Boeing shares slump after it trims its 737 delivery goal for 2026

What happened

The Financial Times (FT) reported that Boeing cut its 737 delivery target and that its stock lost 10% as Ortberg conceded the program is running late. On Tuesday's earnings call, finance chief Jay Malave said deliveries of the jet this year would land below the 500 the company had aimed for, after 124 were handed over in the third quarter. Ortberg said output should reach 52 a month in the second half of 2027, once the line is steady at 47. Quarterly revenue rose 4% to $24.19 billion and the net loss narrowed to $116 million, but the adjusted loss of 34 cents a share was wider than analysts expected.

What it means

Why does a few planes a month matter so much? Airlines pay most of a jet's price when they take delivery, CNBC noted, so the pace at which 737s leave the factory largely decides how fast cash comes in. The 737 Max is Boeing's best-selling model, and investors have treated a quicker ramp as the main path back to healthy profits. Pushing the next rate step out to late 2027 moves that payoff further away.

The bottleneck is not demand. Boeing's backlog hit a record $745 billion, including more than 6,300 commercial airplanes, according to its results release. The trouble is the supply of parts. Ortberg pointed to wing production that is not yet predictable enough, plus fuselage work at the company's Kansas operation, AFP reported. He said reaching full stability at 47 jets a month will take into next year, and he argued that doing the ramp carefully matters more than hitting a particular month. In a CNBC interview he put it simply: "we're going to do it right."

The rest of the quarter was mixed. The commercial jet unit's revenue fell 3% to $10.72 billion and it ran an operating margin of minus 6.5%, which Boeing blamed on a weaker delivery mix, the cost of future rate changes and higher supplier costs. Defense revenue, by contrast, climbed 15% to $7.94 billion. Boeing also expects 787 deliveries near the low end of its 90 to 100 range, and still sees the first 777X delivery in 2027.

For the first time, Boeing laid out a multiyear cash plan. Management expects free cash flow, the cash left after running the business and investing in it, of about $2 billion this year, $3 billion in 2027, $6 billion in 2028 and $10 billion in 2029, according to the call transcript. AFP reported that the shares slid further after that timetable was given, suggesting investors had hoped to see the $10 billion mark sooner.

The bull case

Boeing is losing far less money than a year ago, when a 777X charge drove a $5.34 billion quarterly loss. Free cash flow rose to $464 million, defense sales grew 15% and the order book is a record. The 737-7 and 737-10 have now been certified, and Boeing won the Navy's next fighter jet contract. A slower but steadier ramp could reduce the risk of fresh quality setbacks.

The bear case

Investors keep waiting for the 737 to carry the recovery, and the wait just got longer. Missing the 500-delivery goal means less cash this year, the commercial unit is still losing money, and Boeing flagged higher supplier costs and a wing-part disruption on its 777 freighter and 767 tanker lines. Aviation analyst Richard Aboulafia told AFP the supply chain is only partly in Boeing's control.