Morgan Stanley's Kristine Liwag breaks down Boeing's Q3 results

Core Insights - Boeing's stock is down approximately 1.25% following the announcement of a nearly $5 billion charge related to the 777X program, which has faced delays in aircraft delivery [1][4] - The company reported positive free cash flow for the first time on a quarterly basis in 2023, with a revenue increase of 30% [2] - Boeing's backlog in commercial airplanes has risen to nearly $100 billion compared to December 2024, indicating strong demand [2] - The company achieved record deliveries of 160 airplanes in the quarter, the highest since 2018, reflecting positive operational momentum [3] Financial Performance - Boeing's earnings report highlighted a significant $5 billion charge for the 777X program, which was higher than the anticipated $4 billion, raising concerns about its long-term cash generation capabilities [4] - Despite the non-cash nature of the charge, it may have multi-year implications for cash flow, contributing to negative market sentiment [4] - The FAA certification process has been slower than expected, which has compounded the delays in the 777X program [4][5] Market Position and Outlook - The 777X program was initially expected to enter service in 2020, but delays have shifted focus away from it, especially as the company worked on resolving issues with the 737 Max and 787 [5][6] - Boeing's stock has performed well this year, up 44%, but the current challenges with the 777X program have led to a neutral rating from analysts, indicating a balanced risk-reward scenario [6] - Analysts suggest focusing on suppliers to Boeing, such as Helmet (HWM) and RTX, which may benefit from increased production rates of the 737 Max and 787 without being affected by the 777X issues [7]