What happened

By any standards, The Boeing Company (BA -2.49%) had an outstanding 2017. The stock's 89% rise is startling for a company of such size and a testimony to how many things went right for the company. I'm going to pick out a few of the highlights of 2017.

  • Boeing's 763 airplane deliveries in 2017 set an industry record, and the company's 912 net orders represent a bounce back from 768 and 668 in the previous two years.
  • The ramp-up in production helped non-GAAP core operating margin to jump 9.3% in the first nine months compared to 4.8% in the same period last year -- consequently, earnings from operations jumped 99% to $7.25 billion in the first nine months.
  • There was a successful ramp-up in production on the Boeing 737 program to 47 planes a month, with plans to increase to 57 a month in 2019.
  • Deferred production cost on the 787 continues to fall, and net orders of 94 on the Boeing 787 program represents the best year since 2013.
  • Having cut the production rate on the Boeing 777 to five a month, management claimed it was in an "oversold position in 2018, and approximately 90% sold out in 2019" -- giving confidence that it could bridge the gap to production of the 777X

Clearly, it was a busy year for Boeing, and the company got most things right.

So what

Based on the record production rate of 763 aircraft in 2017, Boeing's backlog of 5,864 aircraft represents 7.7 years of production. That's an impressive figure in its own right, but considering that margin and cash flow are increasing in line with production ramps, it suggests that Boeing is set for strong growth in earnings and cash flow in the coming years.

Moreover, production ramps on the 737 and planned increases in the production rate on the 787 program to 14 a month in 2019 imply that Boeing is taking full advantage of its burgeoning backlog.

The wing of a Boeing Dreamliner in flight, silhouetted against the night sky.

Boeing 787 Dreamliner. Image Source: Getty Images

Now what

The International Air Transport Association (IATA) forecasts that passenger growth will increase 6% in 2018 from a 7.5% increase in 2017, with airlines' net profit estimated to rise 11% to $38.4 billion in 2018. That's good news for Boeing, and suggests the potential for ongoing growth in its order book. The challenge and opportunity for 2018 is for management to execute as well as it did last year and increase margin as it ramps up production on the 737 and 787 programs while bridging production on the 777 to the 777X.