Boeing's Turnaround Thesis Remains Compelling Despite Ongoing Losses

Boeing (BA) stock has been underperforming the market, down 12.0% over the past twelve months while the S&P 500 returned 20.5%. The main reason for this is that Boeing still loses money building airplanes, but it's worth noting that the rate of loss is shrinking.

In fact, the company's operating margin has improved significantly over the past year, from a negative 12.4% to a negative 5.4%. This improvement is largely due to higher delivery volumes and a favorable mix of products.

However, Boeing's commercial airplane unit still operates at a loss, with an operating margin of negative 2.7% in the second quarter of 2026. The company's management expects that this will improve as production ramps up, but it won't reach pre-2018 levels until the end of the decade.

One concern for investors is whether suppliers can keep up with Boeing's increasing demand. Management has said that there are no supply-chain constraints at current production rates, but they do expect to face challenges in the future, particularly as production ramps up further.