Boeing Aircraft Unit Revenue Slides While Company Sales Grow 4%

Boeing's commercial airplane division lost ground in the third quarter even as the wider company reported higher revenue, according to earnings released Tuesday.

The aerospace manufacturer posted revenue of $24.2 billion for the period, up 4% from the same quarter last year. Operating margins rose 1.5% compared with the prior year. The Commercial Airplanes division, however, saw revenue fall 3% year over year, with operating margins at -6.5%.

Chief financial officer Jay Malave attributed the commercial unit's results to lower booking rates tied to production rate adjustments and higher estimated supply chain costs. Defense, Space & Security revenue rose 15%, and Global Services revenue rose 4%.

Chief executive Kelly Ortberg opened the earnings call by pointing to recent milestones: certification of the 737 MAX 7 and 10, a multi-billion-dollar contract for the Navy's sixth-generation fighter jet, and 161 commercial aircraft delivered through the third quarter, the most since 2018. "We know there's more work to do, and I've said before, our progress is not always going to be perfectly linear," Ortberg said. "But we continue to improve, and I'm confident we're on the right track."

The company's commercial backlog reached a record $612 billion, covering more than 6,300 planes. Malave said orders during the quarter came from Turkish Airlines, Ethiopian Airlines and Lufthansa. Boeing delivered 124 737 MAX aircraft in the quarter.

Boeing's production line for the 737 MAX runs at 47 planes a month, and the company wants to reach 52. The North Line in Everett, which builds the 737 MAX 8, 9 and 10, must be certified and producing to reach that target, along with stable wing and fuselage output. Wings are built in Renton and shipped to Everett for final assembly. Fuselages are made in Kansas. "I'm expecting it'll take us into next year to get fully stable at this rate," Ortberg said. The Everett line rolled out its first 737 MAX 10 on Monday.

Malave said the delay in reaching a stable rate of 47 per month means Boeing will fall short of its 500-delivery target for the year. Ortberg said stabilizing the 737 MAX line has taken longer than planned, a point he raised at an industry conference in September, where he said wing production had not shown the flow improvement the company expected.

Boeing expects $2 billion of free cash flow in 2026 and an additional billion the following year, accounting for capital expenditures tied to the F/A-XX program for the Navy. Ortberg projected free cash flow of $6 billion in 2028 and $10 billion in 2029. Those figures assume the 777X is certified by mid-2027.

On the 777-9, Ortberg said flight testing continues and Boeing still needs approval to begin the balance of the flight test program. The company expects the first delivery in 2027. Malave said Boeing is producing the aircraft at roughly one per month and expects to hold that rate for most of 2027.

As of Wednesday morning, Boeing's stock had fallen just under 11% over the prior day.

Ortberg said the company's focus now shifts after the 777X program. "You will see a shift of resources and spending from those development programs to new programs," he said.