The Boeing CompanyJP Morgan Airline, Aerospace and Airfreight Conference: The Boeing Company JP Morgan Airline, Aerospace and Airfreight Conference Joe Ozimek Managing Director of Asset Management Boeing Capital Corporation February 23, 2006 0


Forward-Looking Information is Subject to Risk and Uncertainty: Certain statements in this report may constitute “forward-looking” statements within the meaning of the Private Litigation Reform Act of 1995. Words such as “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our actual results and future trends may differ materially depending on a variety of factors, including the continued operation, viability and growth of major airline customers and non-airline customers (such as the U.S. Government); adverse developments in the value of collateral securing customer and other financings; the occurrence of any significant collective bargaining labor dispute; our successful execution of internal performance plans including our company-wide growth and productivity initiatives, production rate increases and decreases (including any reduction in or termination of an aircraft product), acquisition and divestiture plans, and other cost-reduction and productivity efforts; charges from any future SFAS No. 142 review; an adverse development in rating agency credit ratings or assessments; the actual outcomes of certain pending sales campaigns and the launch of the 787 program and U.S. and foreign government procurement activities, including the uncertainty associated with the procurement of tankers by the U.S. Department of Defense (DoD) and funding of the C-17 program; the cyclical nature of some of our businesses; unanticipated financial market changes which may impact pension plan assumptions; domestic and international competition in the defense, space and commercial areas; continued integration of acquired businesses; performance issues with key suppliers, subcontractors and customers; significant disruption to air travel worldwide (including future terrorist attacks); global trade policies; worldwide political stability; domestic and international economic conditions; price escalation; the outcome of political and legal processes, changing priorities or reductions in the U.S. Government or foreign government defense and space budgets; termination of government or commercial contracts due to unilateral government or customer action or failure to perform; legal, financial and governmental risks related to international transactions; legal and investigatory proceedings; tax settlements with the IRS and various states; U.S. Air Force review of previously awarded contracts; and other economic, political and technological risks and uncertainties. Additional information regarding these factors is contained in our SEC filings, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2004 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005. Forward-Looking Information is Subject to Risk and Uncertainty


2005 Summary: 2005 Summary Grew earnings by 37% Generated a record $7.0 billion of operating cash flow Grew total backlog 33% to a record $202 billion Raised dividend 20% and repurchased 45 million shares Invested in key growth areas (787, 747-8, FCS, MMA) Achieved record revenues, earnings, and margins in Defense business (IDS) Raised EPS guidance for 2006, followed by strong growth in 2007 Driving sustained growth and productivity through new company-wide initiatives Solid results… strong growth ahead


Commercial Airplanes: Strong performance… growth ramping up Delivered 290 airplanes in 2005 Airplane deliveries growing more than 50% from 2005 to 2007 Won a record 1,029 gross orders in 2005 Backlog up 89% this year to a record $124 billion Record orders for 737, 777 and 787 Dominated wide-body order share 787 program made excellent progress 379 firm orders and commitments to date from 27 customers Most successful launch ever Launched new programs 777 Freighter 737-900ER 747-8 Passenger and Freighter Commercial Airplanes 747-8 Program Launched Boeing 787 Continued focus on growth and margin expansion


Product Overview: Product Overview


Airlines Will Need 25,700 New Airplanes in the Next 20 Years: Airlines Will Need 25,700 New Airplanes in the Next 20 Years 25,700 airplanes Regional jets Single-aisle Twin-aisle 747 and larger 60% 15% 3% 22% = 15,420 airplanes 770 airplanes /year


Industry Will Spend $2.1 Trillion on New Airplanes in the Next 20 Years: Industry Will Spend $2.1 Trillion on New Airplanes in the Next 20 Years 2.1 trillion delivery dollars* *In year 2004 dollars Regional jets Single-aisle Twin-aisle 747 and larger


Slide8: The Boeing Airplane Strategy Is All About The Passenger Safe, reliable service “Point-to-point” service with more frequency choices Lower fares in comfortable surroundings


What About…: What About… Frequency Frequency Frequency Frequency Frequency Frequency Frequency Frequency


New Nonstop Flights Continue To Grow, Not Consolidate: New Nonstop Flights Continue To Grow, Not Consolidate Airport Pairs Data from August Schedules NOTE: Excludes regional jets ~2,200 Airport Pairs Added Since 1996 Many new markets yet to be opened


Very Large Airplanes Will Not Reduce Airport Congestion – London Heathrow Airport: Very Large Airplanes Will Not Reduce Airport Congestion – London Heathrow Airport Daily Departures Seat size category OAG August 2004 All scheduled passenger service 83% of departures 68% of departures We need to focus on the single-aisle airplane gauge


A380 or 787, How Are The Different Strategies Working?: A380 or 787, How Are The Different Strategies Working? Sales in 2005 The hub to hub airplane 20 The point to point airplane 235 0 The data tells us our strategy is correct All hub to hub airplanes 58 All point to point airplanes 561


