Thank you for standing by. Good day, everyone, and welcome to the Boeing Company's Third 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, and good morning. Welcome to Boeing's Third Quarter 2020 Earnings Call. I'm Maurita Sutedja, and with me today are Dave Calhoun, Boeing's President and Chief Executive Officer; and Greg Smith, Boeing's Executive Vice President of Enterprise Operations and Chief Financial Officer. After management comments, we will conduct a question-and-answer session. [Operator Instructions]. As always, we have provided detailed financial information in our press release issued earlier today. And as a reminder, you can follow today's broadcast and slide presentation through our website at boeing.com. Before we begin, I need to remind you that any 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.

Thank you, Maurita, and good morning, everyone. Before I get started today, I want to take a moment to remember those who lost their lives on Lion Air flight 610 and Ethiopian Airlines flight 302. Tomorrow will mark the 2-year anniversary of the Lion Air accident. Not a day goes by that we don't remember, reflect, rededicate ourselves to ensuring accidents like these never happen again. Our deepest sympathies are with the family members and their loved ones today and every day. It's been about 9 months since the onset of the COVID-19 pandemic. I hope you are all continuing to stay safe and healthy during these very challenging times. Let's turn to our business update on Slide 2. The pandemic is having broad and deep impacts across the globe on health, on the economy, on global trade and, of course, our travel industry. We're focused on the health and safety of our employees and our communities, while close -- while working closely with our customers and suppliers to navigate through this global pandemic to rebuild stronger on the other side. There's no doubt that this moment is among the most difficult in our more than 100-year history. Through it all, I remain confident in Boeing's long-term future. Let me start today by providing some key updates from across the business. As you know, the COVID-19 impacts on our commercial customers continue to be devastating, and airlines have cut back operations dramatically. We are engaged with our customers every day to understand their short-term, their medium-term and their long-term fleet needs so that we can align our supply and demand. We're also working together across the industry to enhance the safety and well-being of passengers and crews during the COVID-19 pandemic. Through our Confident Travel initiative, we are collaborating industry-wide…

Great. Thanks, Dave, and good morning, everyone. Let's please turn to Slide 5. As Dave mentioned, this moment is among the most difficult in our company's 100-plus year history. Since the beginning of the pandemic, we have taken prudent and decisive action in attempt to get ahead of this to preserve cash so that we can navigate this crisis and also reshape our business so that we can merge as a sharper, more resilient and more competitive company. We are being and will continue to be proactive and look around corners to assess risk factors and take appropriate action. We've been focused on derisking our business and a disciplined cash management for some time, and COVID-19 has accelerated these efforts further. I'll go through a quick time line of our early actions we've taken in 2020 and then provide you with an update of our transformation efforts. Starting back in the middle of March, as the potential risk of the virus escalated, we took a proactive step to fully draw down on our $13.8 billion delayed draw term loan. Given the uncertainty of the markets at that time, we understood that this was a prudent step to bring that cash on our balance sheet. Almost immediately thereafter, we suspended our dividend and terminated our share repurchase authorization. Even then, at the early stage, it was clear to us that liquidity would be critical through this pandemic. These early decisive actions were critical and important. Next, in early April, we rolled out our first voluntary layoff program. We recognized the need to reduce our staffing levels, given the sharp reduction in commercial aircraft demand. And we took action to limit the impact on our teams as much as possible through voluntary opportunities first. This was followed by involuntary layoff programs. By…

Yes. Greg, thanks. This has been a year unlike any other, and we're facing unprecedented challenges in our company, our industry and our communities. I'm proud of our team, and I thank them for the tremendous work they've done through these difficult circumstances. The long-term industry fundamentals remain strong. Air travel will recover. Our portfolio of products and technology is well positioned, and I'm confident in our future. With that, Greg and I will be happy to take your questions, and I'll turn it back to Maurita. Thank you.

John, we're ready for the analyst question now.

[Operator Instructions]. Our first question comes from Doug Harned with Bernstein.

I'd like to understand more about the path back on MAX deliveries once we've got ungrounding, which hopefully will not be in too long. And as we look at it, you've got some number, about 450 airplanes parked, with production on a slow ramp. So -- but there are a number of issues. Like modifications will be needed for -- to these airplanes for recertification. You have an FAA inspection process that we think would affect delivery timing. And many of these parked airplanes will need to be reconfigured for other customers. So how do you think about the start-up of deliveries once ungrounding happens given these issues? And then lastly, given the demand challenges out there due to COVID, what will ultimately be the governing factors for the timing of your ramp in deliveries over the next year or so?

