A Very Good Month For Boeing

The past several weeks have been a welcome change for Boeing, which has struggled for the past seven years with fatal crashes, a pandemic travel shutdown, quality and safety incidents halting production and a labor strike that pushed the company to the brink.

However, after nine months on the job, CEO Kelly Ortberg’s recovery plan is showing strong progress.

On April 22, Boeing announced the sale of Jeppesen, which provides digital navigation services, for $10.55 Billion to private equity firm Thoma Bravo. The move was part of a plan by Ortberg to divest “non-core” assets. Jeppesen is the premier provider of navigation charts and aids to airlines, business jets, military aircraft and general aviation and was expected to prompt a heated auction, which it did.

The unit had many attributes which make prospective buyers salivate – steady cash flow driven by subscription revenue, strong reputation, a highly diversified customer base and a near monopoly position in the market. Thoma Bravo, which specializes in software driven entities, will have pricing power to juice returns over time.

Private equity firms TPG, Veritas and Advent International were all reported to have bid for the unit which went on the block at the end of last year. In the end, the price was far above expectations of approximately $6 Billion penciling out in the end at 16 times 2025 earnings before interest, taxes, depreciation and amortization.

It is estimated that the proceeds will reduce Boeing’s net debt by 14% improving the company’s balance sheet, Boeing bought the unit for $1.5 Billion in 2000 and was able to maintain its market neutrality even with airlines which flew Airbus or aircraft from competing OEM’s.

Then on May 12, China authorized resumption of Boeing aircraft deliveries that had been held hostage in the tariff wars amid scaling back of the China specific tariffs of 145%. Through the remainder of the year 50 aircraft are slated for delivery to China worth approximately $1 Billion. China has over 500 Boeing aircraft still on order, representing approximately 10% of Boeing’s backlog.

Meanwhile, Boeing’s production of aircraft continues to build. In April, Boeing delivered aircraft at roughly twice the rate of a year ago (30 737’s versus 16 in 2024, 8 787’s versus 4 in 2024). May continues to show similar progress.

Boeing has a near term goal of 38 737’a per month at which point the FAA will assess whether production can move to higher rates. The 737 is crucial to Boeing’s recovery as a rate increase to those levels begins to produce positive cash flow.

Then Trump’s trip to the mid East produced record orders from Qatar, United Arab Emirates and Saudi Arabia. For a President fixated on restoring manufacturing jobs and bolstering the economy, aerospace is a critical component to US balance of trade and high value added manufacturing. After the roller coaster of tariff pronouncements, the deals provided a needed boost to backlog and confidence.

As part of the $1.2 Trillion deal between the US and Qatar, Qatar Airways ordered 210 aircraft (130 787’s, 30 777-9’s and an additional 50 options of the two types). It was the largest ever widebody order from a single operator and was the airline’s largest order in history. These were in addition to 197 Boeing aircraft it already had on order.

Etihad Airways, based in the UAE, ordered 28 787’s and 777X’s. Up until now, Etihad has maintained a relatively even mixed fleet of 105 aircraft split between Boeing and Airbus. This order will push them to be more oriented to Boeing if Airbus does not score a similar order.

AviLease, an aircraft lessor based in Saudi Arabia, placed its first order from Boeing. Unlike Qatar and Etihad, this order was all for the narrowbody 737 MAX 8 and 10, which are in high demand and more easily placed in airline fleets. The order was part of a $60 Billion deal by the Saudis to invest in the United States.

Despite this progress, Boeing still faces many challenges including regulatory approval for the 737 MAX 7 and 10 and the 777X. United, one of the earliest customers for the MAX 10 may shift its orders for the aircraft to other variants amid expected delivery delays of up to two years.

Nevertheless, Boeing looks forward to continued progress with other non-core assets being sold in the near future and completion of the re-acquisition of Spirit AeroSystems in the third quarter of this year.

Although the mid-East deals are unlikely to be repeated in the future, the tailwinds that have begun over the past month bode well for the country’s largest exporter.