BA Q2 Deep Dive: Production Stabilization and Trade Developments Shape Boeing's Outlook

Aerospace and defense company Boeing (NYSE:BA) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 34.9% year on year to $22.75 billion. Its non-GAAP loss of $1.24 per share was 5.8% above analysts’ consensus estimates.

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StockStory’s Take

Boeing’s second quarter was marked by significant year-on-year growth in sales volumes and revenue, yet the market responded negatively to the results. Management attributed the quarter’s improvement to higher aircraft deliveries, particularly in its commercial airplane division, along with operational changes that reduced production bottlenecks. CEO Robert K. Ortberg highlighted that the company delivered its highest number of commercial jets since 2018 and noted, “almost every customer I talk to has said they're seeing higher quality airplane deliveries.” However, persistent challenges remain, including the need to further stabilize production lines and manage ongoing supply chain risks.

Looking forward, Boeing’s guidance is shaped by continued efforts to ramp up production rates for its key aircraft programs, while addressing engineering delays and regulatory requirements. Management emphasized cautious optimism, as Ortberg stated, “We still have a lot of work to do,” referencing both the need to resolve technical issues on the 737 MAX derivatives and to secure necessary approvals from the FAA for further production increases. The company also faces uncertainties linked to global trade policies and input costs, but expects recent trade agreements to provide some relief to its supply chain and cost structure.

Key Insights from Management’s Remarks

Management credited the quarter’s results to improved operational performance, strong demand for commercial aircraft, and progress in key defense and services segments, while acknowledging engineering and certification delays.

• Commercial Aircraft Deliveries: Boeing achieved its highest commercial jet deliveries since 2018, driven by stabilization efforts in its production system and structured on-the-job training that reduced traveled work by 50%.
• Production Rate Milestones: The 737 program reached a production rate of 38 aircraft per month, with management focused on maintaining stability before seeking FAA approval for further increases. The 787 program ramped up to 7 per month, following a successful Capstone review.
• Certification Delays: Engineering challenges with the engine anti-ice system on the 737-7 and 737-10 derivatives delayed certification to 2026, though management does not expect a material impact on overall production plans.
• Defense and Space Progress: The defense segment benefited from new contract wins, including a $2.8 billion U.S. Space Force deal and steady progress on programs like MQ-25 and T-7A, while actively managing development risk.
• Services Segment Strength: Boeing Global Services reported another strong quarter, highlighted by the first delivery of the P-8 with upgraded capabilities to the U.S. Navy and expansion of parts distribution centers to support global customers.

Drivers of Future Performance

Boeing’s outlook is influenced by its ability to increase production rates, execute on backlog, and navigate external headwinds like tariffs and regulatory hurdles.

• Production Ramp and Quality: Management aims to further increase output for the 737 and 787 programs, contingent on meeting internal metrics and securing FAA approval. Success depends on resolving engineering issues and sustaining supply chain stability.
• Trade Policy and Input Costs: Boeing expects recent tariff agreements with the EU and Japan to lower input costs and support order momentum, but ongoing trade negotiations with China and Italy, as well as potential changes to USMCA, present risks to cost and supply continuity.
• Defense and Services Execution: Growth in defense and services is expected to continue, driven by contract wins, tighter underwriting standards on new programs, and efforts to return defense margins to historical high single-digit levels. However, labor relations and the pace of development program recoveries remain key variables.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) Boeing’s progress in stabilizing and increasing aircraft production rates, especially for the 737 and 787 lines, (2) the resolution of technical and certification challenges on new aircraft variants, and (3) the impact of evolving trade agreements and tariffs on supply chain costs. Additional focus will be given to defense contract execution, services growth, and the integration of new executive leadership.

Boeing currently trades at $226.05, down from $236.32 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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