Boeing (BA) : June 2025

Company Overview

The Boeing Company (NYSE: BA) is one of the world’s largest aerospace firms. It operates through three primary divisions: Boeing Commercial Airplanes (BCA), which designs and builds passenger jets (from the single-aisle 737 MAX up to the 787 Dreamliner and 777X widebody); Boeing Defence, Space & Security (BDS), which produces military aircraft, missiles, and space systems; and Boeing Global Services (BGS), which provides aviation services including maintenance, spare parts, training and logistics support. Boeing’s commercial business historically generated the majority of revenue, while BDS makes Boeing a major defence contractor. The company is headquartered in Arlington, Virginia, and serves customers worldwide, ranging from airlines and lessors to the US Department of Defence and NASA. In the space domain, Boeing is a key contractor for projects like NASA’s Space Launch System rocket and the Starliner crew capsule program. Overall, Boeing’s broad portfolio across commercial aviation, defence, and space provides diversified revenue streams, though the commercial jetliner business remains its core economic engine.

Positives of Investing in Boeing

• Robust Aerospace Demand & Backlog: Global air travel is in a strong post-pandemic recovery phase, driving vigorous demand for new aircraft. In fact, global passenger traffic is projected to surpass 10 billion passengers in 2025 (up 6% vs 2024 and 16% above 2019 levels). Airlines are rushing to expand and modernise their fleets, resulting in Boeing’s order books being effectively full for years. Boeing’s backlog stood at over $545 billion in value (more than 5,600 aircraft) as of Q1 2025 - an industry-leading order pipeline. At current production rates, this equates to roughly a decade or more of output. Notably, the commercial aircraft backlog is valued at around $460 billion for over 5,600 jets, including large recent orders. This enormous backlog provides great revenue visibility; even if Boeing did not win a single new order, it could still sustain production for many years. It also reflects confidence from airline customers in the long-term need for Boeing’s products. Furthermore, aerospace lessors and airlines are finding that new production slots are scarce – recent analysis suggests that new narrowbody delivery slots may stretch into the 2030s (and even 2040s) unless production. This supply-demand imbalance favours manufacturers like Boeing, enabling potential pricing power on aircraft and a long runway for growth once production issues are ironed out.

• Recovering Commercial Aircraft Business: Boeing’s commercial division is showing clear signs of turnaround from its recent crises. Aircraft deliveries are ramping up strongly as Boeing overcomes past grounding and manufacturing setbacks. In the first quarter of 2025, BCA delivered 130 jetliners – a 57% increase from 83 deliveries in Q1 2024, driving a 75% surge in commercial aeroplanes revenue. This uptick indicates that Boeing is clearing stored inventory (such as undelivered 737 MAX jets) and that its factories are increasing output again. The workhorse 737 MAX production rate is on track to reach about 38 per month by late 2025, and Boeing aims to continue rising beyond that when regulators allow (the CEO has targeted 42 per month by end-2025). Meanwhile, order intake remains healthy: Boeing received 221 net orders in Q1 2025 alone, including major deals like 50 new 737-8s for BOC Aviation and 20 787-10s for Korean Air. With air travel rebounding, airlines are placing new orders to secure future deliveries, adding to Boeing’s backlog. Overall, the commercial aerospace cycle is in an upswing – higher airline profits and traffic are translating into robust demand for Boeing’s newest fuel-efficient models (such as the 737 MAX family and 787). This cyclical recovery bodes well for Boeing’s revenue growth in the coming years as production catches up to order demand.

  
  

• Innovation and Product Development: Boeing continues to invest in new aerospace technology, which can sustain its competitive edge. The company is finalising development of the 777X, a next-generation widebody jet featuring advanced carbon-fibre composite wings and new, efficient engines. After several delays, the 777X program resumed FAA test flights in 2025, with the first 777-9 delivery now targeted for 2026. Once in service, the 777X should strengthen Boeing’s position in the lucrative long-haul widebody segment (as a successor to the 777 and 747 for large aircraft needs). Boeing is also a partner on cutting-edge projects in space: for example, it is the prime contractor for NASA’s Space Launch System core stage (integral to future lunar missions) and is developing the CST-100 Starliner spacecraft to transport crews to the International Space Station. These projects, while challenging, position Boeing for potential growth in the space exploration and satellite launch markets. Additionally, Boeing and NASA have been collaborating on sustainable aviation concepts (such as the Transonic Truss-Braced Wing demonstrator for next-generation ultra-efficient aircraft) to ensure Boeing remains at the forefront of aerospace innovation. Such R&D efforts, along with a portfolio refresh (e.g. potential future new single-aisle aircraft later in the decade), can drive long-term value. Importantly, Boeing’s strong engineering heritage and intellectual property serve as high barriers to entry in its markets.

