2021 Address to Shareholders

Annual Meeting, Virtual

David L. Calhoun
President and Chief Executive Officer
The Boeing Company

April 20, 2021

Thank you, Larry, both for the introduction and your board leadership. And let me add my welcome to all of you that are joining us today.

I hope you are all staying safe, healthy as we continue navigating the global pandemic. At this time last year, we were just beginning to truly understand its impacts, both personally and professionally. It's been a year like no other, and I could not be more proud of our team's dedication to supporting our customers, the communities in which we operate, their teammates and their families during these challenging times.

I've been touched by the incredible stories of compassion and care, as our people rushed to rally around those in need. In the very early days of the pandemic, even as we temporarily suspended operations at many of our facilities, our teams mobilized to manufacture 3D-printed face shields and used our own fleet to deliver massive quantities of personal protective equipment to the front lines.

The reality is that nothing could have prepared us for the sheer magnitude of the global crisis. The loss of life around the globe is beyond comprehension and deeply devastating. My heartfelt sympathies go to everyone who has lost a family member, a friend or a colleague to COVID-19.

Alongside the human pain caused by the virus, entire industry sectors suffered collapsing demand - with the global travel ecosystem at the top of the list. 2020 was a devastating year for our airline customers, as well as for airports, hotels, taxis, restaurants, conferences, events and all other experiences that revolve around travel and tourism.

And while it was tough, we saw the industry come together to support one another like never before. And thankfully, we view 2021 as a critical inflection point. While a full recovery is still likely several years away, we are seeing very encouraging signs of a turnaround.

And we are very thankful for the brilliant scientists who have worked tirelessly to create vaccines with remarkable speed. In our first impact assessment going back to May of last year, we never imagined that 50% of the U.S. adult population would be vaccinated a year later. And as governments around the world accelerate vaccine distribution, we begin to take small steps toward returning to daily life as we knew it pre-pandemic.

This past year, many of us have adopted new ways of working together. In fact, we're implementing virtual and hybrid work arrangements for many of our teams that will extend even beyond the safe return from telecommuting for the majority of teammates at our facilities.

But while this new dynamic creates opportunities to change what the future of work looks like, I know nothing can replace the value of the in-person human connection enabled by air travel. When we're in person, we forge stronger, more enduring connections, we spark creativity and innovation, and we strengthen trust. And for this reason, air travel has proven resilient time and time again - and we fully expect demand to return to historic long-term growth trends once this pandemic is behind us.

And until then, our Confident Travel Initiative, in partnership with experts across government, the health care industry and academia, has demonstrated that when flying, passengers are much less likely to contract COVID-19 than in everyday life. Boeing airplanes use high-efficiency filters to remove over 99.9% of viruses and particulates from the air. Similar to those used in hospitals, these filters exchange the volume of cabin air every two to three minutes.

The cabin design and the airflow system, coupled with other safeguards incorporated by our airline customers, like wearing face coverings and implementing more rigorous cleaning procedures, are part of the multilayered safety approach to help protect the health of passengers and crew throughout the air travel journey.

We're also working with governments and industry associations to help ensure that when people decide to travel, they know what to expect. We encourage that any new protocols use a data-driven and risk-based approach to minimize disease transmission risks between countries.

Standardized and secure methods to verify traveler information - whether a negative COVID-19 test result or proof of vaccination - should be a part of any solution to safely expand international travel. We encourage governments and industry stakeholders to agree on verification protocols that will enable safer air travel while maintaining global connectivity and propelling economic recovery.

As we work to navigate through this recovery in domestic and international travel with public health and safety at the forefront, we remain equally focused on our vital defense, space and security mission, helping protect our nation and allies around the world.

In support of meeting industry and customer needs as we move forward, we launched an internal transformation effort to adapt to the market impacts of COVID-19 and position our business to be leaner and sharper and more sustainable for the long term.

As part of this transformation:

• We're assessing all aspects of our infrastructure to make the most efficient use of our factories, our warehouses, our laboratories and our offices while reducing our environmental footprint.
• We're looking critically at our organizational structure - how we operate to reduce creeping bureaucracy and unnecessary layers.
• We're reevaluating our portfolio and investments to ensure that we're prioritizing our spending on core market opportunities, sustainability efforts and key next-generation technologies.
• We're supporting our suppliers who are managing their production stability in response to our own lower demand.
• And we're driving operational excellence into every corner of our company, so that we can create stability, enhance quality, ensure workplace safety, and reduce rework. Our recent 787 delivery pause is a demonstration of this, where we conducted comprehensive production inspections of our 787 airplanes while focusing on driving stability in our production system so that we're positioned for the market recovery.

