Boeing Lands $8.6B Israeli F-15 Deal as Turnaround Risks Persist

What happened

Boeing has secured an $8.6 billion contract to deliver up to 50 F-15IA aircraft to the Israeli Air Force, with completion expected by 2035. This addition to the defense backlog comes as Boeing's Defense, Space & Security (BDS) segment shows modest improvement, posting a $379 million operating profit on $19.8 billion revenue in the first nine months of 2025. However, the company overall remains deeply unprofitable, with a $4.5 billion operating loss over the same period and a record $635.7 billion backlog that includes significant execution risks. Boeing's history of reach-forward losses on fixed-price defense programs, such as the KC-46 and T-7A, casts doubt on its ability to convert this contract into sustainable profitability. Moreover, the slow, decade-long delivery timeline underscores the long-term nature of the revenue stream, which does little to address near-term financial distress or operational challenges.

Implication

The $8.6 billion F-15IA contract provides incremental revenue visibility for Boeing's defense segment through 2035, supporting the long-term optionality thesis tied to its massive backlog. However, investors should remain skeptical, as Boeing's track record of cost overruns and delays on fixed-price programs raises concerns about the contract's eventual profitability. In the near term, this win does not shift the focus from critical watch items like free cash flow generation, which has been volatile and recently negative despite some improvement. The contract's extended timeline means it offers limited relief for Boeing's pressing balance-sheet issues, including ~$54 billion in net debt and negative shareholders' equity. Consequently, while the backlog growth is positive, it reinforces the need for sustained execution improvements before any upgrade from the current 'WAIT' stance is warranted.

Thesis delta

The new Israeli F-15 contract marginally enhances Boeing's defense backlog and provides long-term revenue visibility, but it does not alter the fundamental investment thesis that the equity is a high-risk turnaround. Investors should view this as a minor positive that supports the structural duopoly advantage, yet it fails to address the core risks of operational execution, financial leverage, and program profitability highlighted in the DeepValue report. Therefore, the thesis remains unchanged: wait for clearer evidence of durable cash generation and balance-sheet repair before considering new positions.