Boeing Co. (NYSE:BA) expects the 787 program to deliver stronger long-term margin recovery than the 737, highlighting an uneven financial outlook across its commercial aircraft portfolio.
During Boeing’s third-quarter earnings call Wednesday, when asked about Boeing Commercial Airplanes’ (BCA) potential 2027 break-even margin and the division’s longer-term recovery, CFO Jesus Malave Jr. said 737 margins should improve as production activity increases. However, he said the program is not expected to return to 2018 margin levels, either as a percentage or in absolute dollars.
On the other hand, Malave gave a stronger outlook for the 787. He said its margins are expected to exceed 2018 levels by 2029 on both a percentage basis and an absolute-dollar basis. “Taken together overall would be a net benefit in ’29,” the CFO said.
Boeing Posts Mixed Q3 Results
The margin outlook follows Boeing’s third-quarter results, which exceeded Wall Street’s revenue expectations but included a wider-than-expected adjusted loss. Investors also assessed improved operating margins, stronger cash flow and a record backlog.
The BCA unit reported third-quarter revenue of $10.7 billion and a negative 6.5% operating margin, weighed down by an unfavorable delivery mix, higher projected costs from future production-rate adjustments and rising supply-chain costs.
Production Challenges Weigh on Outlook
The results pressured Boeing shares Tuesday as investors weighed production challenges and financial uncertainty. Boeing CEO Kelly Ortberg said the company aims to stabilize 737 production at 47 aircraft per month next year. Meanwhile, Malave Jr. warned that delays could leave annual deliveries below the 500-aircraft target and said supplier disruptions affected 777 freighter and 767 tanker production, though shipments have resumed.
CNBC commentator Jim Cramer said Boeing’s third-quarter earnings reset investor expectations by outlining weaker production and cash-flow targets, potentially reducing uncertainty about future performance.
Benzinga’s Edge Rankings place Boeing in the 29th percentile for value and the 8th percentile for momentum, reflecting its weak performance in both areas. Benzinga’s screener allows you to compare BA’s performance with its peers.
Price Action: Year-to-date, BA stock declined 22.54%, as per Benzinga Pro. During Wednesday’s pre-market trading session, the stock was trading 0.01% higher at $168.20.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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