Boeing Faces Turbulence: A Look Back at 2024 and Prospects for 2025

Boeing stock (NYSE: BA) struggled significantly in 2024, dropping around 32%. This decline was starkly contrasted by the S&P 500 index, which saw a gain of 23% for the same period. While competitors in the aerospace sector thrived—General Electric stock rose 65%, and Airbus ADR climbed 5%—Boeing’s issues were largely self-inflicted. The company has drawn criticism for shifting its focus from engineering excellence to profit maximization, often at the expense of quality control. This analysis will review Boeing’s challenges and assess the outlook for BA stock moving forward.

Boeing’s Major Challenges in 2024

The troubles for Boeing began in January, when a cabin panel detached during an Alaska Airlines (Boeing 737 Max 9) flight. Following the incident, the Federal Aviation Administration (FAA) halted Boeing’s plans to expand production of the 737 Max. In February, a supplier discovered issues with fuselage assemblies, which led to failed product audits by the FAA. Boeing is currently working on acquiring Spirit AeroSystems—a key fuselage supplier—in an $8.3 billion deal, including debt.

After facing backlash from these incidents, Boeing’s CEO, Dave Calhoun, resigned. The company then experienced a strike from its largest labor union, which began on September 13 and ended on November 4. The newly ratified contract allowed for a 38% wage increase over four years, although the strike cost Boeing more than $5 billion and hindered production goals.

These setbacks led to numerous Wall Street analysts cutting their price targets for BA, attributing this to production delays and probable cash flow problems.

On December 29, a tragic incident occurred when Jeju Air, a South Korean carrier, crashed, resulting in the deaths of 179 individuals. The accident involved a bird strike just before landing, which led to landing gear failure and ultimately a crash of the Boeing 737-800. An investigation is currently underway, with Boeing and its engine manufacturer, GE Aerospace, participating in the inquiry.

The Implications for BA Stock

Due to these challenges, BA stock has gradually decreased from around $260 in early January to its current price of $170. Over the years, BA’s performance has proven erratic, especially in comparison to the more stable S&P 500. The stock recorded returns of -6% in 2021, -5% in 2022, a significant 37% rise in 2023, and a sharp -32% in 2024. The Trefis High Quality Portfolio—consisting of 30 different stocks—demonstrated much less volatility during the same time period, providing better returns with lower risks compared to the S&P 500 index.

The uncertain economic environment, alongside ongoing inspections for Boeing, raises questions about the possibility of BA stock mirroring its past struggles. Currently, Boeing’s estimated valuation stands at $178 per share, slightly above its present $170 value. This estimate relies on a revenue multiple of 2.0x, consistent with its average over the preceding five years. For 2025, projected sales are anticipated at around $85 billion, with earnings expected at $3.27 per share—an improvement over a $5.81 loss per share in 2023. The company has yet to release complete results for the year 2024.

Outlook for Boeing in 2025

Looking ahead, Boeing’s future could brighten in 2025. The completion of the Spirit AeroSystems acquisition is expected to help the company rectify quality issues and work towards its ambitious production target of 50 airplanes per month by 2026. Should signs of improved production rates surface, investor confidence in Boeing stock may rise. The company retains a robust backlog of over 5,000 airplanes, and a recent agreement to sell 200 jets to Pegasus Air reflects ongoing demand.

Although investors might hope for the FAA to lift the current production cap of 38 737 Max planes a month in 2025, such a shift appears unlikely without considerable improvements in quality control. Currently, Boeing remains far below this production figure. As the FAA reviews its standards, the company must also work towards meeting these targets to avoid further setbacks. Production numbers in Q4 are expected to be low due to the recent labor strike, but with the strike concluded and $21 billion raised in Q4 last year, Boeing is in a better position to enhance production rates in 2025.

In the near term, Boeing may continue to face cash burn as it navigates operational challenges. However, the upcoming year could set the foundation for a more ambitious production cycle starting in 2026, contingent upon quality improvements, potential lifting of FAA caps, and a return to profitability.

As BA stock aims for a brighter year ahead, a comparative analysis with Boeing’s peers on key performance metrics reveals valuable insights. Explore further comparisons for companies across various industries at the Peer Comparisons section.

[1] Returns as of 1/6/2025
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.