Boeing (NYSE: BA) It faces ongoing challenges in 2025. However, it also has opportunities to execute on its existing backlog in its aerospace and defense businesses.
Despite the company’s difficulties, it closed the year with a large order from Pegasus Airlines confirming the underlying demand for Boeing aircraft. To maximize returns for investors, Boeing needs to execute better starting in 2025.
In this context, here are three things investors should pay attention to from the company in 2025.
Turkey-based Pegasus Airlines’ firm order for 100 Boeing 737 MAX aircraft, with an option to order 100 more, highlights the strength of Boeing’s continued demand and backlog. As of the end of November, Boeing’s total commercial aircraft backlog was 6,268, including 4,818 737 MAX aircraft.
To put that number in context, Boeing planned earlier this year to reach a steady rate of 38 monthly deliveries of the Boeing 737 MAX by the end of the year. This equates to 456 aircraft per year, a rate that indicates a 10-year backlog of 737 MAX aircraft.
In 2025, Boeing will undoubtedly want to prioritize boosting 737 MAX production. Unfortunately, a range of self-imposed measures have been taken to slow down production and improve manufacturing quality in light of the crisis Alaska Airlines Blowout in early 2024 Industrial action means Boeing’s delivery rate is disappointing in 2024.
The first step to recovery is reaching the initial target of 38 737 MAX deliveries per month.
It won’t be easy. After all, Boeing will need to make sure its suppliers match its delivery rates, not least because the 38-per-month rate is the beginning of ramping up. Fuselage supplier Air spirit systemsa company that Boeing intends to acquire in 2025, is facing financial difficulties, and CFM International, the company General Electric Aerospace Joint venture supplies 7373 Max engines, It missed the engine production target In 2024 amid ongoing supply chain difficulties.
As such, achieving the initial target would be a big positive for the stock, and investors should look for commentary on this matter.
The following chart illustrates the difficulties faced by Boeing’s Defense, Space and Security (BDS) segment.
Former BDS CEO Ted Colbert left the company in September, after Kelly Ortberg was named Boeing CEO in the summer. The sector’s problems stem from cost pressures and overruns in a range of fixed-price development programmes, including the KC-46 tanker and a refueling aircraft; the MQ-25, an aerial refueling drone; VC-25B, commonly known as Air Force One; And the T-7 training aircraft. This represents about 15% of its revenues. It has also faced cost issues with its fighter and satellite programs, which account for 25% of its revenue.
There’s clearly an opportunity for Boeing to do better in its business development services (BDS) space, and the first step in that recovery comes from increasing profits for 60% of its profitable business. The strike hurt profitability in the third quarter, but now that the strike is over, the BDS movement should improve profitability at those companies. Moreover, Boeing can continue to operate through fixed-price development programs. As such, investors can hope that the BDS movement returns to profitability in 2025.
Boeing has more than 480 orders for its 777X wide-body aircraft, including 205 orders from Emirates Airlines. The problem is that the 777X, an aircraft originally scheduled for delivery in 2020, will not receive its first delivery until 2026.
Delays are not only frustrating for airlines, as they force them to make fleet adjustments. It also imposes billions of dollars in fees on Boeing and ties up cash in inventory before planes are delivered.
The good news is that the end market is still booming United Airlines “The reality is that widebody production lines probably won’t keep up with demand over the next three to five years, based on everything we’re seeing,” Chief Commercial Officer Andrew Nocella noted in mid-October.
Here again, there’s an opportunity for Boeing to execute better, and given that expectations are so low, just staying on track with a first delivery rate estimate in 2026 would be positive for the stock.
The end market environment remains favorable in both Commercial and defense aviation. If Boeing is going to deliver significant shareholder value, the three factors I’ve laid out here must be taken into account. With the labor dispute over and new leadership emerging, Boeing has become largely a self-help story, but it will not have a happy ending unless Boeing can increase 737 MAX deliveries, return BDS to profitability, and maintain the 777X. On the right track.
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The ultimate guide to investing in Boeing for maximum returns Originally published by The Motley Fool