Boeing (BA) is reestablishing its presence in the Chinese market—a move that brings both notable opportunities and meaningful risks. The aerospace giant is operating within a challenging regulatory landscape, intensified by the January 2024 Alaska Airlines door plug incident, which drew global attention and even warranted a dedicated entry on Wikipedia.
Compounding the complexity are the lingering effects of President Trump’s tariffs and trade tensions, which continue to affect Boeing’s international operations. However, there has been a recent positive shift: China has lifted its temporary ban on Boeing aircraft, enabling the company to begin fulfilling its growing backlog of orders. As a result, Boeing’s stock has regained much of the ground lost in the wake of the earlier safety incident.
Boeing (BA) stock price history over the past three years
However, moving forward, Boeing must balance unpredictable geopolitical trade tensions and regulatory scrutiny that ushered in a “new normal,” prioritizing safety over profits, making me cautiously neutral on its stock.
Boeing Navigates Regulatory Gauntlet Amid Geopolitical Crisis
Boeing is now operating under heightened regulatory oversight, with more inspectors present in its factories than in previous years—a direct consequence of several high-profile in-flight incidents involving its aircraft. Subsequent investigations uncovered deep-rooted quality control issues and broader cultural problems that contributed to these events. As part of this intensified scrutiny, the Federal Aviation Administration (FAA) has imposed a strict production cap, limiting Boeing to 38 units per month of its 737 MAX jet—a model widely regarded as the “workhorse” of the airline industry due to its dominance in short- and medium-haul routes.
This cap is intended to slow production, allowing Boeing to prioritize safety and quality improvements. The FAA has made it clear that any increase in the production rate will be contingent on demonstrable improvements in manufacturing standards. However, this restriction poses a significant challenge for Boeing’s business model. It not only curtails output during a period of strong demand and a large backlog of orders, but also delays revenue generation, since Boeing is typically paid upon aircraft delivery.
Demand for Boeing remains strong, with a backlog exceeding 6,000 aircraft, equivalent to roughly 11 years of production at current rates. However, airline customers won’t wait indefinitely. Boeing faces mounting pressure to deliver, especially as its main European rival, Airbus SE, is unlikely to cede any competitive ground.
China’s Reopening: A Critical Lifeline Amidst Trade Tensions
China represents a critical market for Boeing, accounting for nearly 10% of its total unfilled orders. As such, China’s recent decision to resume accepting aircraft deliveries marks a significant positive development, likely helping Boeing reduce some of its existing inventory—aircraft that would otherwise remain idle. Complicating matters, planes built for Chinese airlines differ in configuration from those intended for U.S. carriers, making it costly and inefficient to reconfigure them for other markets.
Looking ahead, Boeing has limited influence over the trajectory of U.S.-China trade relations. While a temporary truce provides some relief, long-term access to the Chinese market remains vulnerable to geopolitical uncertainty.
Boeing’s Cash Burn and the Route to Recovery
All of this is unfolding against the backdrop of substantial cash outflows in recent quarters. In 2024, Boeing reported a net loss of nearly $12 billion, mirroring the amount of cash it consumed in operating activities. This financial strain was driven by a combination of safety incidents, ongoing quality control challenges, and a seven-week machinists’ strike that disrupted production.
Boeing (BA) Balance Sheet
While Boeing does hold almost $24 billion in cash and short-term investments as a financial cushion, the company remains heavily leveraged, adding further pressure to stabilize its operations and restore investor confidence.
Is Boeing a Buy, Sell, or Hold?
On Wall Street, Boeing’s stock sports a Strong Buy consensus rating based on 16 Buy, three Hold, and one Sell ratings in the past three months. BA’s average price target of $217.32 implies 2.77% upside potential over the next twelve months.
Josh Sullivan of Benchmark Co. also has a Buy rating on Boeing. He noted that “anticipated production increments, occurring no sooner than six months apart, suggest a structured and achievable growth path.”
Boeing Plots Backlog-Fueled Comeback
Boeing faces the difficult task of ramping up production while ensuring rigorous quality standards—a balance that’s easier said than achieved. Each incremental increase in the production cap presents new challenges, requiring the company to meet strict performance benchmarks. Overcoming its deeply rooted legacy of quality issues will take time and sustained effort; it’s not a transformation that can happen overnight. In the interim, Boeing must also navigate a complex mix of geopolitical tensions, supply chain constraints, and trade tariffs.
The recent reopening of the Chinese market provides a much-needed tailwind, but it may prove to be temporary. Although Boeing’s first-quarter earnings showed narrower losses and revenue growth, its return to consistent profitability will depend on a combination of internal execution and external stability, factors that remain highly uncertain. Still, the aerospace duopoly remains intact, and if Boeing can normalize production, its massive backlog positions it for significant upside. For risk-tolerant investors seeking to outperform the market, BA stock could present a compelling opportunity.
