Boeing’s Path to Recovery in 2025: Three Key Areas to Watch
As Boeing navigates the challenges of 2025, the company has a unique opportunity to capitalize on its existing backlog in commercial aerospace and defense. Despite recent difficulties, Boeing ended 2024 on a high note with a major order from Pegasus Airlines, highlighting the ongoing demand for its airplanes.
Prioritizing 737 MAX Production
To maximize returns for investors, Boeing must focus on executing better in 2025. A crucial step in this process is boosting 737 MAX production. With a total commercial airplane backlog of 6,268, including 4,818 737 MAX aircraft, Boeing needs to prioritize reaching its initial target of 38 monthly deliveries. This won’t be an easy feat, as the company must ensure its suppliers align with its delivery rates. Investors should keep a close eye on commentary regarding this target.
Turning Around Defense, Space, and Security
Boeing’s defense, space, and security (BDS) segment has faced significant challenges, including cost pressures and overruns on fixed-price development programs. However, with the strike behind them, BDS has an opportunity to improve profitability in its profitable businesses. By focusing on these areas, Boeing can take the first step towards recovery. Investors should look for signs of improvement in BDS’s profitability.
Getting the 777X Back on Track
The 777X program has been plagued by delays, resulting in multibillion-dollar charges and tying up cash in inventory. However, the end market remains buoyant, with United Airlines predicting that production lines for widebody aircraft won’t keep up with demand over the next three to five years. If Boeing can stay on track with its estimated delivery rate in 2026, it will be a significant positive for the stock.
A Favorable End Market Environment
With a favorable end market environment in both commercial aerospace and defense, Boeing has the potential to deliver significant value for shareholders. To achieve this, the company must focus on ramping up 737 MAX deliveries, returning BDS to profitability, and keeping the 777X on track. With new leadership in place and the labor dispute resolved, Boeing’s success is largely dependent on its ability to execute.
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