Delays in ramping up 737 Max production overshadowed Boeing's revenue growth. The stock plummeted.

Boeing shares plummeted 10% during trading on October 27. The aircraft manufacturer reported third-quarter revenue that exceeded analysts’ expectations. However, CEO Kelly Ortberg was cautious about Boeing’s plans to ramp up production of the 737 Max, highlighting a conflict between investors, who are demanding improved cash flow, and management, which is still fine-tuning production lines to increase output, according to Bloomberg.

Boeing does not expect a significant increase in production volumes for its best-selling 737 Max aircraft, Ortberg said during a conference call following the earnings report. The company does not expect to reach a production rate of 52 aircraft per month until the second half of next year, he noted. Currently, Boeing is producing about 47 737 Max aircraft per month, according to CNBC.

Commenting on these plans in an interview with the TV channel, Ortberg explained: “I know everyone wants us to move faster, but we’re going to do things right: we’ll make sure the production system is stable and that we’re delivering high-quality, safe aircraft,” he said, confirming that the “stabilization period,” as he expects, “will last until the end of this year and extend into the beginning of next year.”

This news sent Boeing's stock price plummeting on Tuesday, according to CNBC. Aircraft production and deliveries play a key role in the company’s recovery following the crisis of recent years, as customers pay the bulk of the aircraft’s cost upon delivery, the network explains.

CNBC notes that in September, Ortberg told investors that stabilizing 737 Max production was taking “a little longer” than expected due to the pace of wing production.

Boeing's adjusted loss came in at $0.34 per share, compared with a loss of $0.21 forecast by analysts surveyed by LSEG, according to CNBC. Nevertheless, the company’s total net loss for the three months ended September 30 fell sharply to $116 million ($0.26 per share). This is significantly better than the results for the same period last year, when the loss reached $5.34 billion due to massive write-downs of nearly $5 billion related to the 777-9 program, note Bloomberg and CNBC.

Boeing's revenue rose 4% year-over-year to $24.19 billion, compared with the $23.84 billion analysts had expected. Free cash flow nearly doubled to $464 million, compared with $238 million in the third quarter of last year.

The aircraft manufacturer managed to reduce its losses and exceed Wall Street’s consensus revenue forecasts, in part due to a surge in sales in the defense segment. Its revenue jumped 15% year-over-year to $7.94 billion. Growth in this segment was driven by increased global defense spending and the sale of a non-core asset—HRL Laboratories, a research laboratory that Boeing had owned for more than 20 years.

Meanwhile, revenue from the company’s largest division—commercial aircraft—fell 3% year-over-year, dropping to $10.72 billion. Its operating margin slipped into negative territory at 6.5%, and the loss totaled $697 million—nearly double what analysts surveyed by Bloomberg had expected ($360.8 million). Boeing attributed this to a less profitable delivery mix, an increase in expected costs related to a future adjustment in production rates, and higher-than-expected supply chain expenses.

Deliveries, however, remained virtually unchanged: in the third quarter, the company delivered 161 commercial aircraft to customers, one more than a year earlier.

The disparity in the divisions’ results highlights the complex challenges facing Ortberg, who took the helm at Boeing in 2024, Bloomberg notes. Since then, the company has been trying to restore its debt-burdened balance sheet, regain the trust of regulators following a series of quality and safety crises, and ramp up production of its flagship models. In a message to employees, Ortberg acknowledged that Boeing “still has a lot of work to do.”

"Expectations are rising, and that's how it should be. We have a stronger foundation than we did a year ago, but we still have a lot of work to do to fulfill the orders in our backlog, strengthen our corporate culture, and improve the way we work every day,” Ortberg noted.

Last week, the Federal Aviation Administration approved the 737 Max 10—the largest model in the family—marking the final stage of certification for the series following the approval of the 737 Max 7 in August. In addition, the U.S. Navy has selected Boeing to develop a next-generation fighter jet.

The increase in free cash flow to $464 million was “the main highlight of the quarter” for Boeing, wrote RBC Capital Markets analyst Ken Herbert in a note. According to him, this makes Boeing’s annual forecast of $1 billion to $3 billion for this metric more achievable, even though the company warned in September that it might fall short of $2 billion due to a decline in deliveries, Bloomberg reports. Boeing has not yet provided a cash flow forecast for 2027.

On Wall Street, despite the sell-off, Boeing’s outlook is generally viewed positively: according to the consensus forecast of analysts, the recommendation for Boeing stock is “Buy.” This advice comes from 28 experts who track the company’s stock. Another five recommend holding the stock in a portfolio. There are no “Sell” recommendations or “Underweight” ratings.

Since the beginning of the year, Boeing's stock has fallen by more than 20%—the company's shares are on track for their second-worst annual performance in five years, according to Bloomberg.

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