What happened

Shares of Boeing (BA -1.75%) joined the rally on Friday morning, trading up more than 6% at one point, only to give up most of those gains as they day went on. Investors got a reminder of the challenges that face Boeing's commercial division, taking the wind out of the shares.

So what

It's been a tough run for Boeing, with shares down by more than 60% since the start of 2020. The company was hit first by issues with its 737 MAX, a plane that was grounded for 18 months due to engineering issues. In the wake of that grounding, other Boeing models including the 787 Dreamliner came under more intense regulatory scrutiny. Finally, the pandemic, and its impact on the airline industry, ate into demand for new planes.

A Boeing 787 Dreamliner in flight.

Image source: Boeing.

The 737 MAX is flying again, and airlines are seeing a gradual demand recovery, but Boeing is still trying to dig out from the tough times and ramp up production. On Friday, Reuters reported the company was dealt a fresh setback by regulators taking a close look at the 787. The U.S. Federal Aviation Administration (FAA) has reportedly told Boeing the documentation it submitted to win approval to resume 787 deliveries is incomplete.

Deliveries of the 787 have been suspended for about a year after the FAA raised concerns about aircraft inspection methods.

Now what

The pushback from the FAA should be a temporary setback, but it is yet another black eye for a company that has been forced to deal with a lot of embarrassments in recent years. Nothing is coming easy for Boeing, and it is hard to forecast a quick turnaround.

The lack of 787 deliveries, coupled with a 737 program that is still far short of the delivery numbers that were originally envisioned prior to the grounding, means Boeing has less cash coming in. Boeing's debt has ballooned by more than 400% over the past five years as the company made sure it had the wherewithal to survive the pandemic. Until Dreamliner deliveries resume and the 737 MAX program hits its stride, it will be hard for Boeing to significantly reduce that debt.

The bull case for Boeing is straightforward. Globally, airlines are going to need a lot of planes over the next two decades in order to keep up with growing demand and Boeing, as one half of a duopoly with Airbus, will provide a lot of those planes. But before that can happen, Boeing needs to get out of its own way and resume normal operations. Friday's news was a fresh reminder Boeing isn't there yet, and the shares gave back their gains as a result.