Yes. So there's a lot embedded, of course, in answering that question. But remember, this RTS, return to service, we've been working on this for a very, very long time. So we're confident airplanes are ready, and they will be delivered. And the cert process itself, as in ticketing each airplane, while that's somewhat new, that's a process that has been rehearsed and rehearsed and rehearsed between us and our regulator. It doesn't mean it's going to fly through. On the other hand, I don't actually expect much delay in that process. I think we've provisioned for that. And our guess about how quickly we return these deliveries here in December, I think it's going to be fairly conservatively planned. And I think we can do better than that. But with respect to midterm, all of the early deliveries of 737s will be, of course, to the customers who are on contract and where we will not have to do mods, et cetera. And then as we begin to think about the longer -- or the end of that stream of inventoried airplanes which do not yet have homes, we think we're going to be able to do, within cycle times, all of the reconfigurations that are going to be required. And we have to be ready for that, and our teams have positioned themselves to be ready for that. And then the final thing I would just suggest is that what will be hostage to the movement of those airplanes will be our production rate. We're determined not to create a bigger problem than we started with. And so that production rate will stay low until the movement of those airplanes and then those that need mods are scheduled and work scope is in place such that we can predict their delivery and then, therefore, begin to inch up our production rates again. So that's going to be pretty fluid. Your question suggests that, and my answer suggests that. But I am confident that, that all happens. And then there is a moment, honestly, somewhere in the middle of next year when maybe we're over the second wave, and maybe there's a vaccine, and maybe it's being distributed. And then all of a sudden, everyone's waking up to renewed schedules, and the psychology will lend itself, in my opinion, to a little bit of a run on the bank with respect to narrow-body airplanes. And we'll see about that. I may be dead wrong. But frankly, that's as much of my worry as just moving the airplanes we've got; it's going to be the response when the recovery really does come. I want to make sure we're stable and ready for that.

Our next question's from David Strauss with Barclays.

I wanted to ask, I guess, first of all, on the MAX, the 450 or so that you have in storage, what proportion of your customers have actually reaffirmed that they want to take aircraft in either '21 or '22? Because it seems like pretty much everyone's come out and said that they want very few airplane. And then on the 87, why not take the rate down earlier, given how much inventory you've already built on that aircraft? I think you have somewhere around 50 airplanes in storage.

Yes. Look, on the 787, David, most of the inventory that we have is the result of the quality assessment that we've been doing and the rework associated with it. It's more heavily weighted there than it is customers not able to take the aircraft. So as I mentioned, we're going to have a big fourth quarter on deliveries here, and again, paced by our inspections and quality effort. And then that will pick up in '21. But as Dave said and I think I reiterated, that we're continuing to assess the wide-body market on a day-to-day basis and particularly linked to how we're seeing international coming back. So we're being, I think, very clear-eyed around who we've got in the backlog, the probability of delivery, the time frame, the potential movements of aircraft. And then where we've got unsold positions, what's the real probability there and risk assessing that. So that's going to continue to be our discipline, but we're, again, very diligently focused on it. And if we have to make further adjustments down, then we certainly will to match the demand. And maybe I'll just jump on the 37 and then hand it back to Dave. But look, on the profile around the 37s that we've got parked, really, 3 major kind of, I'd say, kind of ways we look at it. Obviously, you've seen the cancellations and contractual changes, and sometimes, those contractual changes are recontracting the airplanes to move out to further time frames. We're assessing the financial conditions of every customer and assessing that health, and then just other, I'll say, potential delivery risks, which is really tied to the recovery and the challenges across the globe with the pandemic. So all those taken into account, we go through a pretty thorough risk assessment over that profile, including, obviously, day-to-day contact with our customers and their ability to take the aircraft in certain time frames. But look, I'll tell you, it's dynamic. It moves around. We've got a team that's dedicated to that skyline and engaging with those customers, and we're making adjustments real time. But at the same time, doing our own risk assessment. And that is a clear eye towards liquidity. If we see more risk, how do we bolster our liquidity? If that risk does not materialize, then it's upside for us. But we're doing that to really kind of understand, I'll say, the band of risk from the baseline plan that we have in place. I don't know, Dave, if you had anything you want to add.

