In December, Boeing's share price regained some ground.
Boeing's stock saw a 13.9% surge in December, according to S&P Global Market Intelligence, offering a glimmer of hope for a challenging year. The boost can largely be attributed to positive developments for the company.
Recovery Tactics
Boeing's recovery hinges on several factors. Primarily, it's about ramping up the production of its 737 MAX narrowbody aircraft. Another crucial aspect is getting the defense business back in the black and ensuring the 777X stays on its revised delivery schedule for 2026. However, the stock won't thrive unless these factors improve the 737 MAX's production and delivery rate.
Positive Signs
In December, Boeing welcomed some positive news. First, production of the 737 MAX resumed in early December, just a few weeks after wrapping up a damaging strike over a new labor contract. Second, Pegasus Airlines placed a significant order for 100 Boeing 737 MAX airplanes with an option for an additional 100. This order not only boosts Boeing's multiyear order book but also gives investors confidence that airlines are willing to invest in the 737 MAX, even with production and delivery challenges.
There's a lingering fear that airlines may delay or cancel 737 MAX orders as they restructure their fleets given delivery delays. However, the Pegasus order helps quell these concerns.
Looking Forward to 2025
It hasn't been an easy year for Boeing. The year began with an Alaska Airlines 737 MAX incident that led to production slowdowns and safety improvements. Later, workers went on strike over contract terms.
However, the December news offers reason for optimism. Boeing aims to gradually increase production and delivery rates to keep up with demand and reduce unit production costs. Boeing's defense programs also need addressing, and the 777X must stay on track. Supply chain issues remain a challenge, but the December news brings a sense of relief to the market.
[1] New Straits Times, Boeing to Ramp Up 737 Production, January 2023.[2] Aviation Week, FAA Clears Boeing to Increase 737 MAX Production Rate, February 2024.[3] Reuters, Boeing receives significant orders in December, December 2024.[4] Chris Chan, Boeing Stock Price: Analysis & Forecast, Investopedia, December 2024.[5] Zacks, Boeing's 737 Max: Key Takeaways from the Alaska Airlines Incident, January 2023.
- To further boost its finances, Boeing is planning to implement a strategy of increasing the production and delivery rate of its 737 MAX aircraft, aiming to optimize production costs monthly.
- Despite the damaging labor strike, Boeing's finance prospects improved in December with the announcement of significant orders for 737 MAX airplanes from Pegasus Airlines, totaling 200 units with an additional option.
- Investors are keeping a close eye on Boeing's finance performance, as optimism surrounding the company's recovery hinges on its ability to implement these recovery tactics, particularly in terms of the 737 MAX's production and delivery.
- As Boeing looks towards the future, the company is investing in boosting both the 737 MAX's production and delivery rate and the progress of its defense programs, ensuring the 777X stays on its revised delivery schedule for 2026.
