Boeing (BA 3.21%) is hosting its investor day, and investors apparently like what the aerospace giant has to say. As of 12:32 p.m. ET, shares of the aircraft maker were up about 3% despite declines in the broader market thanks to management's reassurance that Boeing's recovery is progressing as hoped.
It has been a difficult few years for Boeing investors. First, the company was slammed both by the grounding of its 737 MAX after a pair of fatal accidents and the troubling details about corporate culture that were revealed in the investigations into those incidents. Soon after, the pandemic hit, causing demand for air travel to dry up and leading airlines to reconsider growth plans.
The 737 MAX is flying again in most of the world, and demand for air travel has rebounded nicely. The question for Boeing investors is how long will it take until the company begins to benefit. Management struck an upbeat tone during the investor day presentation.
Boeing expects to generate about $10 billion in free cash flow and roughly $100 billion in revenue by 2025 or 2026, and it sees no need to sell additional stock to raise money to support operations. The company also expects 737 MAX production to grow from a current rate of 31 airframes per month to 50 per month by 2026.
Boeing could certainly use the lift. The company's stock is down more than 50% over the past three years, and earlier this year was closing in on levels unseen since the onset of the pandemic. Boeing's debt balance ballooned by more than 400% in recent years as the company took on leverage to make sure it could survive the crisis, and the only way to pay down that debt and return to an investment-grade credit rating is by manufacturing and delivering more jets.
There are still issues on the horizon. The 737 MAX is not yet recertified to fly in the all-important China market, and it is not clear when the plane will be allowed to return there. There is also a risk that economic uncertainty will eventually eat into demand for air travel, which could cause airlines to defer plane orders or rework their delivery books.
But for now, Boeing appears headed in the right direction.