Boeing (NYSE:BA) investors got a boost this month when the 737 MAX was cleared to fly again after 20 months on the ground. It's hard to make a bull case for Boeing with the MAX grounded, so the decision by regulators was a definite positive for the stock.

That said, Boeing still faces a lot of turbulence. In this segment from Motley Fool Live, recorded Thursday, Nov. 19, Industry Focus host Nick Sciple and Motley Fool contributor Lou Whiteman talk about what comes next for the aerospace giant.

 

Nick Sciple: Right. When you talk about those portfolio values, part of that is because, you know, maybe there's a little bit of an oversupply of planes in the market. And that brings us to Boeing, obviously, has been a lot in the news the past couple of years with the 737 MAX. We just got news from the FAA that they're going to allow the 737 MAX to return to flight. Boeing is another stock that's up significantly since the beginning of the month, following this vaccine news. Does this change that narrative for Boeing or are we still looking at an oversupply of planes for a while?

Lou Whiteman: We are, I think, unfortunately. I mean, for one thing, this 737 MAX news is very important news. This is the big milestone on the path for recovery. But as you say, there's a lot of supply, not a lot of demand right now, so it's going to be a long recovery. Boeing bled through $15 billion in cash in the first nine months. I mean, part of that is expenses due to COVID, part of that is expenses due to the MAX, but a lot of that is just the lack of revenue coming in because they can't deliver planes in the case of the 737 MAX, and there isn't a lot of demand for the planes they have and the ones they can deliver.

This is going to be a long process. They have +400 737 MAX that they built, but they haven't been able to deliver. We've seen orders cancelled; I think more could follow. So, this is the beginning of a very long process, but this, I think, marks the bottom for them, [laughs] or I think we're past the bottom, which is very good news with the way the stock has fallen.

Sciple: Yeah, I do think it's interesting for Boeing, if you look out over the course of maybe the last couple of years, you went from a period of where everybody is lining up to buy Boeing planes, there's a backlog, you know, they can't them out of the door fast enough. And Boeing in that situation really has all the leverage as the supplier. And now things seem to have shifted a little bit, where you're talking about Southwest putting the screws on Boeing a little bit, and there being an oversupply of planes, them having to reach different terms with companies, so it's interesting to see how things have shifted just over the course of a couple of years.

Whiteman: And let's be honest, this is how it works in a downturn. I mean, a lot has been made of the backlog they have. Now, for one thing, almost 80% of that backlog is the 737 MAX, so that goes to show you the importance of getting this plane going. But in past downturns, we haven't really seen the backlog fall apart. We have seen deliveries slow, because airlines will go in and defer orders. That's what we've seen this year, and especially with the leverage the customers like, whether it be the AerCaps or the large buyers the airlines have, they are owed compensation on the 737 MAX. They can go into negotiations now with Boeing and say we'll forgo some of that late fee if you let us defer this order out three years, so we can get our balance sheet in order. That is good news for Boeing, because it stays on the order books, so you can post a big number, but it does very little for the health of the business in the near-term over the next few years.

And that's really the risk. People have really been overrating, I think, the order book in terms of when Boeing will recover, because it misses the deferral side of this, and the fact that, yeah, those orders are still out there, but if you're pushing them back three, five, seven years, they do very little good for the business right now when they need it more.

Sciple: Right. You got to collect those payments sooner or later, right? The entitlement to the payments is one thing, like, when are those payments going to come due, right? That's like that accounts receivable; if those receivables don't come in, then it's not as big of an asset as you think.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.