What happened

Shares of Boeing (BA 0.15%) gained nearly 5% on Thursday morning following a report that the company is close to winning what could be a massive order from Southwest Airlines (LUV 1.07%). It's an order Boeing couldn't afford to lose, and investors are understandably excited it might finally be done.

So what

Southwest has been a Boeing customer since day one, for most of its history exclusively flying 737s. But earlier this year reports surfaced that the airline wasn't completely pleased with what Boeing and engine partner General Electric (GE -0.46%) were offering to replace its 1990s-era 737-700 jets, opening the door for Airbus (EADSY -0.18%) to offer its A220-300.

A Boeing 737 in Southwest colors.

Image source: Southwest Airlines.

An Airbus win here would have been a major financial and symbolic setback for Boeing. Southwest could order as many as 300 new planes to replace its aging 737-700s, at a list price of more than $100 million apiece. And Southwest is so closely linked with the 737 that its endorsement of the A220 would likely open doors for Airbus at a lot of other carriers.

But the deal was always thought to be Boeing's to lose, and the company has apparently found a way to get it done. Reuters reported late Wednesday that Southwest is close to an order of Boeing 737 MAX 7 jets, initially only a few dozen planes but with "potentially significant" options.

Now what

The importance of this contract to Boeing can't be overstated. With airlines struggling to recover from the pandemic and focused mostly on domestic routes right now, smaller planes like the ones Southwest is looking to buy are likely to account for most of the orders over the next few years.

Boeing last April walked away from a deal with Embraer due to the pandemic that would have given the company a more natural rival to the A220. The 737 MAX 7 is an imperfect substitute. If it was deemed not good enough by one of Boeing's most loyal customers, it would have signaled tough times ahead for Boeing's sales team.

As it is, this deal isn't enough to make me want to buy Boeing stock right now. After a turbulent few years the company is on the mend, but given the health of the airlines the commercial aerospace cycle is likely to take longer than some believe to take off.

For now, there are better ways to invest in a potential post-pandemic aerospace recovery.