What happened
Score one for Boeing (BA +1.57%) and Dennis Muilenburg.
Speaking at an investor conference in September, the Boeing CEO predicted that despite all the obstacles it's encountered, the Boeing 737 MAX airliner would still return to service in the fourth quarter. Over this past weekend, the CEO doubled down on that prediction -- but also laid out a plan to resume shipping MAX aircraft to airline customers, even if federal regulators fail to approve a new training regimen for pilots who will fly the plane.
Boeing stock closed Monday trading up 4.7% in response to the news.
Image source: Getty Images.
So what
Why is it important that Boeing resume delivering MAX airplanes even if they aren't necessarily approved to fly -- or pilots approved to fly them? This is more than just a matter of Boeing losing the top spot to Airbus in airplane production, as a look at Boeing's financials will quickly explain.
In Q2 this year, Boeing's free cash flow numbers turned negative -- the first time that had happened since early 2015, according to data provided by S&P Global Market Intelligence. In Q3, cash losses nearly tripled to $2.9 billion.
In short, this situation is quickly turning dire for Boeing, and the company needs to turn the cash spigot back on. Resuming MAX deliveries will trigger airline obligations to pay for them, and help solve the problem.
Now what
Resuming deliveries will also free up storage space at Boeing factories, which are getting close to full -- they continued producing MAXes all through the flight ban, and are running out of places to put them. According to a Wall Street Journal report on the situation, Boeing only has "about two months' of parking spots" left on its properties, and has even resorted to parking airplanes "in employee parking spaces" as a stopgap.
With recertification of the MAX for flight in December, and training now expected to be approved only in January (according to a Boeing spokesman), time is running out for Boeing to resolve this crisis. Investors are simply relieved today to learn that Boeing has a plan in place to fix it.
