Boeing Company (BA) has cleared a major hurdle with the Federal Aviation Administration's certification of the 737 MAX 10, a move that could significantly boost its cash flow in 2027. The approval removes a key bottleneck in Boeing's commercial aviation pipeline, allowing the company to transition its backlog of undelivered aircraft into revenue-generating assets. The MAX 10 variant, which accounts for about 30% of the unfilled 737 order book, has been a significant strain on Boeing's balance sheet, with around $13 billion in deferred production costs tied up in inventory.
The certification comes at a critical time for Boeing, as it aims to ramp up production to about 52 narrowbody jets per month next year. This increase in delivery volumes is expected to help the company recover deferred costs and move closer to its long-term free cash flow target of approximately $10 billion. Additionally, Boeing has introduced the Dataliner AI platform, backed by Microsoft (MSFT), which could provide a high-margin stabilizing force for the broader income statement.
Despite these positive developments, Boeing's stock price remains down nearly 12% year-to-date, largely due to immediate cash drags such as a $700 million Department of Justice settlement payment expected in the third quarter. Analysts have trimmed price targets in response to these near-term cash-burn realities, but institutional investors have been accumulating shares, suggesting confidence in the company's longer-term outlook.
Investors evaluating Boeing may want to monitor the company's delivery volumes in the coming months, ahead of the first MAX 10 deliveries expected in 2027. The current valuation could present a reasonable entry point before the anticipated free cash flow inflection fully materializes in the coming fiscal year.