We also made difficult decisions to reduce the size of our workforce in line with our current market realities. As we go through that challenging process, we're not losing sight of our future. We've taken great care to ensure we have the team, the resources and the investments necessary to meet our customer commitments, to drive our improvement initiatives and innovate for the future.

As we transform, we're staying grounded, and grounded in and guided by our core values.

We will not forget the lives lost and where we fell short in the tragic Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents. Their memories drive us every day to be a better Boeing.

Our highest priority is ensuring the safety, the security and the protection of everyone we serve. You have our leadership team's promise that nothing is more important today - and nothing will be more important tomorrow. Delivering on that promise starts with a steadfast commitment to ensuring all of our teammates operate with complete transparency and the highest integrity.

Culture begins at the top, and our global leadership team is shifting more time, more attention to getting as close as possible to our day-to-day work. Together, we're fostering a culture of trust, one that encourages and recognizes transparency, accountability and integrity.

Boeing is now and will forever be an engineering company. We design, we build and sustain the world's most advanced technology, operating from the depths of the ocean to the far reaches of space. And to strengthen this foundational capability, we have brought together our 50,000 engineering teammates into a single, integrated global community to increase innovation, transparency, collaboration and accountability across all engineering designs and decisions.

We also made key leadership appointments. We hired a new vice president of Software Engineering, we named a new chief technology officer, and we appointed a chief aerospace safety officer.

In parallel, we are advancing our enterprise-wide Safety Management System that is grounded in timely data, analysis and insights to enhance how we manage and improve safety every day. It will be fully embedded in every aspect of how we design, how we build and how we support all of our products and our services, and it will help transparently inform our regulators and our customers every step of the way.

And beginning in 2021, product safety, employee safety and quality metrics are incorporated into our primary executive, management and employee annual incentive structures. This update further drives our focus on safety and quality across the enterprise at every level of the organization.

A key milestone on our journey was the safe return to service of the 737 MAX, beginning with the U.S. Federal Aviation Administration, the FAA, approval in November of 2020.

We continue to work with global regulators and customers to return that airplane to service worldwide. And since returning to operations, Boeing has delivered over 85 737 MAX aircraft to customers around the globe. Twenty-one airlines have returned their airplanes to service and have safely flown more than 23,000 revenue flights totaling more than 52,000 flight hours.

As we have discussed and have previously reported, Boeing identified a potential electrical issue for specific components in the 737 MAX flight deck. Boeing is working with the FAA to finalize the required action and to address the issue, and is working closely with both the FAA and our customers on implementation.

We have also resumed delivering 787s, following our comprehensive reviews to ensure each airplane meets Boeing's highest standards. While this work impacted our near-term financials, it was the right thing to do and is another demonstration of our unrelenting focus on quality and the long-term health of our business.

In our defense business, we've made important progress across a number of programs. For example, we delivered the first F-15EX Eagle II for the U.S. Air Force ahead of schedule, and we've started production on the Air Force's new T-7A Red Hawk Advanced Trainer. And of course, we were honored to be awarded the 2020 Collier Trophy for aerospace excellence for the X-37B autonomous spaceplane.

We also took the time to ensure the safety and integrity of our key space systems as we advance toward important milestones in our nation's space program. We successfully completed the hot fire testing for NASA's Space Launch System rocket earlier this year, and we are excited for the next CST-100 Starliner launch as we prepare for its first mission to the International Space Station. We are proud of the decision - that was grounded in our safety-first focus - that NASA and our team made to delay our first crewed mission relative to the original schedule.

And in services, we adapted quickly to the impacts of COVID-19, as our balanced portfolio of digital offerings and government services provided key stability through the pandemic. For example, Frontier Airlines signed a 10-year digital services agreement for their fleet, and we secured a six-year support contract with the Royal Australian Air Force for their P-8As. Additionally, as e-commerce drove increasing cargo demand, we worked rapidly with customers to convert freighters to meet their growing cargo fleet needs. These achievements, and many others like them, reinforce the long-term strategy that underpins our services business and our commitment to meeting our customers' evolving life cycle needs.

