Boeing stock rises thanks to a large order. Will the effect be long-lasting?

Shares in US airplane maker Boeing rose after news of a major order from South Korea's national and largest airline Korean Air. The deal confirmed that interest in passenger airliners remains high. However, the main challenge for the company is not the volume of contracts, but its ability to ramp up production and fulfill its impressive order book, analysts say.

Shares of aircraft maker Boeing rose by 3.5% on Tuesday, August 26, thanks to the news of a large order from Korean Air. At the pre-market on August 27, Boeing's shares continued to grow, adding 0.8% at the moment.

Korean Air intends to buy 103 Boeing airplanes: 20 777 passenger jetliners, 25 long-range 787s, 50 medium-range 737s and eight 777-8 Freighters, Boeing said in a press release. This is a major commitment in its favor, Barron's noted. The order was a new confirmation of sustained demand for passenger airliners. Korean Air now has a fleet of 108 Boeing airplanes and about 50 Airbus machines, the publication said.

"This agreement with our longtime partners Boeing and GE marks a key moment for Korean Air. The acquisition of these next-generation aircraft is at the core of our fleet modernization strategy," the airline's CEO Walter Cho said in a press release.

The engines for the airliners are GE Aerospace units. GE shares were up 0.2% on the premarket on August 27, and rose 2.75% in the previous session.

The cost of the order at catalog prices could be about $20 billion. However, Boeing no longer publishes official price lists: prices for the planes are negotiated with each airline separately, and large carriers, as a rule, pay significantly less compared to the base cost, Barron's writes.

For Boeing, new orders are a positive signal, but the company's stock does not always react directly to their number: selling airplanes is a normal part of business, the publication notes. But order statistics have improved: from January through July, airlines ordered nearly 700 airliners, compared with about 230 orders in the same period in 2024, Barron's said.

Growing demand adds optimism to investors, but Boeing has already accumulated a huge backlog. There are more than 6,500 outstanding orders on the list, and the official backlog is just under 6,000 airplanes. That's more than a decade of work at current production rates, Barron's writes.

The main challenge for Boeing is to speed up production. The company is making progress here: the company is producing 38 737 MAX airplanes a month, the maximum allowed by the U.S. air regulator after an incident involving a door plug that flew off during a flight in January 2024. By the end of the year, the company expects to bring that number to about 42.

At the same time, Boeing is close to concluding a contract to supply up to 500 airplanes to China, according to Bloomberg sources. The discussions have centered on the 737 Max series, Boeing's most popular narrow-body aircraft. Despite the lack of available slots, Boeing likely has some flexibility in its delivery schedule for strategically important customers, Jefferies analyst Sheila Kahyaoglu noted.

Earlier this week, Jefferies maintained its recommendation to buy Boeing shares, leaving its target price unchanged at $275. Its estimate implies a 17% growth in the stock.

Of the 28 analysts covering the airline giant's securities, most - 22 - advise buying them (Buy and Overweight ratings), five are neutral (Hold) and only one recommends selling them (Underweight).

This article was AI-translated and verified by a human editor