Boeing’s Airplane Strategy Has Been Validated2005 AirFinance Journal Investors and Operators Poll: Boeing’s Airplane Strategy Has Been Validated 2005 AirFinance Journal Investors and Operators Poll 0 …Four of the top five are Boeing …Boeing sweeps the top spots with unprecedented performance by wide-bodies Delivering better value with less risk


The Twin-Aisle Strategy: The Twin-Aisle Strategy 0


Boeing Twin Aisle Airplanes Provide The Right Sizes To Meet Future Market Requirements: Boeing Twin Aisle Airplanes Provide The Right Sizes To Meet Future Market Requirements Passenger Airplane Deliveries Forecast 2005 – 2024 2004-2023 747-400ER 416 seats 777-300/-300ER 365 seats 777-200/-200ER/200LR 301 seats 767-400ER 245 seats 767-300ER 218 seats 767-200ER 181 seats 2,235 3,005 200 Seats 200 Seat Gap A380-800 542 seats A340-600 323 seats A340-500/A340-300/A330-300 280 262 262 seats A330-200 241 seats 1,250 2,650 1,799 450 Seats 400 Seats 300 Seats BOEING AIRBUS 590 747-8 450 seats The A350 will cause further “gap stress”


777 – The Smart Business Choice: 777 – The Smart Business Choice 0


The 777 Family Offers Flexibilityin Capacity and Range: The 777 Family Offers Flexibility in Capacity and Range 747-400 777-300ER 777-300 777-200 777-200LR 747-400ER 747-200 777-200ER 747-8 777-200LR


2005 - A Record Order Year For The 777: 2005 - A Record Order Year For The 777 As of December 31, 2005 154 orders from 15 customers worldwide, 12 competing product orders


Cabin Area Dictates Relative Seating Capacity: Cabin Area Dictates Relative Seating Capacity Seating Cabin Area (sq. m) 787-8 A330-200 A350-800 A330-300 A340-300 787-9 A340-500 777-200ER A340-600 777-300ER 747-400ER A350-900


Long-Range Interior Comparison: 365 passengers 323 passengers A340-600 777-300ER Long-Range Interior Comparison 42 more comfortable seats


Cabin Area Dictates Relative Seating Capacity: Cabin Area Dictates Relative Seating Capacity Seating Cabin Area (sq. m) 787-8 A330-200 A350-800 A330-300 A340-300 787-9 A340-500 777-200ER A340-600 777-300ER 747-400ER A350-900


The 777 is the Market Leader: The 777 is the Market Leader 825 Total Sales Worldwide, 44 Customers


777 Takes Top Honors Five Years Running in AirFinance Journal Investors’ and Operators’ Poll: 777 Takes Top Honors Five Years Running in AirFinance Journal Investors’ and Operators’ Poll 2001 #1 Widebody (777-200ER) 2002 #1 Widebody (777-200ER) 2003 #1 Widebody (777-200ER) 2004 #1 Widebody (777-200ER) 2005 #1 Widebody (777-300ER) #2 Widebody (777-200ER)


The Twin Engine Strategy: Airbus Has Changed its Position on Twins “It’s always reassuring to have the redundancy option of four engines rather than two. Especially when you’re a long, long, long way from home … If you’re over the middle of the Pacific, you want to be in the middle of four engines.” (competitor ad, 1999) The success of Boeing’s long-range twins must have changed our competitor’s mind. The Twin Engine Strategy


777: The Polar Route ChampionThe Most Efficient Way to Travel to Asia: 777: The Polar Route Champion The Most Efficient Way to Travel to Asia Chicago JFK/Newark/ New York Beijing Hong Kong Tokyo Singapore 0 4,000 polar flights since 2001 Over 120 polar flights each month


Investors Have Determined Boeing’s Twin-Aisle Products Have Better Residual Value: Investors Have Determined Boeing’s Twin-Aisle Products Have Better Residual Value Average Annual Change: 777-200ER -5.3% A340-300 -6.5% 0 Residual Value Of 1997 and 1998 Build Aircraft Residual Value Source: Average of AVITAS & Aviation Specialists & Aircraft Value Reference


Range Capability From New York: Range Capability From New York 777-200ER/GE90-94B 656,000-lb MTOW 301 passengers 7,710-nmi 777-300ER/GE90-94B 660,000-lb MTOW 365 passengers 7,885-nmi 777-200LR/GE90-110B1 (3 body fuel tanks) 766,000-lb MTOW 301 passengers 9,400-nmi Typical mission rules Nominal fuel burn ISA temperatures 85% annual winds 0.84 Mach cruise speed 210-lb passenger baggage allowance 200-nmi alternate airport 6.7 lb/U.S. gal fuel density 0


Boeing 787:The Game Changer: Boeing 787: The Game Changer 0


Efficiency for Medium- and Long-Haul Markets: Efficiency for Medium- and Long-Haul Markets 767-200ER 767-300ER 767-400ER 777-300 777-200ER 777-200LR 777-300ER Tri-Class Long Range Rules Dual-Class Short Medium Range Rules 787-8 787-9 747-400 767-300 787-3 747-400ER 0 150 200 250 300 350 400 450 3000 4000 5000 6000 7000 8000 9000 10000 Design Range, nmi Seats


