Boeing's Ethiopian Order Bolsters Backlog, But Fundamentals Remain Weak

What happened

Boeing and Ethiopian Airlines announced an order for nine 787 Dreamliners and completed the purchase of 11 more 737 MAX jets. This adds to Boeing's $635.7 billion backlog, which is a key valuation anchor according to the DeepValue report. However, the report highlights that Boeing's commercial segment reported a $6.4 billion operating loss in 9M25, indicating ongoing profitability challenges. Execution risks, such as safety issues and production instability, threaten timely and profitable delivery of this backlog. Thus, while the order signals demand, it does not address the core financial and operational weaknesses detailed in the filings.

Implication

The order confirms continued demand for Boeing's 787 and 737 MAX models from a key African carrier. It adds incremental value to the backlog, which is crucial for future revenue but must be converted profitably amid execution risks. Investors should remain cautious as Boeing's commercial segment is still loss-making, with negative equity and high leverage amplifying financial strain. The company's free cash flow has been volatile, and sustained positive trends are needed for balance sheet repair. Until production stability and cash flow improvement are demonstrated, this news alone does not warrant shifting from the WAIT stance.

Thesis delta

The Ethiopian Airlines order provides incremental support to Boeing's backlog but does not alter the fundamental investment thesis. Boeing remains a high-risk turnaround with critical dependencies on production stability and cash flow recovery, and no shift from the WAIT recommendation is justified based on this announcement.