Yes. No. I mean, it's as fluid as anything you could imagine. So again, I'm not -- I don't want to suggest that we know everything about everything. I will suggest, in light of what we have to do through -- for the accountants and for ourselves, we tend to be more conservative than our customers are with respect to their intentions. So yes, probably more than half are, in fact, planned for customers have already been through adjustments, and we're ready to go do what we're going to do. But we tend to be more conservative than they are on this front because we have to be. Anyway, it's not a perfect world. We'll continue to update it each and every week and month, and we'll keep you informed. But we are where we are now.

Our next question is from Sheila Kahyaoglu with Jefferies.

Greg, I think you mentioned you're unlikely to be cash positive in 2021. Can you help us square that, especially in light of some of the MAX production comments on 31 a month in 2022, which would lead us to believe some inventory unwind. And you haven't really changed production rates quarter-over-quarter. So what are the biggest drags on 2021 cash, whether it's BCA profitability, inventory or PDPs or concessions?

Yes. Probably a little bit of everything, Sheila, around that. I mean, certainly, it's become more challenging just as we've seen continued elevations of the virus, and then, therefore, the customer dialogues around the specific timing around, in particular, delivery. So all of that backdrop has made '21 more challenging. I'd say key drivers from '20 to '21, which we expect, again, '21 to be better than '20, it's the same elements. It's certainly the 737 return to service and that ramp up, in particular, near-term focus on the parked fleet. And then the 787 inventory build, as you mentioned, that timing of the transition between this year and next year will give us some cash headwind. But overall, it's just gotten a little more challenging, specifically around whether it's PPs or actually delivery slots that's made '21 -- again, we're still shooting for it. But having said that, based on everything we know today, it really is looking more likely that cash flow positive is going to be in the '22 time frame. But like I said, we'll continue to work it, but that's how we see it today.

And next, we'll go to Ron Epstein with Bank of America.

Maybe a bigger picture question for both of you. It really does seem in the narrow-body market like Boeing is, I think it's been [indiscernible] fact at this point, is losing share to Airbus. I guess my question for both of you is, one, do you see it as a problem? And if you do, how can you address it given all the constraints that confront the company today?

Yes. So let me take this one. Market share, without a doubt, we've lost some share. When you don't produce an airplane for a year and the other guy does, by definition, you take a big hit with respect to share. With respect to future competitions and our airplane competing against their airplane, I don't -- I'm not going to give up any ground, and I don't believe we will. I don't think our airplane will. They have a particular part of their narrow-body fleet, the 321, that's got advantages for certain routes, without a doubt. Our airplane, in the middle part of that route, with respect to efficiency and environmental performance, frankly, and seat cost, gives us an advantage. And I'm not sure how the mix of the market is going to ultimately play out with respect to the number of routes in each. But I'm not worried about the 737 family competing against the A320 family. And then with respect to wide-bodies, of course, I think we enjoy a big advantage, and I think we will continue that advantage despite the fact that the market's going to have a rough time. And it's going to take a while to get back. So yes, no, I'm not sitting around, sucking my thumb that we're disadvantaged with respect to our product offering. And then the next product's going to come along. We have some incredible underlying technologies that are going to support the point design of that next airplane. We're going to assess this market based on everything that's happened in the last year and probably the next year. And I think we'll be able to call out that point design and pull these underlying technologies that we think will create a winning airplane. So we're not out of the development business. We're still in it. This time -- or I will call it deferral of the NMA or whatever that slot was, this is actually going to advantage us in determining the point design based on what I think are some changing market conditions. But we never let up on the underlying technologies, and we will not let up. And our spending today covers those things. So yes, I'm -- I believe we've got a very competitive product line, and I'm not, in any way, going to give up any room with respect to our competitor on that front.

Our next question is from Carter Copeland with Melius Research.

Greg, I wondered, could you speak to whether there were any changes in your program margin assumptions across the portfolio? Obviously, the big decision on the South Carolina consolidation, and that was a pretty low program margin for the last quarter Q. But just in general, all these cost-out actions and the impact of those and what that means for your assumptions around cost and profit, whatnot. Any color you could give us would be helpful.

