Thank you and good morning. Welcome to Boeing's quarterly earnings call. With me today are Kelly Ortberg, Boeing's President and Chief Executive Officer, and Jay Malave, Boeing's Executive Vice President and Chief Financial Officer. This quarter's webcast, earnings release, and presentation, which include relevant disclosures and non-GAAP reconciliations, are available on our website. Today's discussion includes forward-looking statements that are subject to risks and uncertainties, including the ones described in our SEC filings. As always, we will leave time at the end of the call for analyst questions. With that, I will turn the call over to Kelly Ortberg.
Thank you, Erik, and good morning, everyone. Thanks for joining in today's call. As we reflect on our first quarter performance today, we're off to a really good start and headed in the right direction. We remain on plan and are building momentum from solid performance across all three of our businesses. Our Commercial Airplanes team continues to integrate our safety and quality plan into its operations, which has enabled us to increase production rates and deliver high-quality airplanes to customers around the world. Our Defense and Space team continues to stabilize operations, and after two years of hard work and development, we're starting to achieve inspiring milestones, like the recent Artemis II launch that carried NASA astronauts to space on the Boeing-built core stage rocket.
The launch and landing were truly profound moments as humans reached farther into space than ever before and serves as a great reminder of what Boeing, our industry partners, and our country can do. In Boeing Global Services, our team is off to a strong start, adding further orders to its record backlog, meeting customer demand, and continuing to deliver solid operating results. While we are seeing some regional instability as a function of the Iran war, we remain confident in the long-term future of our industry. Aviation has seen moments like this before, whether it be recession, pandemic, or conflict. The resilience of our industry has always led to a recovery and return to growth trends. Our market remains robust, and the Boeing portfolio of versatile, fuel-efficient airplanes, defense platforms, and services is built for the dynamic environment of our time.
So far, we have not seen any impact on our airplane deliveries. As always, we stay close to our commercial customers if they make adjustments to their plans, in which case I think the strength and diversity of our backlog gives us a lot of flexibility. I should note, we're already seeing higher demand in our defense business given the increased operational tempo, which over time will be a good offset to any potential commercial MRO weakness that results from these higher fuel prices. We are confident in our business, customers, and markets, and our team remains squarely focused on safety and quality, disciplined execution, and elevating operational performance so we can profitably deliver on our record backlog of nearly $700 billion. As I mentioned last quarter, one of the biggest focus areas for our team in 2026 is completing the certification work on our development programs.
This is where I'll spend a few moments before discussing our first quarter accomplishments. In BCA, we continue to move forward on certification work for the 737-7 and the 737-10. In the quarter, we began the final phases of the certification and flight tests for the 737-10, which includes auto-throttle, autopilot, enhanced angle of attack, as well as engine anti-ice solution. We're pleased with the progress so far and remain on plan for the newest members of the 737 MAX family to be certified later this year, with deliveries expected to start in 2027. On the 777-9, we continue to advance our certification testing. Last month, we received approval from the FAA for the next phase of testing called TIA 4A. While it's a smaller package focused on natural ice testing, it's an important step in moving this development program forward.
You'll recall last quarter we discussed a potential durability issue on the 777X engine that was discovered during an inspection. Since then, we've worked closely with our supplier. As they've said yesterday, they believe they have identified root cause, and they're working on finalizing their modification. We are working together with the supplier and the FAA to fold this into our certification plan, and we remain on track for schedule of first delivery in 2027. In the quarter, we also achieved an important milestone on the 787 program. We obtained FAA certification for an increased maximum takeoff weight for the 787-9 and the 787-10, enabling those models to fly further or carry more cargo, creating additional value and revenue-generating opportunities for our 787 operators. In BDS, work to reduce risk across our development programs using active management is leading to win-win outcomes for our customers and Boeing.