As we safely deliver for customers today, we're also advancing technology that will define our next chapter. We anticipate that our R&D investments will lead to next-generation aircraft that offer higher performance while being more efficient, easier to maintain, easier to reconfigure.

Airplanes that we are delivering to customers today are already 15% to 25% more fuel efficient than their previous generation of airplanes, which helps our customers' economics while supporting important efforts to combat climate change. In addition, we've committed to deliver commercial airplanes that can fly using 100% sustainable fuels by 2030.

We expect the demand for carbon reduction to escalate considerably over the next decade, and we plan to help accelerate and lead our industry's focus on supporting bold climate goals.

Underscoring the criticality of this work, we appointed a chief sustainability officer in 2020 to help us further advance our approach to sustainability while staying focused on environmental, social and governance priorities.

As part of our commitment to sustainable aviation, Boeing has been exploring, developing and partnering in concepts for advanced aircraft that meet specific energy efficiency, environmental and operational goals for 2030 and beyond.

One such partnership is with Wisk, a joint venture between Boeing and Kitty Hawk. Wisk is the first company in the U.S. to develop and successfully fly an autonomous, all-electric vertical takeoff and landing aircraft and has completed over 1,500 full-scale flights since 2017 with zero incidents. Last year, Wisk and the New Zealand Government announced their partnership to trial Cora, the world's first autonomous air taxi, which will involve Boeing subsidiary Insitu Pacific.

In addition to commercial travel, sustainability and these advanced aircraft, we're making key investments to ensure we're providing our women and men in uniform with the technology advantage to stay one step ahead of evolving threats, achieve their critical security missions and return home safe every time.

We want future generations of Boeing's stakeholders to conclude that at this moment in our history, we listened, we adapted, we stayed focused, we remained tireless in our pursuit of continuous improvement.

We have also taken significant steps toward confronting racism and advancing our racial equity and inclusion efforts across Boeing.

We have expanded and reformulated the senior leadership team - our Executive Council - to ensure we have a far more diverse executive team shaping every aspect of our strategy, our operations and our culture. We've also developed a racial equity and inclusion action plan that raises the bar for progress on key measures of equity, key measures of inclusion for all our people and holds us accountable for clearing that bar.

As we prepare to release our company's first ever Global Equity, Diversity & Inclusion report this year, we recognize we still have lots of work ahead to live up to our aspirations. Our work to confront racism and discrimination across our ecosystem is core to our values and will be an enduring effort.

More broadly, we take pride in enabling travel experiences that create meaningful connections between people within and across countries and cultures. These in-person connections and conversations among colleagues, friends and family remind us that we are less divided than we might imagine.

From air and space travel to global security and global trade, Boeing plays an essential role in our world. Nearly every time a person or a package arrives on your household or company's doorstep, there's a high likelihood Boeing was involved in making that possible. Likewise, the active-duty members of our military in the U.S. and allied nations depend every day on our technology, our products and our services to help protect their nation, as well as their individual security, all while enabling them to achieve their mission on the ground, at sea or in the air, and now in space.

Through Boeing's purpose to protect, connect and explore our world and beyond, we're committed to understanding, meeting and exceeding the expectations of our stakeholders.

We've faced a reckoning over these last few years, but tough times have brought out the very best in our company and our people. And I'm heartened by the tremendous support we've received from our customers, from our suppliers and shareholders during this challenging period.

I want to take this opportunity to recognize Greg Smith. He's been an integral part of Boeing's ability to navigate the unprecedented challenges over the last year or two. Greg has decided to retire in July after an enormous contribution to Boeing over his 30-year career with the company. His stewardship of the company's financial position for nearly a decade and his leadership during the severe challenges our industry faced as a result of our global pandemic have been essential to positioning Boeing for a bright future.

As part of these efforts, he led the largest bond offering in the company's history, and he launched a comprehensive transformation program that will leave our business stronger and more resilient as we move forward. Greg has also driven Boeing to be a better and more competitive company through his oversight of the enterprise operations, sustainability and strategy efforts. He leaves a legacy of leadership and lasting impacts. I'm also grateful for Greg's commitment to support the upcoming transition and for his counsel as we select his successor. Please join me in thanking Greg for his enormous contributions and wishing him all the best in his future endeavors.

I want to conclude by saying thank you to our Boeing team. Your passion, your dedication, your resilience is inspiring - every day, all day. I am proud to be on your team, and because of you, I'm confident in our shared future.

Thank you, and that concludes my report, Larry.

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