Mark Suchinski: Yes. Sheila, good morning. I think the thing that I would add is the quality issue, the vertical fin, the work stoppage, that caused significant disruption to us. Significant, right? And it was obviously not planned at the start of the year, much lower deliveries in the second quarter. We’ve had to add more people. We’ve — we’re taking deliveries out of the plan. It had serious impacts to the overall cash flow projection for the year. And as we move into 2024, we move past the work stoppage. We moved — as Tom said, we moved past the quality issue. It’s all about execution. It’s about stabilizing supply chain and producing on time in our factories and meeting our delivery commitments on time, right? And so the positive cash flow is all 100% based on the further stabilization of supply chain and meeting our production commitments internally.
And if we can go do that, we’ll see a significant improvement in overall free cash flow and that’s what we have to do. Operationally, we’ve got to execute. We’ve got to execute better, and that will lead with the higher production rates to much better profitability and cash flow.
Sheila Kahyaoglu: So, how does that change just like your free cash flow margin per aircraft on the MAX? Like if it was close to 20% before, does it lower at 500 bps? So, I’m thinking like instead of $1.2 million per MAX, you’re down to $1 million with all these changes?
Mark Suchinski: Well, I’d say this, Sheila. I mean, we tried to be really, really granular as it relates to the IAM impact. And I would tell you, when you think about, as you just said, the cash per unit, the biggest driver as we look forward on the 737 is the impacts of the IAM contract. You know that it’s over 50% of our revenues as a company but much higher than that as it relates to Wichita. And so I think that you can put some math to the negative impacts or the higher cost and the pressure that’s going to put on our overall business and a big portion of that is going to hit the 737.
Tom Gentile: And Sheila, the way I would also say it is as we’ve said before, is you always have to run fast in this industry to stand still. We’re always facing pressures. We knew the IAM contract was going to create additional financial pressure, and it did and we need to continue to work to mitigate that through our productivity initiatives.
Sheila Kahyaoglu: Great. Thank you.
Tom Gentile: Thanks Sheila.
Operator: Our next question comes from Doug Harned of Bernstein. Doug, please go ahead.
Doug Harned: Thank you. Good morning. I wanted to go over to the wide-bodies. And when you look at the 787 and the A350 and can you tell us what the rates are you’re at now? And when you look forward, you have Airbus standing by, producing nine a month at the end of 2025, Boeing on the 787, 10 a month in 2025, 2026. Where are you now? And how do you get to those high numbers?
Tom Gentile: Right. Well, as it sits right now, Doug, both on 87 and 350, we’re really at about five per month right now in terms of what we’re delivering at. And so as I mentioned in my remarks, we’re going to deliver between 40 and 45 87s this year and about 60 or so A350s. But the rate right now on both programs is about 5. Now, Boeing has said they’re going to go up to high as 10 at the end of 2024. And Airbus has said, I think high as nine in 2025, which would include some freighters. And so the way we get up to those rates — we have already the capital because we’ve been up as high as 14 on 787. Now, there is some more pressure on the build process because things have changed, the fitting finish issue on 787 and the pull-up force, it has resulted in some change in the build process, which puts some pressure on it.
But we have a lot of the capital and tooling to get up to 14. And so it’s really a question of adding the headcount and making sure we adjust and take into account some of the changes in the build process. And that’s how it will happen on 787. On A350, we’re capitalized for 13 aircraft per month, and we’ve been as high as 10. And so obviously, we’re at a much lower rate right now. There’s some differences there in terms of build process as well, but it’s really a question of hiring the people in our Kinston plant and our Saint-Nazaire plant to increase the rates to what Airbus is expecting. The other thing I would say, though, is the freighter, which is in development right now is going to be a substantially different aircraft. I mean it’s a derivative, but there’s a lot of changes to it.