Earnings: Boeing Has A 777X Problem

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Boeing (NYSE: BA) reported third-quarter results this morning that split the difference between operational recovery and program setbacks. Revenue beat expectations, and the company achieved a critical milestone by turning positive on free cash flow for the first time since 2023. But a $4.9 billion charge tied to 777X certification delays and a core loss per share that missed estimates by $2.16 overshadowed the progress. Shares were mixed in early trading, reflecting the dual narrative.

Where the Recovery Is Real

The headline that matters most is cash flow. Boeing generated $1.12 billion in operating cash flow and $238 million in free cash flow during the quarter. That's a turnaround from negative $1.35 billion in operating cash flow a year ago. For a company that has been burning cash since the 737 MAX crisis and pandemic pressures, this is the clearest sign that production discipline and safety investments are starting to pay off.

Revenue also impressed. The company delivered $23.30 billion, beating expectations by $670 million and growing 30.6% year over year. That growth came from 160 commercial airplane deliveries, the highest quarterly total since 2018. The backlog now sits at $636 billion, representing over 5,900 commercial aircraft on order. I'd keep an eye on Commercial Airplanes, which generated $11.1 billion in revenue this quarter. It's carrying the recovery.

The 777X Problem

Here's where the earnings stumbled. Boeing took a $4.9 billion charge related to 777X certification delays and pushed first delivery to 2027. That charge decimated the bottom line and explains why the core loss per share came in at negative $7.47 versus an expected loss of $5.31. The company said the airplane continues to perform well in flight testing, but the schedule slip signals that regulatory scrutiny and engineering complexity are taking longer to resolve than previously guided.

Management acknowledged disappointment with the delay, but it's a reminder that Boeing's path to full profitability depends on successfully certifying and delivering this widebody jet without further setbacks.

Numbers Tell the Story

Key Figures

Revenue: $23.30 billion (vs. $22.63 billion expected); up 30.6% year over year Core EPS: Loss of $7.47 (vs. expected loss of $5.31); missed by $2.16 Net Income: Loss of $5.34 billion; improved 13.5% from prior year loss of $6.17 billion Operating Cash Flow: $1.12 billion; up 183.5% from negative $1.35 billion year ago Free Cash Flow: $238 million (positive for first time since 2023) Commercial Airplanes Revenue: $11.1 billion Defense, Space and Security Revenue: $6.9 billion Global Services Revenue: $5.4 billion

Story Continues

The real story here is cash generation. That positive swing in operating cash flow matters more than the headline loss because it shows the company can fund operations and debt service without burning through reserves. The 777X charge is a one-time hit; the cash flow improvement is structural.

What Management Said

CEO Kelly Ortberg struck a cautiously optimistic tone. He highlighted the "important milestones" in the recovery, pointing specifically to positive free cash flow and a joint agreement with the FAA to increase 737 production to 42 per month. That production ramp is critical. It signals regulators are comfortable with Boeing's quality controls and that demand for the workhorse 737 remains strong.

On the 777X, Ortberg acknowledged disappointment but kept focus on execution. "We remain focused on the work ahead to complete our development programs and stabilize our operations," he said. The message was steady, not defensive. That's appropriate given the mixed results.

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