What happened

Boeing (BA -0.14%) has had a miserable 2020, but the aerospace giant is steadily making progress resolving some of its biggest issues. The stock is still down big for the year, but shares climbed 25.7% in June, according to data provided by S&P Global Market Intelligence, as investors gained confidence the worst is over for Boeing.

So what

Boeing had hit turbulence well before the COVID-19 pandemic, weighed down by the March 2019 grounding of its 737 Max jet. The pandemic worsened the outlook for Boeing, as it left airlines scrambling to cut costs and put the aerospace giant's order book at risk.

A Boeing 787 Dreamliner takes flight.

Image source: Boeing.

Boeing alleviated fears of a potential liquidity crisis in late April when it raised $25 billion in fresh debt, but the added cash did little to make the company's issues go away. Activist investor Dan Loeb gave an endorsement to Boeing in early June when his Third Point fund bought Boeing debt, but the stock really jumped as the month went on as investors grew more encouraged that both the 737 Max issues, and the pandemic, could soon be in the past.

Reports surfaced early in the month that Boeing hoped to conduct 737 Max recertification flights by the end of June (which it did), a key step toward getting the plane airborne again. The shares also gained on a steady stream of reports that airlines are rebuilding their schedules and the economy is holding up better than feared.

Boeing's commercial business is almost certain to be pressured for years, but the return of the 737 Max would help by increasing free cash flow, and a quick economic recovery would hopefully mean the airline slump will be over sooner than some had feared.

Now what

It's important to remember that even if Boeing is doing test flights for the 737 Max, the plane is unlikely to return to service before September at the earliest. Once it does, Boeing has an inventory of about 400 planes it has built but could not deliver during the grounding, and it will take months to work through that.

Add it all up, and even in the most bullish scenario, the 737 Max production schedule will be modest for years to come, a fact that the company has telegraphed to suppliers. And it remains to be seen if the plane will ever live up to its pre-production hype, when analysts thought it could be one of the most successful commercial aerospace platforms of all time.

Boeing shares, once down more than 70% for the year, are now down only 44%. The rally makes sense in that Boeing is no longer at risk of a cash crunch that could do serious harm to equity values. But the declines reflect the long, tough journey ahead for the company. Investors should be warned that for now at least, there are limits to how high this stock can fly.