Boeing's Delivery Pace Hinges on Free Cash Flow

Boeing's stock has been struggling, down about 8% over the past year and trading 22% below its 52-week high. However, within the company's factories, there is a different story - Boeing is delivering airplanes at a rate not seen since 2018, against a record order book of $715 billion. The key to unlocking further growth lies in translating this delivery pace into positive free cash flow.

The upside case for Boeing relies on the assumption that the company can maintain its current delivery rate, which has been steadily increasing. In just three months, the 737 narrow-body line has gone from stabilizing at 42 airplanes per month to ramping up to 47 per month, with a fourth line in production set to unlock an additional 5 planes per month.

While demand is not the constraint, Boeing's operating margin remains negative at -5.4%, and volume is arriving ahead of operating profit. The company's goal is to reach $10 billion in annual free cash flow, which management believes is attainable given the record backlog. However, this will require careful management of resources and supply chain constraints.

Two key areas to watch are engine deliveries and seat certifications. Boeing fell behind on 787 engine deliveries in the first half of 2026, but a recovery plan with GE is expected to bring production back up to speed by delivering 10 engines per month in Charleston. Additionally, management expects seat certifications to run through the rest of 2026.