Key questions from the first quarter earnings call conducted by The Boeing Company on May 23, 2008.

Steve Binder: You are assuming zero margin with 787 program. Since you had not fully scrubbed supplier payments, renegotiation with suppliers, as well as your new schedule as far as your ramp cost with respect to a new production schedule, would you characterize your cost estimates to be on the initial block size to be conservative, such that you want to meet figure with forward charge?

James Bell: I would say that it is our best ability to estimate, but a couple of things that we have high confidence in. One we have confidence that we have almost 900 orders today which would help us relative to set what the pricing is, relative to that. We have negotiated the subcontractor cost and we have good idea of how we are going to finish in negotiating as it relates to some of the impacts or some of the changes we have experienced. The area that is less certainty is how we settle all of the issues we have with our customers. Although, we think we are being relatively conservative by starting out with the zero margin.

Steve Binder: If the R&D decreases mainly coming out of BCA and you take out the 787 sales and zero profit contribution, it looks like you are still assuming some decline in your matured business and services business and margin in 2009 versus 2008. Is that just conservatism?

James Bell: No. It is what we have talked about before. Prior to putting these airplanes to 787 into service we have some expense associated with that that would come out and what we would call out fleets support area out of our cap area. In terms of trainee menus and things of that nature that support the entry into the service and new airplanes. That is some of the impact that you see.

Steve Binder: Are you assuming 747-8 deliveries in 2009?

James Bell: Yes.

Troy Lahr: Can you give more insight into discussions with international costumers specifically those that have taken deliveries over the next 2 to 3 years?

Jim McNerney: Internationally we have had little indication that the customers want to reschedule. That is then a relatively stable situation, the financial turmoil as we have seen it has mostly been US centered. So answer to your first question is, hardly any.

Troy Lahr: What are you hearing from the domestic carriers regarding recapitalization efforts now that oils at 117, are you still on track to start seeing more domestic orders in 2008 and 2009?

Jim McNerney: The new oil reality is a hard one for them to be deal with. It is impossible from me to know exactly what oil price they were assuming in their models as we begun discussions with them. We are in active discussions with most of them, and that should unfold over the next 12 to 18 months. If there is an impact, we have not seen it yet. The new reality has hit us quickly here. We are all in an ongoing situation that it will unfold, but no direct indication there either.

Troy Lahr: Do you think the domestic are still recapitalized within a year, year and a half?

Jim McNerney: If anything the oil price situation could accelerate some moves that would in the minds of the airline management strengthen their businesses. You look at the proposed Delta, Northwest merger which has yet to play out fully, but that is a move to strengthen, introduce more scale and insulate competitively from all kinds of price in marketplace pressure. To the extent to which this accelerates that that could get you there faster actually.

Cai von Rumohr: You have ambitious cash flow next year given the 787 delay. Could you quantify what was the cash flow impact on 2008 and 2009 from this latest delay of the 787?

James Bell: It is reflected in the guidance, #1, but what you are seeing in terms of the lower cash flow in 2008 is the production build-up not only of the 787, but of the production aircraft that also or we produce the higher rate and pull that with the flight out based on the prior schedule shift of about 75 787s out of 2008 into the 2009 into outyears now as we now understand the schedule better. That is how we got to 2.5 this year. In the next year, we are upping our deliveries, which will help the cash flow to get to the 6 billion we are guiding you to as well as we will start relieving the inventory on 787s as we deliver the 25 we are expecting to deliver next year.

Cai von Rumohr: What impact does this assume, you are paying Spirit per their 8-K, it looks like 350 million plus that was not on the plan?

James Bell: We are not going to get into the specifics of what we have assumed but believe that the impact of what we believe based on what we know today cash that would be extended out because of the payment flow coming from customers as well as what we would have to pay for pay to suppliers to be there and because of contract terms are included in the guidance for both 2008 and for 2009.

Joe Campbell: The difference between the program accounting and the unit accounting was $330 million, which is the largest number ever seen in a single quarter and 71 million of it is related to the 777-300ER. What was going on?

James Bell: We are still experiencing the impact of the more aggressively priced airplanes several years ago that we are delivering, which has a more profound impact on unit margins than program. Then coupling that with the mix that was delivered in the quarter had the increase the gap a bit based on what is in the accounting quantity relative to that mix and the pricing associated with it.

Joe Campbell: What was the mix difference?