So what about Boeing $BA? Do you think the worst is already behind us? The newly announced order from Alaska Airlines points in that direction...
The carrier ordered 110 new aircraft, of which 105 are 737 MAX 10s and five are widebody 787-10 Dreamliners. This is the largest order in Alaska’s history and a strong signal that airlines once again believe in long-term demand and Boeing’s ability to deliver a modern fleet.
This order also doesn’t come out of nowhere. In recent months Boeing has been securing large contracts, especially for the 737 MAX and 787 models, and is trying to stabilize production rates after years of problems with quality, certification, and reputation. The return of trust from major airlines is crucial—not only because of the volumes themselves, but mainly because the backlog and cash flow from these programs will decide whether the company can return to sustainable profitability.
From an investment perspective, we’re at an interesting crossroads. Boeing still faces tough execution challenges and regulatory pressure, but large orders suggest the cycle may slowly be turning.
Do you take these orders as evidence that Boeing is truly rising from the bottom, or do you think it’s still too early to talk about a turnaround and the biggest risks are yet to come?
I think Boeing has probably seen the worst, but a full turnaround isn’t a done deal yet. Large orders like Alaska’s are a strong signal of returning confidence and confirm long-term demand, which is crucial for cash flow. At the same time, high execution risk remains, along with regulatory pressure and the need to execute production flawlessly. So I see this as the start of a recovery from the bottom, not a confirmed comeback.
It's a shame the Aerospace and Defense division isn't traded separately :)
Orders have nothing to do with it — large commercial airliners are built only by Boeing and Airbus, and the slightly smaller ones are being attempted by the Chinese, but even for them the first two are the main producers. So it’s not about orders: both have booked more years’ worth of orders than they can handle, and demand is rising. The Russians today are no longer able to produce large airliners—even though they have the technology—because of the embargo. Boeing ended up where it is precisely because they couldn’t keep up with production and satisfying demand was prioritized over quality. At least that’s how I read it a year or two ago.