This means we're proactively working challenging programs by looking more closely at risk, requirements, schedules, and customer needs. Combined with stronger focus on program management rigor, we're seeing good progress here. For example, on KC-46 Tanker, we recently approached our best ever factory performance, going back to pre-pandemic levels of productivity, and we remain on track this year to deliver the most tanker aircraft since 2019. We also achieved an important milestone on MQ-25 with completion of high-speed taxi tests, and the first flight is imminent. The Stingray is our first unmanned aerial refueler for the U.S. Navy. We are now one step closer to providing this first-of-its-kind capability to further enable the U.S. to project power worldwide. Overall, I'm pleased with the progress our BDS development programs are making, and there are no major EAC adjustments. Let's turn now to the first quarter accomplishments.
As we start the year, we continue to drive stable operations across our factories, enabled by a focus on safety, quality, and performance. Our team is more engaged in embracing our values and behaviors, which we first shared with our team around this time last year. That increased commitment is helping drive process improvement ideas. As an example, I just reviewed one from Renton where the team developed a new drill jig, resulting in more than 30% reduction in defects per 737 wing tip. In BCA, Stephanie and her team are methodically increasing production rates across our key commercial programs. The 737 program has stabilized at a rate of 42 airplanes per month, and in the quarter, we also delivered the final 737 MAX from storage. As previously discussed, some first quarter 737 deliveries slid into the second quarter due to a recent nonconformance finding on aircraft wiring.
As part of our root cause corrective action process, we fully understand the issue, and we have reworked all of the 25 airplanes affected, and most of these have already been delivered. Importantly, this is evidence of our safety management system working to identify issues early and drive continuous improvement and avoid these issues in the future. To be clear, the wiring issue will not affect our full-year delivery goals or plans to increase production to 47 per month this summer. We believe our internal and external supply chains are well-positioned for this next rate increase. To support further planned rate ramps above 47 per month, we are readying the new Everett North Line. I recently walked the factory, where I saw construction complete and tooling in place. Our teams setting up the line are eager to get started, and we started hiring and training.
Employees for the North Line will complete structured on-the-job training, which will pair new mechanics with experienced teammates from our existing Renton line. On the 787 program, we did see some impact to deliveries in the quarter due to delays of premium seat certifications, but we still expect to meet our full-year delivery range of 90-100 airplanes. We're staying close to our customers, suppliers, and regulators to work through these seating issues, and Jay will talk a little bit more about the actions we're taking to better manage these impacts going forward. On production, the program continues to stabilize at eight per month as we work through selected supply chain delays, including interiors and engines. Overall, the factory is performing well, and the program continues preparations to increase production to 10 airplanes per month later this year.
Like the 737 program, the 787 team will use the same disciplined process guided by our safety and quality plan with data from the six key performance indicators to assess readiness ahead of planned rate increases. Turning now to BDS, where our defense platforms are providing unique value and capability to our customers, particularly in the current threat environment. Over the past two months, we've seen much of our defense portfolio support key missions in theater. For example, the AH-64 Apache has proven its potent anti-drone capabilities, and the Patriot Advanced Capability-3 interceptor with its Boeing-built seeker has intercepted ballistic missiles and drones threatening civilians and military forces. Boeing systems remain central to air superiority, precision strikes, and electronic warfare, while long-range strike and airborne command and control extend reach and situational awareness.
Our aerial refueling, reconnaissance, and strategic airlift sustain high-tempo operations, and we're proud that our Combat Survivor Evader Locator system and the Little Bird helicopter played a key part in the heroic mission that safely returned downed pilots. We continue to make investments in our people and facilities to meet the evolving need of the United States and our allies. Those investments help secure wins like the recently announced agreement to expand PAC-3 seeker production in our Huntsville factory. The framework agreement with the Department of Defense enables a massive increase in the supply of seekers needed to expand the protection provided by the world's most advanced air-defense system.
The current demand environment for defense extends into services as well, and BGS has had several notable wins, including Boeing Defence UK largest ever maintenance and support contract for the UK's Rotary Wing Enterprise, which was announced last week. Our global services team also signed the largest landing gear exchange contract in Boeing's history with Singapore Airlines. That agreement will provide landing gear exchanges for more than 75 airplanes across Singapore's 737 MAX and 787 fleets. With these recent program wins and operational improvements in all of our segments, we're well on our way to fully putting the recovery behind us. Before I wrap up my prepared remarks, I want to thank all of our employees for delivering another quarter of improved performance as we continue to turn the corner.
