Boeing (BA 0.97%) continues to show signs that its business is normalizing, and investors are taking note. Shares of the aerospace giant were up as much as 3% on Tuesday after a solid October order report and news of a fresh freighter deal with a key Middle Eastern airline partner.
It's been a rough few years for Boeing, as the company has flown through both issues with its 737 MAX and then the pandemic. The MAX was grounded in the U.S. for 18 months after a pair of fatal accidents, and by the time it was cleared to fly again, airlines were focused more on survival than on new airplane orders due to a COVID-related fall in demand.
But the MAX is airborne again and cleared to fly in most countries, and the airline industry has bounced back. Boeing is now looking to boost deliveries in order to increase cash flow and pay down some of the billions in added debt it took on during the crisis to make sure it survived.
On Tuesday, investors got fresh signs that the commercial business is stabilizing. Boeing reported 122 airplane orders in October without any cancellations, bringing its total orders for the year to 664, or 554 when factoring in cancellations and conversions from one aircraft to another.
Boeing ended the quarter with a backlog of more than 4,441 airplanes on order. The company has already delivered more planes in 2022 than it did in all of 2021.
The company also announced a fresh order from Emirates, one of its most important customers in the Middle East. The Dubai-based airline has ordered five 777 freighters valued at more than $1.7 billion at list price.
Boeing is moving in the right direction, but investors need to remember we are in the early stages of a long journey. The company's total debt swelled by more than 400% over the past five years as Boeing battled through internal challenges and pandemic-related disruptions, and the company will likely need a couple of years to get back to an investment-grade credit rating.
Airlines are ordering planes today in part because they know Boeing is desperate to move metal, and a lot of these orders won't turn into cash-generating deliveries for years. If an economic slowdown dents travel demand in the months to come, airlines could look to defer deliveries to later years.
Boeing has the wherewithal to survive whatever comes next. But given the uncertainties that still remain, investors buying in today will likely need a lot of patience in the quarters ahead.