Stephanie PopeThank you, and good morning. Welcome to Boeing's first quarter 2012 earnings call. I am Stephanie Pope, and with me today are Jim McNerney, Boeing's Chairman, President and Chief Executive Officer; and Greg Smith, Boeing's Chief Financial Officer. After comments by Jim and Greg, we will take your questions. In fairness to others on the call, we ask that you please limit your questions to one. As always, we have provided detailed financial information in our press release issued earlier today. As a reminder, you can follow today's broadcast and slide presentation through our website at boeing.com. Before we begin, I need to remind you that any projections and goals we may include in our discussion this morning are likely to involve risks, which are detailed in our news release and our various SEC filings and in the forward-looking disclaimers at the end of this webcast presentation. Now I will turn the call over to Jim McNerney. W. James McNerney Thank you, Stephanie, and good morning, everybody. Let me start today by addressing the evolving business environment, followed by some thoughts on our performance during the quarter. After that, Greg will walk through our financial results and outlook and then we'll take your questions. Starting with the business environment on Slide 2. As the global economy continues to recover, albeit at a slow and somewhat choppy pace, airline industry fundamentals remain intact. Global demand for commercial airplanes is strong and growing. Emerging markets are driving the expansion of airline fleets worldwide, growth that is complemented by the ongoing retirement and replacement cycles for airplanes in developed markets. Passenger air traffic remains resilient with airline load factors and utilization rates continuing at or above peak levels. Although cargo traffic remains below long-term trends, it appears that this market is stabilizing and is projected to improve in the second half of the year.
Despite the ebbs and flows of the Eurozone debt crisis, we foresee aircraft financing as broadly adequate throughout 2012. Boeing airplanes are attractive, value-creating assets and sources of financing for them remain broad and diverse.The high cost of jet fuel remains a key concern for our customers and has them focused more than ever on ensuring that they have the most fuel-efficient airplanes with which to compete, a dynamic reflected in our solid first quarter order total. The combination of strong market demand and our customer preferred portfolio of products and services that delivers superior fuel and operational performance positions us exceptionally well for the future. Delivering our record backlog faster to speed the flow of new airplanes to customers and open additional positions for sale remains a priority. Production rate increases planned over the next 3 years will increase our output by more than 40% in support of these objectives. While damage from the recent severe weather in Wichita has not had a significant impact on our operations at our facility there, we are working closely with our major supplier partners, Spirit, as they continue to manage the challenges of their stressed infrastructure. We will continue to assess this evolving situation. However, we believe the impacts to be manageable. Turning to Defense, Space & Security. Defining U.S. defense -- declining U.S. defense budget and shifting program priorities continue to pressure domestic markets. We were generally pleased with how Boeing programs fared in the President's fiscal year 2013 budget request, which contained strong support for the majority of our programs, including the F/A 18, P-8A, Chinook, Apache and Osprey. We also see clear alignment in the proposed budget and the Defense Department's new strategic guidance with several of our targeted growth areas, including space, unmanned, ISR and cyber security. We have been anticipating and preparing for a declining defense environment for several years. While the potential for sequestration has created additional uncertainty, we believe we are well positioned for continued success with our portfolio of proven, affordable and reliable systems and services, our focus on innovation and strong execution across our programs and our relentless effort to maximize efficiencies and reduce infrastructure costs. Read the rest of this transcript for free on seekingalpha.com