Thanks, Kelly, and good morning, everyone. As Kelly mentioned, a good start to the year and a clean quarter. Consolidated revenue was up 14% to $22.2 billion, driven by solid growth across all three segments. Of note, the revenue impacts from last year's Spirit AeroSystems acquisition and Digital Aviation Solutions divestiture largely offset each other in the quarter. Operating margin was 2%, down primarily from lower FAS/CAS pension adjustment as compared to last year, partially offset by higher segment earnings. The core loss per share of $0.20 improved from last year on segment growth and other non-operating earnings improvements. Free cash flow was a usage of $1.5 billion in the quarter, driven by seasonal corporate expenditures in addition to planned CapEx increases as we continue to make progress on our growth investments in St. Louis and Charleston.
The cash flow was notably better than expectations I shared last month, largely driven by the solid recovery from the 737 wiring issue and favorable collection timing late in the quarter. Turning to BCA on the next page. BCA delivered 143 airplanes in the quarter. Revenue of $9.2 billion was up 13%, as Stephanie and her team continuously derive quality improvements while increasing delivery volume. Operating margin of -6.1% improved compared to last year, primarily driven by higher delivery volume and a favorable accounting adjustment, partially offset by the dilutive impact of the Spirit AeroSystems acquisition that we highlighted last quarter. Regarding our customers in the Middle East, as Kelly noted, at this time, we have not seen any requests for delivery deferrals, nor have we encountered material supply chain disruptions that would impact our delivery or production rate plans.
In fact, we delivered four airplanes as planned to customers in that region since the conflict began. That said, we will continue to monitor the situation. Importantly, backlogs continue to grow and remains at an all-time high of $576 billion, including over 6,100 airplanes. Now drilling down to the commercial programs. Starting with the 737 program, where we delivered 114 airplanes in the quarter, which included the final shadow factory airplane built prior to 2023. As Kelly mentioned, we completed the rework on all 25 airplanes impacted by the wiring NOE, and we remain on track to deliver 500 airplanes this year. In the quarter, production stabilized at a rate of 42 per month, and the team drove a nearly 20% reduction in final assembly rework hours as compared to the first quarter of 2025.
We continue to expect a production increase to 47 per month in Renton this summer and will benefit from buffer inventory during this transition. As we discussed previously, production rate increases above 47 per month will be enabled by activating the 737 North Line in Everett. The North Line is expected to begin operations later this year at a low rate of initial production to demonstrate conformity to the FAA that will allow operations under our current production certificate. Following completion of these initial units, we will be led by our safety and quality plan to increase rate to 52 per month when the entire production system is ready. On the 787, we delivered 15 airplanes in the quarter, in line with expectations shared last month, and remain on track to deliver 90-100 airplanes in the year.
Although seat certifications impacted deliveries in the quarter, we are working with the FAA and our customers to address these risks by partnering earlier in the development process and creating contractual off-ramps to avoid delivery delays in the future. In Charleston, the factory's performing well and continuing to make progress at stabilizing the production rate at eight per month. In the quarter, our rework hours improved by more than 25% as compared to the first quarter of 2025. These gains in the factory come even as our stability is being paced by the supply chain, where we don't enjoy the same buffer we have on 737. We are closely working with our suppliers, including forward deploying resources to support their recovery plans. We continue to expect an increase to 10 per month later this year.
Finally, on 777X, Kelly highlighted TIA 4A approval, as well as progress made with GE on a solution for the engine durability issue we highlighted last quarter. During the quarter, we successfully completed flight testing associated with handling qualities, lighting, and stability and control. We remain on track for first delivery in 2027 and continue to focus on managing the production system for increased rates. We also have a dedicated team performing the change incorporation statement of work for built airplanes, which will be completed over a number of years. All right, let's shift over to BDS on the next page. BDS delivered 29 aircraft and one satellite in the quarter. Revenue grew 21% to $7.6 billion, primarily driven by higher volume on KC-46 tanker, missiles and weapons, and classified programs. Spirit contributed approximately $150 million sales in the quarter.
