Jefferies cuts TP for Boeing

Boeing (BA) and Korean Air finalized a $36.2B order for 103 aircraft, including 737, 777, and 787 models, with an estimated actual value of $12.6B. The deal boosts Boeing's backlog to 6,200+ aircraft worth $596.7B, strengthening its position with a major Asian carrier. However, execution risks and production constraints remain, with 2026 free cash flow projected at $2B.

Boeing Co. secured two defense contracts worth $41.5m. One, $11.8m, is for F/A-18E/F Super Hornet support services in Kuwait, funded via Foreign Military Sales. The other, $29.7m, covers V-22 aircraft data for maintenance. Work spans multiple U.S. locations, with completion dates in 2027 and 2030. Contracts were awarded without competition by Naval Air Systems Command.

U.S. Trade Representative Greer stated 150 of 200 Boeing aircraft China plans to buy are in the order process, with 140 progressing well and 10 in processing. Boeing CEO Ortberg cautioned against expecting immediate additional orders. The deal, announced in May, is China's largest commercial aircraft purchase in a decade, aiming to reduce trade imbalance. Boeing sees China as a key market, with long-term demand for thousands of aircraft.

The FAA granted Boeing a waiver to produce up to 35 777 freighters from 2028 to 2031, exempting them from emissions standards. Boeing argued the exemption was necessary to avoid disrupting the air cargo industry and protect U.S. exports and jobs. The FAA agreed, citing minimal environmental impact. Boeing plans to meet customer demand with these planes until the 777X freighter enters service.

The FAA granted Boeing an exemption to continue producing the 777F freighter until 2031, allowing sales of 35 units. Boeing argued the exemption was necessary to avoid losing $15B in export sales and to prevent airlines from using older, less efficient aircraft. The decision supports cargo airlines' fleet expansion and modernization, as next-gen freighters face delays. Korean Air recently ordered eight 777-8 freighters, with Boeing booking over 80 orders for the next-gen model.

Boeing CEO Kelly Ortberg announced delays in ramping up 737 Max production due to wing manufacturing bottlenecks. The company is currently producing 47 jets per month but aims for 52. Delays could impact Boeing's $10 billion free cash flow target and 2026 guidance. A potential strike by the engineering union adds further risk.