Alaska Airlines' Major Order Reinforces Boeing's Backlog Amid Persistent Turnaround Risks

What happened

Alaska Airlines has placed its largest-ever order with Boeing, committing to 105 737 Max 10 jets and five 787-10 Dreamliners, signaling renewed customer confidence after the 737 Max 9 door-plug incident. This order bolsters Boeing's already substantial $635.7 billion backlog, which underpins long-term revenue potential in a duopolistic market. However, Boeing continues to report operating losses, negative equity, and high leverage, with recent filings highlighting volatile free cash flow and ongoing execution challenges. The news does not address core risks such as the delayed certification of the 737-10, persistent quality issues under FAA oversight, or potential reach-forward losses on key defense programs. Thus, while positive for sentiment and backlog conversion, this development alone fails to alter the fundamental high-risk turnaround narrative that demands sustained operational improvement.

Implication

This order adds incremental visibility to Boeing's revenue pipeline, potentially supporting production stability and cash flow generation if deliveries proceed without hiccups. However, given Boeing's track record of safety lapses, program delays, and negative profitability, investors should view this as a sentiment boost rather than a catalyst for immediate fundamental change. The company must still demonstrate multiple quarters of positive free cash flow, debt reduction, and successful certification of key programs like the 737-10 to justify its current valuation. Critical watch items from the DeepValue report—such as production quality, FCF trajectory, and avoidance of new charges—remain unchanged and paramount for risk assessment. Ultimately, while the backlog provides optionality, the stock's recent rally prices in optimistic assumptions that require concrete evidence before shifting from a WAIT stance.

Thesis delta

The news does not materially shift the investment thesis; Boeing remains a high-risk turnaround with a narrow margin of safety, as operational and financial challenges persist despite the order. The WAIT recommendation stands, as investors should await clearer signs of durable cash generation and balance-sheet repair before considering a more constructive view.