Yes. I'd say not significant change within the quarter on the booking rates, Carter. 777 was up a little bit. 87 was up a little bit. And then we were down slightly on 37 and 47 a little bit on 67. Some of that is, as you said, customer mix. Some of it's cost, and some of it's escalation. So not a lot of movement within the quarter on program.

Okay. And with respect to the comments you had on the skyline and managing the skyline, are there any kind of broader observations or themes in how that skyline is settling out from a customer type or regional standpoint, where those planes are going or how that process is evolving?

Yes. I can't sit here and say there's any specific themes. I know it's probably an overused term, but it's dynamic. So in each situation where the customer is different. It's different considering their own liquidity, access to liquidity, what their planned fleets are, what they were and what's happening within their region with regards to any government restrictions on travel. So it really varies by customer and then within time frames because some customers want to remain and have remained committed to taking deliveries but needed to move them out to the right for a variety of reasons. So you can imagine, again, this is tail-by-tail, customer-by-customer weekly assessments by the teams that are engaging with customers. So we have a good line of sight, but recognizing we've got to be agile in it's dynamic. But then again, applying our own risk assessment to just look at it through a liquidity and cash lens to ensure that if we do see any risk building, how do we stay ahead of it? And that's the action, certainly, that we've been taking to date, and that relates to my comments around the debt maturing that we may seek to refinance in the fourth quarter as well as the actions we're taking with the pension and the 401(k). So I can't say if there's anything specific that comes to mind as a common thread throughout other than, obviously, the significant impact the pandemic's is having on everybody.

And next, we go to Jon Raviv with Citi.

So just talking about defense for a moment, I think it's a pretty important part of the cash flow generation story here. But when you look at it, it doesn't seem to be growing much this year. The margins are a bit lumpy. Backlog's really kind of in the 1x, below 1x area. So what's going on there? And maybe you can give us a full picture, including BGS government. And how do you see the future of the total defense enterprise developing over the next few years? Everyone's is seeing decelerating growth next year. Can you guys sort of change that dynamic?

Maybe I'll take a shot on the top line and the margin, and then I'll hand it over to Dave. But this is a year, certainly, if you take the production programs, steady production across whether it's the fighter business or in the rotorcraft business. But this is a year of transition, in particular, for the development programs on the T-7A and the MQ-25 and residential aircraft. So obviously, once those get out of development and start to move their way into production, you'll see the, I'll say, the modest growth associated with that. I think, Jon, domestically, we're continuing to see good support for our core programs. But at the same time, I mean, we're competing to win there. So we're -- all this transformation effort doesn't just apply to commercial, it's really coming off the heels of what a lot of the effort we do at BDS for some time. But that mix of portfolio, Jon, on the development side is certainly impacting the margin here near term. And then as we've seen, we've had COVID impact on the defense business, and it's been disruptive that we're experiencing on KC-46 and we've experienced on a couple of other programs this year. But outside of that, I think, again, once we move into production on the development programs, and there's no question that we've got to improve our performance on development -- overall development programs, we expect to see a more stable, growing margin there as well. I don't know, Dave, if you have anything to add.

Yes. The only thing I would comment on is, one, I feel great about the franchise broadly. In our services business broadly, government now is the majority of that business. And it continues to go quite well. So I do expect some growth in that. Two, our resource planning has not, in any way, tried to strangle government. In fact, it's been the opposite. So almost all of the reductions net that we've described across the company have been applied against our commercial franchise, so that we're not starving something in our defense business as a result of the difficulties we're having in our commercial business. And finally, the tanker. The tanker has been a drag on us for like 3 or 4 years in every way you can think of with respect to investors. But we are beginning to clear the hurdle with our customer with respect to its performance in their fleet and then their need for that tanker. So that whole relationship, I believe, will begin to transition next year. And as opposed to being a drag on our franchise it's been, I believe it will become a strength in our franchise. So I just -- I think in combination with what Greg said, I think that's the situation. I will say, and I said it this morning, we're not planning on defense spending to go up in any appreciable way. In fact, we believe there will be pressure on defense spending as a result of all the COVID-related spending that's been -- that governments around the world have been experiencing. So I don't think we're looking at that world through rose-colored glasses. I expect real pressure on that market.

Our next question is from Seth Seifman with JPMorgan.