• Long-Term Market Outlook: The fundamental long-term outlook for aerospace remains positive. Boeing’s own 2024 Commercial Market Outlook projects demand for nearly 44,000 new aeroplanes globally from 2024 to 2043, driven by a 3.2% annual growth in the world fleet. The rising middle class and air travel demand in emerging markets (especially the Asia-Pacific region) are expected to fuel decades of growth. This translates into a total market value of trillions of dollars for new aircraft and services. Boeing, as one of only two dominant jet makers, is well positioned to capture a large share of this growth. Additionally, Boeing’s recent management changes and focus on safety/quality improvements may gradually rebuild its brand reputation, enabling it to capitalise fully on the industry upcycle. CEO Kelly Ortberg (appointed late 2024) has emphasised “making the fundamental changes needed to fully recover the company’s performance and restore trust” – a positive sign that lessons have been learned and operational execution is improving.

Risks and Challenges

Despite Boeing’s strengths, investors face several significant risks and challenges:

Fallout from the June 2025 Air India Crash: A recent tragedy has put Boeing under fresh scrutiny. In June 2025, an Air India Boeing 787-8 Dreamliner crashed shortly after take-off in Ahmedabad, killing over 240 people on board. This disaster – the world’s worst aviation accident in a decade – is the first ever fatal crash involving the 787, a model previously known for a strong safety. Early indications suggest no obvious manufacturing fault (investigators have not identified a design issue at this stage), but the public relations impact is nonetheless a concern. The crash has refocused attention on Boeing’s safety practices and could erode passenger and customer confidence just as Boeing was trying to regain trust. It is a test for Boeing’s new leadership, which was heading into the Paris Air Show 2025 hoping to highlight Boeing’s recovery. Instead, they had to address difficult questions about safety. Boeing’s stock dropped 4% in the immediate aftermath of the crash, reflecting investor jitters about potential implications. While U.S. regulators said they saw no immediate reason to ground the 787, the incident may still lead to heightened regulatory scrutiny and inspections until a cause is found. There is also the risk of litigation or compensation costs if Boeing is found partly liable. More broadly, this crash underscores that any major accident can have outsized effects on an aerospace company’s reputation and order flow. Boeing must now work hard to reassure airlines and the flying public that its products remain safe. Another serious accident in the near term would compound these reputational challenges significantly.

• Aircraft Quality and Safety Concerns: Boeing is still rebuilding its reputation after the 737 MAX crisis and other quality control issues. The 737 MAX, one of Boeing’s most important models, was grounded worldwide for nearly two years following two fatal crashes in 2018 and 2019. Investigations revealed design and oversight lapses (notably with the MCAS software), leading to intense scrutiny of Boeing’s engineering culture and FAA certification process. Even after the MAX was cleared to fly again in late 2020, Boeing has faced years of scrutiny and production delays for this jet. The corporate trauma from these events is still fresh – Boeing’s brand was ranked a dismal 88th out of 100 in a 2024 Axios Harris poll for reputation. Moreover, quality problems have not been limited to the MAX. Boeing’s manufacturing has hit snags on other programs: for example, production of the 787 Dreamliner was halted for long stretches in 2020-2021 due to manufacturing defects (gap tolerances in the carbon fibre fuselage) that required rework, delaying deliveries. In January 2024, a highly publicised in-flight incident occurred on a new Alaska Airlines 737 MAX 9 when a cabin door plug blew off mid-flight, forcing an emergency landing. While no one was hurt, this shocking failure on a brand-new jet further damaged Boeing’s credibility. The fallout was severe – it prompted the resignation of then-CEO Dave Calhoun and several other top executives. All of these issues highlight systemic lapses in Boeing’s quality assurance and safety processes in recent years. The risk for investors is that such issues might recur or take a long time to fully resolve. Each time Boeing discovers a manufacturing flaw (be it faulty fuselage joins, engine supply issues, or software glitches), it can lead to costly fixes, delivery pauses, and customer dissatisfaction. It also invites stricter oversight: Boeing had to allow the FAA unprecedented on-site oversight of 787 production and has lost some authority to self-certify aircraft. Restoring a safety-first culture is an ongoing challenge – any backsliding could result in further crises or regulatory penalties.

