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Boeing's Q3 performance highlighted operational progress that came along with a large accounting hit. Boeing (NYSE: BA) revenues rose 30% to $23.3 billion on 160 jet deliveries, highlighting the manufacturer's highest quarterly output since 2018. Free cash flow further turned positive at around $200 million, with operating cash flow reaching $1.1 billion. However, a new $4.9 billion pre-tax charge tied to pushing the Boeing 777X's first delivery to 2027 drove a net loss per share. Management indicated that the Boeing 737's production line output has now stabilized at 38 per month. With Federal Aviation Administration (FAA) approval that could come by the end of the month, output could rise to 42 per month. The company's total backlog increased to $636 billion. While demand and execution continue to improve, the manufacturer's Boeing 777X delay and overall program costs continue to weigh down on earnings. A Deeper Look At The Key Drivers Of Boeing's Performance Top-line manufacturer outperformance reflected stronger commercial value (with around 160 deliveries up around 385 year-on-year), lifting Boeing Commercial Airplanes revenue by 49% to hit $11.1 billion, according to company financial statements. Boeing Defense and Global Services, as business segments, also grew by around 25% and 10% respectively. Nonetheless, the manufacturer reported negative earnings per share due to the large charge associated with the Boeing 777X, adding $6.45 per share to the overall loss. Free cash flow ultimately turned positive, and cash held steady at $23 billion, aided by working capital and improved factory cadence. Importantly, the Federal Aviation Administration (FAA) received approval to lift Boeing 737 MAX production to 42 aircraft per month, underpinning sequential volume gains. Revenue figures topped external estimates, but sizable charges tempered overall sentiment. Across the board, the quarter highlighted resiliency in overall demand and services profitability over lingering widebody development drag. What Are The Financial Implications For Boeing? The manufacturer's ability to turn free cash flow positive, even by a relatively modest margin, remains a notable milestone for overall balance sheet repair after the company struggled with cash burn for so long. Positive operating cash flow and overall stable liquidity suggest that the manufacturer will be able to maintain near-term funding flexibility while capital expenses continue to mature into profitable program investments. The charge for the Boeing 777X program resets overall expectations, as it pushes the first delivery of the type to 2027, extending the timeline for margin and cash inflection from that aircraft and keeping Boeing Commercial Airplanes' margins depressed in the near-term. Conversely, the FAA's nod to lifting Boeing 737 output to 42 per month and steady Boeing 787 production at 7 per month should improve overall working capital velocity and factory absorption, all supporting incremental cash generation. Boeing Services' margins at 17.5% continue to help the manufacturer build out a relatively stable overall earnings mix. The $636 billion company backlog, which accounts for more than 5,900 aircraft, anchors a multi-year revenue mix while overall execution risk remains the principal swing factor for cash and leverage normalization across the board. What Is Boeing's Fourth Quarter Outlook? Going into the fourth quarter, investors should keep their eyes on the manufacturer's production cadence, the Boeing 777X's development burn, and overall working-capital timing. With the Boeing 737 production now permitted to rise to 42 per month, Boeing has the scope for modest sequential delivery gains if suppliers can keep pace, supporting overall operating cash flow growth. The stability of the Boeing 787 program should aid consolidated margins. That being said, the Boeing 777X's delay continues to build costs that harm overall near-term earnings recovery even if revenue growth continues to advance over time. Management's continued focus is on stabilizing programs and converting its large backlog into revenue. However, the company's overall growth picture will need to be tied to its ability to maintain cash discipline. The manufacturer's free cash flow trajectory, acceptance of firm orders, and absorption of abnormal costs are all pieces of this overall picture. Headline earnings per share remain constrained by development and interest expense, while the upside hinges on a clean execution and supply chain reliability picture.