Kind of a two part question on China, one kind of specific and one bigger picture. I mean, specifically, when you think about your production and delivery expectations for 737, what are you assuming in terms of when you get certification from Chinese authorities? And then second of all, when we look at the 20-year forecast, and we see China is such a big market for new aircraft, and we think about increasingly explicit strategic competition between the two countries and their efforts over that 20-year time frame to break into the market, how do you plan for that over time? And how do you see it potentially eroding the market?

Yes. So there's a narrow question and a giant question together. So let me start with the narrow one with respect to our narrow-body deliveries. We attempted quite a while ago to derisk our delivery stream on the inventoried airplanes such that we pushed out the Chinese airplanes for later delivery. And at the same time, we've had a team on the field with the CAAC, the certification body in China, for probably a better part of 2 months. And they are working through that process just like the FAA and the EASA did here in Europe. And it's been going quite well and productively, and all the technical people are lined up, et cetera. So I'm confident that, that process will happen, and then ultimately, we can get back to deliveries. And as everyone knows, China is back in business. And the airlines need this kind of lift, and we happen to be 1 of 2 people in the world that can deliver it. And that will be that way for quite a while. So we've had great relationships. We continue to have them. We're going to continue to manage it, and we know that there is going to be, over time, a competitive threat there. We're not afraid of it. We're going to continue to do what's right for our customers. When that threat shows up, what form it takes, ultimately, how it wants to compete around the world, we will -- we'll be up for that round of competition. I don't think that is for quite a while. And I've been around that discussion since the year 2000. So anyway, I have great respect for China and what they want to accomplish here. But I'm -- the long view is still going to have to remain a constructive view with respect to Boeing and China, and that's where we're positioned.

Next, we'll go to Rob Spingarn with Crédit Suisse.

Greg, I wanted to ask you a little further on cost. You talked about reducing the footprint and is laser-focused on cost. I wanted to just explore how we think about the excess capacity that gets created in Everett with the 787 leaving and the 747 concluding. I mean, is it -- would you think about moving MAX up there at some point? Or does this next aircraft that Dave alluded to go there? How do we think about that?

Yes. Just maybe just stepping back, as I mentioned in the remarks, I mean, we're looking at all of our space around the globe, Rob, and looking for ways to be more efficient. And that's certainly as we see it today with the work that's in there, but as Dave said in his response to some of the BDS question, we're not -- we're looking forward as well. So we're trying to take all of that into consideration and be strategic about it. But the fact is that all of our facilities are not fully utilized, and we need to get them fully utilized. And we got to do that in a very methodical way and do it as a company and doing it together about how do we think about, strategically, how do we get our utilization improved and overall efficiency. So it doesn't really just center around one site. I mean, that's certainly an important part of it. But it's every building, every lease, every office space, looking at current near-term demands, but also kind of future potential opportunities and so on. And every one of our decisions is going to be looking through all those lenses before we make it. But make no mistake about it. It's all about being more efficient and having improved utilization. As I mentioned, just in office space alone, we're targeting something like a 30% reduction there, and we'll continue to do so. And like I said, it's across all aspects of real estate. So more to come on it. We're...

Right. So you're not ruling out big changes?

We're not ruling out -- no, we're not ruling out big changes. But just by way of how we think about it, that Everett space that's freed up, I mean, we're going to line it off for quite a while because I don't want to move lines from one place to another just because it's available. And for the most part, our reinvigoration of all things lean in Boeing, and this is really related to workflow and the use of the capacity that we have, will suggest that we can actually produce a lot more in the same or even smaller footprint than we do today. So we're going to stay on that program, and we're going to line off the things that get freed up as a result of decisions like the 787 and the 47, et cetera. And we're not going to just try to fill it. We also need the market to return. We need to see where all the demands really ultimately play out and where that next footprint really needs to sit. We know we have some great skills in that area, there's no doubt. And that matters a lot, and that will factor. But we're not just going to try to fill empty space. That would be -- that would not be in our best interest.

Our next question is from Myles Walton with UBS.

The question I had was really a clarification leading to a question. So the clarification on the $1 billion of equity sale stock towards the 401(k) sort of on an annual basis, I guess, on a go-forward basis, and then the $3 billion to the pension plan. Is that $3 billion prefund for a number of years, such that it's sort of a one-and-done for a few years? And then is the 401(k) more of an ongoing? And then, Greg, is this open -- the question, obviously, to a broader equity issuance to rebalance the portfolio -- the balance sheet, rather, above and beyond what this is. What would make you consider that?