• Regulatory and Legal Scrutiny: In the wake of the 737 MAX crashes, regulators (especially the U.S. FAA) have adopted a far more cautious and hands-on stance with Boeing. This creates a risk that certifications of new aircraft and even routine production expansions face delays. For instance, Boeing’s plan to eventually ramp 737 MAX output above 38 per month is contingent on satisfying regulators that production quality can be maintained - Boeing’s CEO noted that the MAX’s production rate is effectively “capped” at 38 per month by regulators until certain conditions are met. Such external limits can constrain Boeing’s ability to meet demand in the short term. The forthcoming 777X jet has also seen its certification timeline pushed out – the FAA has demanded design modifications and more exhaustive testing, now delaying first delivery to 2026. While a rigorous regulatory environment is ultimately aimed at ensuring safety (a positive for the public), it does introduce added compliance costs and timing uncertainty for Boeing. In addition, legal exposure remains a concern. Boeing has settled numerous lawsuits and paid penalties (over $2.5 billion in fines and compensation related to the MAX crashes), and it still faces some ongoing civil suits and possibly shareholder litigation alleging management failures. Any new safety incident could quickly lead to lawmakers, regulators, or courts cracking down further on Boeing. The scrutiny on manufacturing and quality procedures is higher than ever, which, while necessary, may result in production slowdowns or required investments in process improvements. In short, Boeing operates under a microscope – an environment in which even minor missteps can become major news, and regulatory compliance must be managed diligently.

• Supply Chain Constraints and Production Challenges: Like the rest of the aerospace industry, Boeing is grappling with a fragile supply chain and logistics bottlenecks. Many aircraft parts suppliers were weakened by the pandemic downturn and have struggled to scale up production as demand rebounded. Shortages of skilled labour and critical components (from engines to avionics to raw materials) have caused delays in aircraft production across both Boeing and Airbus. A recent example is a shortage of specialised fasteners (nuts and bolts) needed for the 737 MAX: in February 2025, a fire at a key sub-supplier (SPS Technologies in Pennsylvania) disrupted the supply of certain custom fasteners used to attach 737 landing gear. Boeing had to urgently find alternate sources at a higher cost to avoid a line shutdown. Such incidents illustrate the vulnerability of the supply chain – a single factory accident or bottleneck at a small supplier can threaten Boeing’s output. Furthermore, Boeing’s workforce and labour relations have seen turbulence. In the second half of 2024, unionised machinists at Boeing’s Washington state plants went on a seven-week strike, halting production of critical aircraft and components. This contributed to delivery shortfalls (e.g. no KC-46 tankers delivered in Q4 2024 during the strike) and significant financial losses on certain contracts. There is a risk of future labour disruptions or simply difficulty hiring enough skilled workers as Boeing tries to increase production rates – a nationwide shortage of aerospace manufacturing talent has been noted by industry surveys. Additionally, Boeing’s internal production systems have to catch up after years of interruptions: re-integrating the supply chain, managing parts quality issues (such as occasional fuselage section misalignments on the 737 MAX that required rework in 2023), and coordinating with engine makers who themselves are behind on deliveries (CFM, the 737 engine supplier, has had its own delays). All these factors mean Boeing could struggle to hit its ambitious production targets. If Boeing cannot deliver aeroplanes on time, it delays cash inflows and could frustrate customers (potentially risking future orders). It may also incur extra costs (overtime, supplier expediting fees, etc.) to resolve bottlenecks. The bottom line is that smoothing out production is one of Boeing’s biggest execution challenges going forward – and until the global aerospace supply chain stabilises, this remains a risk to financial performance.

Financial Performance (Latest Results)

Boeing’s recent financial results reflect a company in the early stages of recovery, with improving revenues and narrowing losses, yet still facing cash outflows. In Q1 2025, Boeing generated $19.5 billion in revenue, an 18% increase year-on-year (up from $16.6 billion in Q1 2024). This growth was driven primarily by the jump in commercial aeroplane deliveries mentioned earlier. Importantly, Boeing returned to overall operating profitability: it recorded an operating profit of $461 million for the quarter (a 2.4% operating margin), compared to a small loss in the prior-year quarter. Net income was approximately -$31 million – essentially break-even, which is a vast improvement from the $355 million net loss in Q1 2024. The fact that Boeing is near profitability again is a positive sign after the heavy losses of the past few years. (For context, Boeing lost $11.8 billion in 2024 due to low deliveries and exceptional charges, so the trajectory in 2025 is much better.)

