Core Viewpoint - Boeing is experiencing a turnaround under CEO Kelly Ortberg, with operational improvements and a significant backlog of $619 billion as of the end of Q2 [1] Group 1: Stock Performance and Investment Case - Boeing stock shows potential for near- to medium-term attractiveness if operational improvements are sustained [2] - The defense segment, known as Defense, Space & Security (BDS), has recently shown profitability after years of issues, which is a positive sign for the stock [2] - The majority of losses in BDS come from fixed-price development programs, which only make up 15% of the portfolio, indicating potential for margin improvement [4] Group 2: Management Changes and Operational Improvements - Management believes that BDS margins will improve as key milestones are achieved, with new BDS CEO Steve Parker focusing on better cost estimations [5][6] - The swift management changes under Ortberg are aimed at addressing past issues and improving operational efficiency [5] Group 3: Production and Delivery Rates - Boeing has over 4,800 unfilled orders for the 737 MAX, and the FAA has approved an increase in the production rate to 42 per month, enhancing delivery capabilities [8][9] - The increase in production rate is expected to positively impact delivery rates over time, contributing to the company's momentum [9][11] Group 4: Long-term Considerations - There are concerns about Boeing's financial feasibility to compete in the next generation of aircraft, with an estimated investment of $50 billion needed over a decade [12] - Boeing's current net debt stands at $30.3 billion, raising questions about cash generation cycles from the 737 MAX [12] - Competitive pressures are increasing, particularly with Airbus advancing its RISE program, which may put Boeing at a disadvantage if it does not adapt to new technologies [14][15]

Core Insights - CFM International, a joint venture of GE Aerospace, is developing a new engine called RISE that could significantly impact the aerospace industry [2][7] - The RISE engine features an open fan architecture, which allows for a higher bypass ratio and improved efficiency compared to traditional engines [8][9] - The competition between GE Aerospace, RTX's Pratt & Whitney, and Rolls-Royce is intensifying as they develop engines for the next generation of narrowbody aircraft [5][6] Industry Dynamics - Aircraft engines are crucial for the aerospace industry, with manufacturers like GE and RTX investing billions in R&D while generating long-term revenue through aftermarket sales [3] - The development of new engines is closely tied to the evolution of aircraft, with both Boeing and Airbus planning future models that will require advanced engine technologies [5][14] - The potential adoption of different propulsion systems by Boeing and Airbus could lead to significant differences in their aircraft designs over the next decade [14][15] Technological Innovations - The RISE engine aims for a bypass ratio above 70:1, which could result in a 20% reduction in fuel consumption and emissions compared to current advanced engines [9] - CFM's commitment to open fan technology is supported by Airbus, which plans to conduct flight tests of an A380 by 2030 [12] - RTX's strategy focuses on improving existing geared turbofan technology, which may be less risky compared to CFM's revolutionary approach [15] Competitive Landscape - Boeing's recent challenges with the 737 MAX and its financial situation may hinder its ability to lead in new aircraft development [11][15] - If Boeing opts for a ducted propulsion system while Airbus embraces open fan technology, it could face a competitive disadvantage [15] - The stakes are rising for both RTX and GE, indicating that investors should consider these developments when evaluating their stocks [16]