Now we're witnessing solid growth in airline traffic around the world.

Based on stronger demand, we expect deliveries to increase:

In short, the commercial airplane market is coming back ... just as we always expected it would. We're poised to take real advantage of the up cycle.

Second, we invested our cash to design a family of products that suit the re-emerging market. We developed the 787 and the new variations of the 737 and 777 to give airlines and passengers more of what they want--

And third, we refocused our sales and marketing efforts. We're listening to our customers with deeper understanding. And we're working with them to deliver not just airplanes... but a range of solutions that will help their businesses prosper -- along with ours.

Great performance requires that we know when to enter new markets or offer new products. But it also requires that we know when to get out of a market or discontinue a product. Our decisions to discontinue the 717 and 757 lines should be seen in that light. We've made the hard decisions to reflect market realities and, as a result, we're better positioned to take advantage of the upturn.

Lew has already addressed the issue of launch aid to Airbus. But let me just add that we have the right strategy to compete ... and win ... in the commercial airplane arena. We are simply asking for a level playing field.

Like BCA, IDS is making real progress in dealing with its own challenges. Most notable is the path toward restoring our reputation with key U.S. government customers.

Let me echo Lew's commitment: Integrity will remain at the center of our consciousness.

IDS is well positioned for future growth and strong earnings.

It has a broad portfolio of:

Within the defense industry, IDS is at the leading edge in making everything that flies...

At the same time, IDS has established Boeing as the leading industry partner to the U.S. government in developing a "network-centric" view of the world. Through its work on Future Combat Systems and other programs, Boeing is applying that system-of-systems approach to a wide array of conventional and non-conventional threats.

IDS combines a commitment to execution with deep insight and foresight.

All in all, I'm confident that it will continue to deliver strong financial performance. We see exceptional upside for Boeing in our defense business.

Now, at the enterprise level, we see strong growth in revenue and earnings for '05 and '06.

I'm confident in the ability of the Boeing team to keep achieving the kind of performance you've come to expect. That team includes our 160,000 employees ... and our worldwide network of partners and suppliers.

We've put out clear and challenging new targets for:

Our people know what those targets are. And our team is working to achieve them.

This team is doing the right things:

The stock price is reflecting the performance we've demonstrated over the last 17 months.

We're confident in our growth outlook. We remain focused. We are performing to expectations and to plan. And we're creating sustained value for our shareholders.