On Wednesday, Boeing (BA -0.24%) released yet another subpar earnings report. While operating cash flow turned slightly positive, revenue sank 2% year over year and the company recorded a core loss of $0.37 per share.

Boeing executives see better times ahead. To some extent, that's justified, as the resumption of 787 deliveries and the continued effort to clear out 737 MAX inventory should return the aerospace giant to sustainably positive free cash flow soon. Nevertheless, Boeing stock continues to look like a dubious investment.

Still spinning its wheels

Last quarter, Boeing's key commercial-airplanes division delivered 121 jets, up more than 50% year over year. However, the segment's revenue inched up just 3.4%, as the long-running pause in 787 Dreamliner deliveries led to a negative mix shift. Additionally, Boeing appears to be suffering pricing pressure from its efforts to jump-start 737 MAX sales after the troubled jet was cleared to return to service in late 2020.

Boeing's global-services business posted healthier top-line growth of 5.7% in the quarter. But that couldn't fully offset a 10% drop in revenue for the defense and space segment. As a result, total revenue slipped to $16.7 billion from $17 billion a year earlier and $24.3 billion in Q2 2018.

This weak revenue performance and a variety of cost pressures caused Boeing's core operating profit to sink to $490 million from $755 million in Q2 2021 and $2.4 billion in Q2 2018. And the company's quarterly interest expense of $650 million caused its core earnings per share to swing into the red, missing analyst estimates.

The one relatively bright spot in Boeing's Q2 report was that the company generated positive operating cash flow of $81 million. That said, just a few years ago, Boeing generated billions of dollars of cash from operations every quarter. Furthermore, after accounting for capital spending, the company's Q2 free cash flow was negative $182 million.

A light at the end of the tunnel?

The long pause in 787 Dreamliner deliveries due to quality problems has been the biggest drag on Boeing's revenue, earnings, and cash flow over the past year. However, Boeing CEO Dave Calhoun told staff this week that the company "is in the final stages of preparing to restart deliveries" of the 787. Other industry sources have indicated that deliveries will likely resume in August.

A Boeing 787-10 preparing to land.

Image source: Boeing.

In the near term, discounts to compensate customers for the extended delays will temper the cash flow benefit of restarting 787 deliveries. But over the next couple of years, Boeing could generate as much as $10 billion of cash from delivering the roughly 120 Dreamliners it has previously built.

Calhoun also sees ample demand to support increased 737 MAX production as soon as engine supplier CFM is able to solve its own supply chain constraints. Indeed, Boeing has logged solid order activity for the 737 MAX this year.

Plenty of risk, too

Unfortunately, Boeing faces numerous potential pitfalls that could upend management's optimistic outlook. For one thing, it's still struggling to get Federal Aviation Administration (FAA) approval for the last two members of the 737 MAX family -- the 737-7 and 737-10. The 777X program has also suffered massive delays, with the first delivery pushed back to 2025 from an initial target of early 2020.

Moreover, while aircraft demand looks strong now, the chances of a near-term global recession are rising. It's unlikely that pent-up travel demand will fully insulate the aviation industry from a downturn. Making matters worse, Boeing remains almost entirely locked out of the massive Chinese market due to tense U.S.-China relations. Finally, the company's aircraft backlog remains much smaller than it was three years ago, which will magnify the impact of any order slowdowns on production.

Even if Boeing navigates these challenges reasonably well, its net debt has ballooned by more than $40 billion over the past four years. It will take many years of strong cash flow to repair the company's balance sheet.

BA Net Financial Debt (Quarterly) Chart

Boeing net debt (quarterly), data by YCharts.

Considering all of these factors, Boeing stock remains fairly unattractive. For comparison, top rival Airbus has a pristine balance sheet and has already returned to positive free cash flow, but has a lower market cap by around $10 billion. That makes Airbus a much more sensible bet on the global airline industry's recovery than Boeing.