Yes. No. I mean, well, first of all, the way you're thinking about the 401(k) and pension is right. So the pension will be -- really is, like I said, it's an attempt to really minimize the outflow over the next several years. So as we see it today, contributing the stock at an amount of $3 billion really takes that risk off the table. So ultimately, it should help our cash flow profile going forward. And like I said, the 401(k) is, yes, it's more of kind of an annual approach to that. But the whole idea on the balance sheet between debt and equity and so on, I mean, we're, again, diligently focused on what levers we have, how do we derisk. Certainly, our credit rating is significantly important to us and our overall balance sheet health. So it's a balance. It's a continuous balance of the 2. And we think between what we've done and what we are doing internally, combined with the debt and the bank drawdown, and now, with this, think of that, again, as just a continuous balanced approach of looking through each one of these areas and trying to find the right mix. As I did mention, too, we've got $4 billion of debt maturing over the next year. So we'll again look at that and look at potentially refinancing that. So again, it's a very balanced approach in understanding the second, third order effect of each of them. But the objective here, again, is just to try to stay ahead and manage our liquidity as we have on a day-to-day basis. But again, looking beyond our baseline plan around the possibilities with some of the near-term challenges and pulling the appropriate levels at the appropriate time. And this 401(k) and pension, we believe, is -- fits right into that category.

And next, we'll go to Kristine Liwag with Morgan Stanley.

With your decision to fund the pension with Boeing stock, I guess, I would have thought that free cash flow in 2021 would have been incrementally positive. So first, were you initially expecting to fund the pension in 2021, and were you expecting to do that with stock? And then also second, can you provide a little bit more color on the moving parts and operating cash flow in 2021 and any onetime items so we can bridge to your positive outlook in 2022?

Yes. So Kristine, the pension funding or -- as you know, it all depends on the rates and the discount rate. But as we kind of modeled it, we started to see in the '22 time frame and beyond some incremental funding requirements. So we essentially, like I said, pulled that forward. We didn't see a significant amount of funding required in '21, but we did start to see some of it in the years beyond that. So this was again an opportunity to pull that forward and utilize our stock and improve the cash profile going forward. So net-net, as you know, we've done it before, and we know how to do it. And we think it was, again, a prudent thing to do. All part of just consistently reviewing the capital structure strategy and balancing the funding approach to the pension in particular. As far as '20, I'll say, kind of '20 to '21, again, I'd say the key elements are very similar to what we talked last time, but the level of contribution is evolving and changing year-over-year. So as you bridge to an improved cash flow, which it will be, as we see it today in '21 over '20, 737 MAX is the single biggest contributor. So getting return to service, starting to deliver off the ramp, and then as Dave said, informing our production rates, and then ultimately, the marketplace and what the recovery looks like, that's going to be the single biggest driver. Outside of that, the next one is the 787. As I said, we're building inventory, and we'll have that inventory and delivery profile aligned into '21, and that will be your second largest contributor to '20 over '21 as it sits today. Those are the two single biggest. If you look at year-over-year, as we see it today with services or defense, it's pretty much in line with how we think we're going to finish this year. So it really does narrow down to those 2 product lines, in particular, with the 737 being the biggest contributor.

All right. John, we have time for one last question.

Great. And that will be from Peter Arment with Baird.

Greg, just on the 787, the consolidation move final assembly to one facility in South Carolina, maybe just -- maybe you can just talk through how you're thinking about -- does that change any kind of outlook on the times of the profitability of the overall program? Or how you're thinking about the kind of the productivity gains that you'll be able to achieve with -- at one facility?

Yes. I think, as you know, Peter, it really kind of starts with the market outlook that we had, and then looking at efficiencies, and then, ultimately, how do we become more competitive. And this is certainly a key contributor to that. As far as a program margin perspective, not a -- it won't have a significant impact on that certainly near term. But as Dave said earlier, we're looking beyond the current rate and looking at rates beyond where the marketplace is today. And that's ultimately where we'll see much more efficiencies, and particularly around logistics, going from the mid and half body right over into final assembly and not having the transportation logistics associated with that, and having the dedicated crews and the cycling, again, we'll see the efficiencies. But really, we'll capture it more at the higher production rates.

All right. Thank you all. That completes the Boeing Company's Third Quarter 2020 Earnings Conference Call. Thank you for joining.

Thank you, everyone.