Boeing Revenue Climbs in Third Quarter While Commercial Airplanes Unit Slips

Boeing reported higher overall revenue for the third quarter as it works through a record order backlog, though its commercial airplanes division posted a decline. The company presented its results on Tuesday.

Revenue reached $24.2 billion, up 4% from the same quarter last year, and operating margins improved by 1.5%. Chief Financial Officer Jay Malave said the growth was partly offset by a "less favorable commercial delivery mix." Boeing's stock fell just under 11% over the day ending Wednesday morning, despite the gains.

CEO Kelly Ortberg opened the call by pointing to recent milestones. These included certification of the 737 MAX 7 and 10, a multi-billion-dollar contract to build the company's sixth-generation fighter for the U.S. Navy, and 161 commercial deliveries through the third quarter, the most since 2018. "Our progress is not always going to be perfectly linear," Ortberg said, adding that he is confident the company is on the right track.

Ortberg said Boeing has narrowed its outlook and expects $2 billion in free cash flow in 2026, with another billion added the following year, including capital spending to support development of the Navy's F/A-XX aircraft. He projected larger gains later, with free cash flow of $6 billion in 2028 and $10 billion in 2029. Malave said those targets assume the 777X is certified by mid 2027, and that they also depend on higher 737 and 787 deliveries with better cash margins, a positive cash contribution from the 777X and growth in units such as global services.

The Commercial Airplanes division reported a 3% drop in revenue from last year. Its operating margin improved but remained at negative 6.5%. Malave attributed the shortfall to lower booking rates tied to production rate adjustments and higher estimated supply chain costs. The Defense, Space & Security division grew revenue by 15%, and Global Services grew by 4%.

Stabilizing the 737 MAX line is taking longer than expected, a point Ortberg raised in September at an industry conference. Production currently stands at 47 planes a month after Boeing passed the Federal Aviation Administration's capstone review. The company hopes to reach 52 a month, a target the Everett North Line is expected to help meet. Ortberg said that requires certifying and starting production on the North Line and stabilizing wing production and fuselages, which are made in Kansas. Wings are built in Renton and sent to Everett for final assembly. "I'm expecting it'll take us into next year to get fully stable at this rate," he said. The Everett line rolled out its first 737 MAX 10 on Monday.

With the 737 MAX 7 and 10 certified, Ortberg said Boeing can now focus on the 777-9. He said the company still needs approval to begin the balance of the flight test program, and it continues to expect the first delivery in 2027. Malave said Boeing is building roughly one 777X a month and expects to stay at that pace for most of 2027.

The commercial backlog stands at a record $612 billion and covers more than 6,300 planes. Malave cited orders during the quarter from Turkish Airlines, Ethiopian Airlines and Lufthansa. Boeing delivered 124 of its 737 MAX jets in the quarter, but Malave said the delay in stabilizing at 47 a month means the company will likely fall short of its target of 500 deliveries this year.

Looking ahead, Ortberg said that once the 777X program is finished, "you will see a shift of resources and spending from those development programs to new programs."