Cash flow, however, remained negative in early 2025. Operating cash flow was -$1.6 billion, and free cash flow (FCF) was - $2.3 billion in Q1 2025. The cash burn is largely due to working capital swings – Boeing has been ramping up production (which consumes cash for inventory) and also still delivering some previously built jets for which payments were largely collected in prior periods. Boeing expects cash generation to improve over the course of 2025 as deliveries accelerate (historically, Boeing gets a large final payment at delivery). Indeed, the company maintained its full-year outlook that it will achieve positive free cash flow for 2025. Boeing’s backlog continued to grow, reaching $545 billion in total by the end of Q1 (across all divisions). This includes over 5,600 commercial aeroplanes not yet delivered – a slight increase from the end of 2024, indicating that new orders exceeded deliveries in the quarter. Such backlog growth underscores strong demand and bodes well for future revenue as those orders turn into deliveries.

Looking at segment performance in Q1 2025, The Commercial Aeroplanes (BCA) division saw revenue of $8.16 billion, up a remarkable 75% from $4.65 billion a year earlier. This was thanks to 130 deliveries (vs 83 in Q1 2024), including higher 737 MAX output and resumed 787 deliveries. Despite the revenue jump, BCA still posted an operating loss of $537 million in the quarter. The loss reflects the high production costs and inefficiencies of operating below capacity – Boeing is still not at “normalised” production rates and is incurring abnormal costs (such as extra labour for rework and supplier catch-up). As production volume continues to rise through 2025-2026, the expectation is that unit costs will come down and BCA will return to profitability, but Q1 shows it’s not there yet.

The Defence, Space & Security (BDS) division had Q1 revenue of $6.3 billion, a 9% year-on-year decline (partly due to fewer KC-46 tanker deliveries during the prior strike). However, BDS managed to eke out a small profit: the operating margin was 2.5%, implying an operating profit on the order of $150 million. This is an improvement, considering BDS was deeply in the red in 2024. The margin uptick suggests stabilising performance – Boeing has been working to restructure or absorb charges on troubled defence programs. Notably, the BDS backlog was $62 billion (with 29% from international customers) as of Q1, providing a multi-year defence revenue runway. Finally, Global Services (BGS) generated Q1 revenue of $5.1 billion (roughly flat year-on-year). Services continued to be the profit engine of Boeing, with an operating profit of $943 million, a robust 18.6% margin. This reflects strong demand for spare parts, modifications, and support as airlines bring aircraft back into service. BGS's profitability helps offset weakness in manufacturing segments.

Boeing’s overall financial position remains stretched but is gradually healing. The company ended Q1 2025 with $23.7 billion in cash and marketable securities on hand. Debt stood at $53.6 billion, only slightly down from $53.9 billion at 2024 year-end (Boeing repaid a small amount of maturing debt). This leaves substantial net debt ($30 billion). Boeing’s debt levels are high relative to its current earnings, but the company has maintained access to liquidity and its debt maturities are staggered over a long period. Interest expense is manageable in the low hundreds of millions per quarter. The key to de-leveraging will be returning to consistent free cash flow generation, which Boeing anticipates in 2025 and beyond as deliveries ramp up. Boeing’s credit rating has been downgraded since the MAX crisis (to the BBB/Baa range), so further balance sheet strengthening would be welcome. In terms of capital expenditure, Boeing is keeping capex relatively low (approximately $1.5 billion per year) given it is not launching major new development programs at the moment. R&D spending is focused on incremental improvements and safety enhancements. Shareholder dividends remain suspended (since 2020) and are unlikely to be restored until Boeing’s cash flows and balance sheet improve sufficiently, probably by 2026 in many analysts’ view. Overall, the Q1 2025 results show Boeing on a positive trajectory – revenue is rebounding, losses are shrinking, and backlogs are growing – but also highlight that full recovery is not instantaneous, with challenges like negative cash flow and segment losses still present in the short term. Investors will be watching the upcoming quarters for continued progress on profitability and cash generation as Boeing works through its backlog.

10-Year Discounted Cash Flow (DCF) Valuation

To estimate Boeing’s intrinsic value, we perform a 10-year DCF analysis. We project financials over 2025–2034, then calculate a terminal value at the end of 2034. The following assumptions underpin the model:

• Revenue Growth: We assume Boeing’s revenues grow rapidly in the next few years as production recovers, then growth tapers in the late 2020s. This reflects clearing the backlog and returning to peak output. In our model, annual revenue growth starts in the low-teens percentage (2025–26) and slows to 3% by 2033–34, roughly tracking industry fleet growth. By 2030s, we presume Boeing has returned to a steady-state growth rate slightly above inflation (given continued global air travel demand). These growth rates are consistent with Boeing ramping 737 MAX and 787 production and eventually introducing a new model around the end of the decade.

