Robert Spingarn: What kind of backlog erosion could Boeing tolerate before 2009 and 2010 production plans would be impacted?

Jim McNerney: When you looked what happened in 2000 when 6% or 7% of our orders ended up being cancelled and that was a difficult situation. There where a number of reschedules, a push outs, and number that the majority did not change. We managed to work through with our customers we are facing difficult headwinds to say the least of that time. A lot of those orders were US based carriers then. That is in contrast where we are today, we are the vast majority of orders 80% plus are with international carriers backed by Ex-Im financing. We are in a stronger backlog position, today all you can use is data here, because you can not predict future. If you had exactly the same situation happened to you as happened to you in 2001 same kind of pressures although differently constructed you can end up with something like that. I think that given that we have constraints on most of our product lines right now, we can get people airplanes. We are biased to be cautious on the rate increases even though we are increasing, but you add that all up, the strong ability to managing the past when we got lacked. We are in conservative position to go again and return we have more order than we have production.

Robert Spingarn: Do you think given the diversification of the backlog and strength of it, 6 plus years of production, that if there were cancellations or deferrals other customers would be more welling to slip forward?

Jim McNerney: In the couple of incidences that we have had during this year that is exactly what happening.

Hal Weitzman: You said if EADS were to end up wining the tanker contract would face a complicated supply chain. Given your own experiences with the 787, what have you learned in terms of supply-chain issues?

Jim McNerney: We have learned a lot and have the scars to prove it. Having real time visibility of your partner''s inventory as well as their rep as they are assembling things is a global understanding of how things are coming together all the way down to Tier 3 and 4. IT visibility, like we had on the engineering side and so there is some learning there for us. We are already doing it differently. Whether Airbus chooses to learn from that or not is something that, then at last they will be confronted with similar challenges and they know it will not be easy.

Dominic Gates: There is a change to the 747-8 program. the change to the wing was effectively a new wing and put a total price tag of 747-8 development of somewhere between 3 and $4 billion. Is the characterization of more or less the whole new wing accurate and what about that price tag?

Jim McNerney: The wing was an issue we had to wrestle through. There was some redesign that had to happen there, it took us longer than we thought, but we are largely through it. We feel comfortable with it and it did explain a lot of the non-recurring pressure that we had particularly last year.

Dominic Gates: Is that increasing the cost to about the levels of 3 to $4 billion?

Jim McNerney: It cost more than we thought it was going in, but we remain comfortable that this will be a profitable program and the business case remains strong.

Mike Mecham: Is there any thinking about a development effort on 777 to position against the A350 or are you confident that what you have got definitive 300-ER?

Jim McNerney: The A350-1000 as it comes together as Airbus has characterized it in terms of its performance would put some pressure on our longer range 777 fleet and we would have to answer the question what we would do about it. It is a wide issue. The driver is what were the real performance of the A350-1000 be and since that will not be introduced until 16ish, it is introduced after the 800 and 900, we have plenty of time to make the decision on what modification might be needed if the performance does threaten the bottom of our long range part of our 777 fleet. Given the order rates that we continue to have on 777s, I do not think the marketplace is all worried about it yet, but it will be an issue we have to address.

Mike Mecham: Is it possible you might address these issues before you address an issue on replacing 737?

Jim McNerney: It is possible and it is also possible there could be some overlap as we address both. We are asking the questions independently because there are two different market segments, but yes, you could paint a scenario where some work on the 777 would be done before the majority of the work on the next generation 37 but we do not know yet either.

Suzanne O''Halloran: You mentioned company-wide part gains in your release. Could you give some examples?

Jim McNerney: The productivity gains are across the board in our productions programs. If you looked at both on IDS and on commercial airplanes, you look at the 737 the 777 and you look at F-18, F-15, C-17 you would see good year-over-year productivity on all of our major product lines. It is an article to face each year that we will make progress there.

Suzanne O''Halloran: Your commercial plane deliveries will be flat next year, if you strip out the 787. Does that mean you have already achieved all the productivity gains with this delivery last quarter?

Jim McNerney: No. The example I would cite there is our Edward facility. There are productivity efforts that are just gaining maturity up there on the 777 in particular and on the 747 that will produce significant productivity for us even at rate. There is still productivity approvals year-over-year planned for renting as well.