Boeing (BA -0.65%) is set to release its fourth-quarter earnings report on Wednesday, capping off a tumultuous 2016. The aerospace giant took some big knocks last year, including further charges related to its delayed KC-46 military tanker, plummeting sales of its 777 widebody jet, and an overall slowdown in commercial jet orders.

Despite these headwinds, Boeing stock posted solid gains during 2016. To keep up the momentum in 2017, the company will have to return to earnings growth and show continued progress on cash flow. Here are two key things I'll be watching for in Boeing's upcoming earnings report.

Are cost cuts working?

Over the past five years or so, Boeing's defense unit has slimmed down dramatically in order to maintain its profitability in the face of weak U.S. military spending. By contrast, Boeing's commercial aircraft division didn't have the same focus on minimizing costs -- until recently.

As a result, Boeing's full-year earnings almost certainly declined year over year in 2016, even excluding the impact of several one-time charges the company incurred last year.

However, Boeing implemented big cost cuts in its commercial airplanes division during 2016 in response to slowing sales and increased pricing pressure in the commercial aircraft market. The commercial airplanes segment cut its workforce by 8% last year, with more cuts expected in 2017. Boeing is also working hard to reduce non-labor spending.

Boeing is slashing costs to cope with pricing pressure and a downturn in orders. Image source: Boeing.

Boeing CEO Dennis Muilenburg expects revenue to be roughly flat year over year in 2017. For earnings to bounce back, the company's cost cuts will have to drive meaningful savings this year. Therefore I plan to pay close attention to Boeing's formal guidance in the earnings report and management's comments about the cost-cutting program on the subsequent earnings call.

Can the 787 Dreamliner replace the 777 as a widebody cash cow?

A second key issue for Boeing is turning the 787 Dreamliner program into a cash cow following years of losses. For the past few years, Boeing has relied upon the mature Boeing 777 widebody program to produce a large proportion of its cash flow. With 777 production set to slow dramatically, the long-troubled 787 program needs to take up the slack.

One aspect of the problem is simply getting more orders. Boeing ended 2016 with a backlog of 700 firm orders for the 787. That's nothing to sneeze at, but order activity has been slowing, with key customers like United Continental (UAL -0.28%) deferring or canceling some orders in recent years. Without an uptick in order activity, Boeing could have to cut production early in the 2020s.

That said, Boeing has several potential order prospects. Most notably, Emirates will likely make its long-awaited decision between the 787 and the Airbus A350 in 2017, ordering about 70 planes. Air New Zealand and Qantas could also order additional Dreamliners in the next few years, as the 787 is ideally suited to the many long-and-thin routes in their networks.

In the U.S., United Continental may look to grow its 787 order book again in the near future. United will probably receive the last of its 787-9s in December. It still has about 50 787-10s and A350-1000s on order, but these planes are too big to be good replacements for United's aging fleet of Boeing 767s. The 787-8 and 787-9 would be much better for replacing the 767s and for opening new long-haul routes to Asia.

United Airlines could potentially order more 787s in the next two or three years. Image source: The Motley Fool.

Thus, I will be very interested to see what Boeing's management says on the earnings call with regard to the Dreamliner's sales prospects.

The other major issue with the Dreamliner is improving the product line's profitability. Pricing has improved now that the 787 program has matured. Boeing is also benefiting on the cost side from scheduled supplier price reductions, along with internal productivity initiatives.

As recently as early 2014, Boeing's 787 program was losing about $1 billion per quarter on a cash basis. However, cash flow has been positive for the past year. In Q3 2016, deferred production costs for the 787 program declined by $150 million, indicating that Dreamliner production was solidly profitable. Investors should be looking for another meaningful improvement in the 787 program's profitability in Q4.

A transitional period

In 2017, Boeing will be cutting production on one of its key aircraft programs (the 777) while starting to ramp up production on another (the 737). This situation will likely continue in 2018. Meanwhile, order activity is likely to remain muted.

In this context, solid execution will be the key to Boeing's performance. If the company can win some of the few major ongoing sales campaigns while keeping costs down and improving the profitability of 787 production, Boeing stock could keep rising this year.