• Profit Margins: Boeing’s EBIT margins are projected to improve from the current low levels to more normal aerospace levels over time. We start with a low single-digit operating margin in 2025 (reflecting lingering abnormal costs and inefficiencies) and gradually increase it to the low double-digits by 2028 and beyond as volumes rise and cost-cutting/safety investments pay off. In the later years of our forecast, we use an EBIT margin of around 14–15%, which is in line with Boeing’s historical peak margins (Boeing achieved a 15% operating margin in 2018 before the MAX crisis). This improvement assumes a successful turnaround: no major safety crises, improved programme execution (especially in BDS), and a healthier mix (more services and efficient production). Net Operating Profit After Tax (NOPAT) is calculated assuming a 21% effective tax rate (approximate U.S. corporate tax rate). NOPAT thus reflects after-tax operating earnings.

• Reinvestment (Capex and Working Capital): We factor in the capital expenditures and working capital needs required to support the growth. Boeing’s capital expenditures are assumed to be around 3-4% of revenue in the next few years (slightly elevated as it invests in production capacity and possibly development of a new aircraft), then normalising to 2.5-3% of revenue in steady state. Working capital is a bit complex for Boeing (since it receives progress payments from customers, Boeing’s working capital can even be negative in boom times). However, during the recovery, Boeing will likely use cash to build inventory (work-in-progress jets) and receivables as deliveries accelerate. We model moderate working capital outflows in the early years corresponding to growth, then smaller outflows once production stabilises. The combined effect is that Free Cash Flow (FCF) will lag NOPAT in the initial years (as Boeing catches up on production and incurs capital costs), but in later years, FCF should approximate NOPAT as growth plateaus and efficiency improve. By 2030 and beyond, we expect Boeing’s annual FCF conversion to be strong (reflecting the high margin and the fact that depreciation and customer deposits provide cash benefits).

• Discount Rate and Terminal Growth: We use an 8% Weighted Average Cost of Capital (WACC) to discount cash flows. This reflects a blended cost of equity and debt for Boeing in the current environment – 8% is a reasonable rate given Boeing’s risk profile (somewhat higher than the market average due to its leveraged balance sheet and cyclicality). For the terminal value in 2034, we assume a 2% perpetual growth rate, roughly in line with long-term GDP/inflation, given that the aerospace sector should grow slightly above inflation in the very long run (global air traffic growth offset by cycles). The terminal value is calculated as FCF in 2035 / (WACC–g), where FCF in 2035 is essentially 2034’s FCF grown by 2%. All cash flows are discounted to present (beginning of 2025) at the 8% rate. All figures are in nominal USD billions.

Below is the 10-year pro forma DCF model, showing projected NOPAT, free cash flow, and present values for each year:

In the above table, NOPAT is Net Operating Profit After Tax for each year, and FCF is free cash flow. The terminal value (undiscounted) at the end of 2034 is about $189.4 billion, which is the present value of all cash flows beyond 2034 assuming 2% growth; its present value discounted to start of 2025 is $87.7 billion. Summing up the present values of all annual cash flows (including the terminal) gives an enterprise value of approximately $129 billion. We then adjust for Boeing’s net debt. Using $30 billion in net debt (debt minus cash) as of early 2025, we subtract this from the enterprise value to arrive at an equity value of roughly $99 billion. Based on 653 million diluted shares outstanding, this translates to an intrinsic value of about $150 per share for Boeing.

Valuation Interpretation: The DCF result ($150/share) can be compared to Boeing’s current market price to gauge upside or downside. As of mid-2025, Boeing’s stock has been trading around the low $200s. Our intrinsic value estimate is lower, suggesting the market may be pricing in a more optimistic recovery (or a lower discount rate) than our base-case assumptions. It’s worth noting that small changes in assumptions (growth, margin, WACC) can swing the DCF substantially given the long-dated nature of aircraft programs. For example, using a 9% WACC or a 3% terminal growth would increase the valuation, while a slower margin recovery would decrease it.

The key drivers for Boeing’s valuation are how quickly and efficiently it can restore production and profitability. If Boeing achieves margins closer to 15%+ and generates the kind of cash flows it did pre-2019, there is significant upside potential. Conversely, if setbacks continue (delays, extra costs, weak defense profits), the intrinsic value would be considerably lower. Investors should view $150/share as a ballpark fair value under the assumption of a steady multi-year recovery. In summary, Boeing’s stock offers exposure to a potentially rewarding turnaround in global aerospace, but the valuation is sensitive to execution. Prudent investors will monitor Boeing’s progress on clearing its order backlog, generating free cash flow, and resolving its various challenges to see if it can justify or exceed the calculated intrinsic value in the coming years.

Sources: Boeing Company SEC filings and earnings releases; Reuters and financial media reports for recent developments and industry outlook. All monetary figures are in U.S. dollars.