Composite Solutions Applied Throughout the 787: Composite Solutions Applied Throughout the 787 0


Starting the Second Century of Powered Flight: Starting the Second Century of Powered Flight 0


Broad and Deep Market Penetration379 Orders and Commitments from 27 customers: Broad and Deep Market Penetration 379 Orders and Commitments from 27 customers 0 LCAL


Slide33: 0


Boeing Has A Better View Of The World: Boeing Has A Better View Of The World


Boeing Has A Better View Of The World: Boeing Has A Better View Of The World


Range Capability From New YorkFull Passenger Payload: 0 Range Capability From New York Full Passenger Payload 787-8 223 Three-class passenger 787-9 259 Three-class passenger 787-3 296 Dual-class passengers Honolulu Buenos Aires Rio De Janeiro Johannesburg Sydney Singapore Tokyo Manila Bangkok Jakarta Port Moresby Auckland Mumbai Dubai Addis Ababa Cairo Santiago Papeete NEW YORK Typical mission rules 85% annual winds


Development Schedule On Track: Development Schedule On Track 0


747-8The 21st Century 747: 747-8 The 21st Century 747 0


Stretching the 747-400 For More Passenger and Cargo Capability: Stretching the 747-400 For More Passenger and Cargo Capability 747-400F 747-8 Freighter 747-8 Passenger 747-CO-0226 2-2-5-KM/LB 147-in plug (3.73 m) 60-in plug (1.5 m) 60-in plug (1.5 m) 80-in plug (2.0 m) 0


An Improvement in Capability: Typical mission rules An Improvement in Capability 747-8 More payload... more range... more revenue >450 Pax 366 Pax 416 Pax +740 nm +700 nm +50 seats Range, 1,000 nmi (1,000 km) > 34 seats 747-200B 747-400 5.0 6.0 7.0 8.0 (10.0) (15.0) more profit! 0


Providing the Right Capabilities to Match Freighter Market Needs: Typical mission rules Providing the Right Capabilities to Match Freighter Market Needs 747-8 F More cargo... more revenue 134 tonnes 110 tonnes 114 tonnes +20 tonnes +4 tonnes +830 nm Tonnes +30 nm 747-200F 747-400F 100 110 130 more profit! 120 140 0


The 747-8 Freighter —The Most Efficient Solution: Notes: (1) Uses Boeing assessment (2) Maximum structural payload Weight, tons Potential Revenue Payload (2) Operating Empty Weight (OEW) (1) +78.4 tons OEW -4.2 tons revenue payload The 747-8 Freighter — The Most Efficient Solution 0 A380F is heavier and carries less


Range Capability To/From New York: Range Capability To/From New York 747-400 416 three-class passengers 747-8 450 three-class passengers Range circles reflect most restrictive direction Typical mission rules Airways and traffic allowances included 85% annual winds 0 Product Development Study


Early 2009 Entry Into Service: Early 2009 Entry Into Service 787 Schedule 2002 2003 2004 2005 2006 2007 Customer Commitments First Flight 2008 Certification/Delivery Firm Configuration 2009 Firm Configuration 0 787 engines are schedule drivers


The Single-Aisle Strategy: The Single-Aisle Strategy 0


737 Next Generation Product Review: 737 Next Generation Product Review 0


The Leader Provides theCompetitive Edge: The Leader Provides the Competitive Edge Newest, most advanced family of airplanes in its class Flexibility of one airplane in four sizes Standard setting maintainability and reliability Lowest operating costs in its class 0


Flight Selection, What Factors InfluenceYour Choice? (2-5 hour flight): Flight Selection, What Factors Influence Your Choice? (2-5 hour flight) 0 The airplane is less important when choosing a domestic flight


A Record-Setting Year For The 737NG : A Record-Setting Year For The 737NG *includes 2 orders by unidentified customers (30) (35) (18) (20) (4) (26) (8) (3) (43) (75) (8) (6) (5) (5) (8) (10) (6) 569 Net Orders* This Year For The Record-Selling 737


Investors Have Determined Boeing’s Single-Aisle Products Have Better Residual Value: Residual Value Of 1997 and 1998 Build Aircraft 20.0 25.0 30.0 35.0 40.0 45.0 1999 2000 2001 2002 2003 2004 737-800 A320 A319 737-700 US $ Millions Residual Value Source: Average of AVITAS & Aviation Specialists & Aircraft Value Reference Investors Have Determined Boeing’s Single-Aisle Products Have Better Residual Value 0 Production Discipline Over producing can lead to value erosion


Looking Ahead: Looking Ahead Boeing’s market preferred airplanes – based on “point-to-point” strategy – are driving significant growth in our business Boeing Commercial Airplane deliveries are expected to increase 50% from 2005 to 2007 Margin expansion opportunity during commercial upcycle… a key driver of earnings power Record backlog (> $200B) is fueling strong growth in revenues, margins and earnings across the enterprise Delivering value to customers and shareholders