What happened

Shares of aerospace giant Boeing (BA 2.78%) soared 4.7% through 10:45 a.m. ET Tuesday after the Puget Sound Business Journal reported that the company is pushing the Federal Aviation Administration (FAA) to hurry up and complete certification of the company's 737 MAX 10 airliner for service.  

So what

The MAX 10, which is similar to but bigger than the company's better-known 737 MAX 8 and MAX 9 airliners, must be certified by the end of this year if Boeing is to keep building the plane thereafter under an exemption provided in a Congressional 2020 aviation bill, reports the Business Journal.

Certification of the plane under this exemption would give Boeing a boost in using the plane to compete with Airbus' (EADSY 3.87%) popular A321neo line of planes. However, there's a downside to this story: If the FAA does not certify the 737 MAX 10 for flight by the end of this year, Boeing will have to spend as much as $10 billion redesigning the plane to include a new crew alert system. (A crew alert system sounds alarms, flashes lights, and vibrates controls to alert the pilot when something has gone wrong, and the system currently installed in the MAX 10, while upgraded from past versions, doesn't fully comply with current safety regulations -- hence the exemption.)  

Now what

So why are investors taking this as good news, and are they making a mistake? Citing Boeing CEO David Calhoun, the Business Journal reports that Boeing is playing hardball and threatening to pull the MAX 10 off the market entirely if the FAA doesn't certify it rather than incur the $10 billion it would cost to comply with safety regulations. Investors may therefore be hoping Boeing will succeed in its feud with the FAA.

But here's the downside: If Boeing doesn't win its exemption and it pulls the plane from production, it might have to spend even more money developing an entirely new single-aisle jet to give it something in its lineup that can compete with Airbus' A321neo.

With Boeing stock already drowning in debt (with $45.5 billion more debt than cash on its balance sheet), unprofitable (having lost $4.9 billion over the last 12 months), and burning cash (with $4.3 billion in negative free cash flow), Boeing really isn't in a position to incur more costs at this point. Looks to me as if this is a lose-lose situation for Boeing, one in which it can't afford to build the plane without an exemption and can't afford not to build the plane rather than a new one.  

Unless Boeing wins certification for the MAX 10 by year-end, it may be time to bail on Boeing.