Operating margin increased 60 basis points in the quarter to 3.1% on improving operational performance. BDS booked $9 billion in orders during the quarter, including notable awards to continue E-7 Wedgetail development and additional international demand for KC-46 aircraft. Backlog grew to a record $86 billion. As I mentioned last month, I've continued my reviews of BDS and have come away impressed with the teams leading these programs. I've also generally found reasonable assumptions in our EACs. They're not without risk, and many assume improvements in front of us, but the estimates have a solid basis. On many of these legacy challenge programs, the teams have made excellent progress in retiring risk and moving these programs forward. Steve Parker and team are building on this progress, utilizing active management and increased program management rigor to drive continued gains and improved financial stability.
As Kelly's previously said, you are never done until you are done, but the team has made great progress here. As I also mentioned, a key part of our ongoing reviews of the BDS portfolio is focused on strategy and growth. It's clear to me that our defense portfolio is well-positioned to capture upside from increased operational tempo and rising defense budgets among the U.S. and our allies. We see incremental growth opportunities from our missiles and weapon systems, including PAC-3, Small Diameter Bomb, and JDAMs, as well as exquisite capability offered by platforms such as P-8, F-15EX, and other proven solutions where we are investing to ramp up production. While we pursue additional growth, new opportunities are now subject to tighter underwriting to account for risk and our ability to deliver on our commitments.
This approach, combined with continued operational improvements, supports steady progress towards high single-digit operating margins as we execute against a record $86 billion backlog. Moving into Global Services on the next page. BGS continued to perform well and again delivered strong financial results in the quarter. Revenue was up 6% to $5.4 billion, primarily reflecting increased government volume. Excluding the impact of the Digital Aviation Solutions divestiture, revenue was up 13%. Operating margin of 18.1% was down from prior year, primarily related to the impact of the Digital Aviation Solutions divestiture and less favorable mix. Both commercial and government businesses delivered double-digit margins in the quarter. Also in the quarter, BGS received FAA and EASA qualification for 777-9 training devices, an important step forward in support of the airplane's entry into service next year. Chris Raymond and the BGS team remain focused on continuous improvement.
For example, the business has implemented automation and AI to reduce proposal cycle time by approximately 25% year-to-date, enabling faster response times to our customers. BGS received $8 billion of orders for a book-to-bill of 1.6 in the quarter, led by a strong intake from its government business. BGS ended the quarter with record backlog now at $33 billion and remains a high-performing business focused on profitable, capital-efficient service offerings and continues to execute very well. Okay, let's shift over to cash and debt. Cash and marketable securities ended at $20.9 billion, primarily reflecting debt repayments and free cash flow usage in the quarter. Debt balance ended at $47.2 billion, down $6.9 billion in the quarter on the pay-down of maturing debt, consistent with our debt reduction plans. There are $1.4 billion of maturities left in the year.
We also maintain access to credit facilities of $10 billion, all of which remain undrawn, and we remain committed to strengthening the balance sheet and supporting our investment-grade rating. Regarding our cash flow outlook, we continue to expect positive free cash flow of $1 billion-$3 billion this year, aligned with the expectations I shared last quarter. As I said previously, we benefited from order timing in the first quarter. We expect second quarter free cash flow to improve, with the second half of the year turning positive. Of note, we assume the expected DOJ payment to occur in the second half of the year. Beyond 2026, and consistent with what we've discussed previously, cash flow is expected to grow primarily driven by higher commercial deliveries, steady performance improvements at BDS, and continued growth at BGS.
We continue to view the $10 billion free cash flow figure as very attainable, with significant growth beyond that into the next decade as we execute on our record backlog and benefit from continued strong market demands. Okay, let's sum it all up. A good start to the year as we continue to build on the momentum from 2025, and we're focused on steadily elevating our performance in 2026 to deliver on the long-term potential of this business. With that, let's open up the call for questions.