Boeing (NYSE: BA) stock rose by 13.9% in December, according to data provided by S&P Global Market Intelligence. The move put a little shine on a disappointing year for the company and comes down to some positive news for Boeing.
Good news for Boeing
The key to Boeing's recovery is ramping up its 737 MAX narrowbody aircraft production. Boeing must also return its defense business to profitability and ensure the 777X stays on its revised track for its first delivery in 2026. However, the stock won't prosper unless the 737 MAX production and delivery rate improve.
To that end, Boeing had some good news in December. First, according to a Reuters article, Boeing restarted production of the 737 MAX in early December, a few weeks after the end of a damaging strike over a new labor contract.
Second, Boeing received a significant and morale-boosting order from Pegasus Airlines for 100 Boeing 737 MAX airplanes with an option to order another 100. As previously discussed, the order adds to Boeing's multiyear order book. It gives investors confidence that airlines are willing to place large orders on the 737 MAX even as Boeing struggles to ramp up production and meet delivery schedules for airlines.
There's an underlying fear that airlines might delay or cancel orders for the 737 MAX as they look for ways to realign their fleets given delivery delays, but the Pegasus order helps allay those concerns.
Boeing in 2025
It was a difficult year for the company, which started 2024 with an Alaska Airlines flight blowout (door plug) on a 737 MAX. The incident caused Boeing's management to slow production while implementing safety and quality control measures. Later in the year, Boeing workers went on strike over the terms of a new contract.
Image source: Getty Images.
Still, the positive news in December gives cause for optimism that Boeing can return to its initial target of 38 monthly deliveries on the 737 MAX and then look to improve it. Increasing airplane production is critical from a revenue perspective and a major part of its profit margin expansion plans. As more airplanes are produced, the benefits of scale production kick in, and Boeing can lower the unit cost of production.
Aside from the 737, Boeing must also work through problematic and loss-making fixed-price development programs in defense, keep the 777X on track, and continue to deliver in the 787. It won't be easy, as supply chain issues continue to impact the industry negatively, but Boeing's news in December was positive, and the market rewarded the company's stock for it.
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