Boeing (NYSE:BA) will release its quarterly report on Wednesday, and investors have remained bullish on the aerospace giant, sending its stock to all-time record highs as recently as last week. But even as domestic carriers Delta Air Lines (NYSE:DAL) and United Continental (NYSE:UAL) have joined dozens of airlines around the world in making massive orders for new aircraft models, the question facing Boeing is whether the huge growth it's experiencing now is sustainable for the long run.

Boeing struggled during the decade of the 2000s, as the airline industry as a whole struggled to remain solvent amid competitive pressures and high costs. Yet as Delta, United, and their peers merged with rivals and started passing through costs to customers in the form of ancillary charges like baggage fees, they suddenly became immensely profitable. That put them in a position to invest in their long-term prospects, and Boeing was ready with more fuel-efficient aircraft models that suddenly found themselves in high demand. Yet the concern is whether all this purchasing activity will meet customers' needs for decades to come, leaving Boeing with a future growth problem. Let's take an early look at what's been happening with Boeing over the past quarter and what we're likely to see in its report.

Source: Boeing.

Stats on Boeing

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$22.74 billion

Change From Year-Ago Revenue


Earnings Beats in Past Four Quarters


Source: Yahoo! Finance.

How high can Boeing earnings go?
Analysts have been optimistic about Boeing earnings in recent months, raising their fourth-quarter estimates by a penny per share and their full-year-2014 projections by more than a dime per share. The stock has kept climbing as well, rising 13% since late October.

Boeing's third-quarter earnings report gave a good example of just how well the aerospace giant has performed recently. Sales jumped 11% on the strength of its commercial aircraft division, leading the company to boost its full-year-earnings guidance by about 5%-6%, its second upward revision to guidance during 2013. Despite challenging conditions on its defense business, commercial aircraft profits soared by 40%, with the company's order backlog rising to a new record level of $415 billion.

Clearly, customers like United and Delta are hungry to upgrade their fleets with Boeing aircraft. But the challenge Boeing faces is actually building enough planes to satisfy that demand. Its most popular 737 aircraft model represents more than 70% of its backlog, and at current production rates, Boeing would need until mid-2021 to build and deliver currently ordered planes -- even if no further orders come in. To address those concerns, Boeing announced during the quarter its plan to boost its production speed on its 737 models by 24%. Yet the risk remains that customers will flee to Boeing rival Airbus for faster turnaround times, or that Boeing will have to pay penalties for failing to deliver on orders in a timely manner.

Another piece of good news came just after the New Year began, when Boeing announced an eight-year labor contract with its largest union, the International Association of Machinists & Aerospace Workers. The contract only narrowly passed, but it ensures the production of the important 777X model will likely remain within the state of Washington, even after Boeing shopped around to see if it could get a better deal elsewhere.

Investors also need to remember that even with its commercial business thriving, Boeing still has a huge defense presence. For instance, the company said it believes it's on track to deliver on its $52 billion contract for the KC-46 Tanker for the U.S. Air Force. Boeing still has plenty of things to accomplish between now and the expected 2017 delivery date before declaring final victory, but the news nevertheless emphasizes the continuing importance of Boeing to the military community.

In the Boeing earnings report, watch to see how the company comments on its future production ramp-up. With such a huge backlog, the key to earnings expansion will be to deliver on its commitments as quickly as possible in order to keep customers like Delta and United satisfied. Otherwise, enthusiasm could turn to disappointment for Boeing shareholders in the long run.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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