Boeing Co. (BA) shares saw their most significant single-day surge in over seven weeks, climbing over 6% on Wednesday.
The boost followed Chief Financial Officer Brian West’s comments at the Bank of America Global Industrials Conference, suggesting the company’s cash outflows could be significantly smaller than previously anticipated.
West highlighted that cash burn in the first quarter could be reduced by “hundreds of millions” of dollars due to stabilized factory operations and progress in clearing inventory. Production rates of Boeing’s cash-generating 737 Max are on track, with the company targeting 38 planes per month. Additionally, production of the 787 Dreamliner has reached a consistent five units per month, with further increases expected.
Recovery Amid Challenges
Boeing has faced a challenging period marked by regulatory scrutiny, production delays, and safety concerns. Following a near-catastrophic incident in early 2024, regulators imposed strict production limits on the 737 Max. However, the company’s recent operational progress has provided a positive signal to investors.
A shadow factory established to upgrade undelivered 737 Max aircraft is expected to be phased out this summer as deliveries increase. Similarly, Boeing has ceased the use of a dedicated inspection bay for the 787 Dreamliner, underscoring confidence in its quality improvements.
Despite lingering issues, including a one-time expense of $150 million that will weigh on first-quarter earnings per share, the company’s financial performance is largely in line with expectations. Boeing delivered 89 aircraft in January and February, representing a 65% increase compared to the same period last year.
Investor Caution Remains
While Boeing’s recent surge reflects growing optimism, some analysts remain cautious. The company burned through over $14.3 billion in cash last year and is expected to report another quarter of negative free cash flow. Analysts project Boeing will burn around $3.9 billion in cash this quarter, with expectations of a return to positive cash generation later in the year.
Furthermore, external risks persist. Boeing could face headwinds from new tariffs and trade tensions, though West indicated the company’s reliance on domestic suppliers provides some insulation. Notably, 80% of its commercial spending and 90% of its defense spending are sourced within the U.S.
Despite the rally, Boeing’s market cap of $130 billion and elevated price-to-earnings ratios suggest it may not yet be a compelling buy for new investors. Analysts will closely monitor Boeing’s ability to sustain production targets, control costs, and generate positive cash flow in the coming quarters.
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