Boeing's Credit Watch Removal: A Turnaround Anchored in Cash, Labor Peace, and Operational Clarity

The removal of Boeing Co. (BA) from S&P Global Ratings’ credit watch list in early 2025 marks a pivotal moment in the aerospace giant’s recovery from years of turbulence. S&P’s decision, driven by Boeing’s strengthened financial position, restored labor relations, and improved operational metrics, signals that the company has navigated its way back to stability after grappling with production bottlenecks, debt concerns, and reputational damage. For investors, this milestone raises critical questions: Is Boeing’s turnaround sustainable? What metrics should guide its future trajectory? And how does this reshuffle the competitive landscape of the aerospace industry?

The Financial Foundation: Cash, Capital, and Debt Management
At the core of Boeing’s revival is its financial resilience. S&P highlighted the company’s $24 billion cash balance as a critical buffer against uncertainty—a stark contrast to its liquidity struggles in late 2024. This cushion, bolstered by a successful $24 billion equity raise in October 2024, has reshaped Boeing’s capital structure. The equity infusion reduced reliance on debt financing, easing fears of a downgrade to junk status. As of Q1 2025, Boeing’s debt-to-equity ratio had improved to 0.6x, down from 1.2x in 2023, signaling a healthier balance sheet.

While Boeing’s stock has lagged behind peers like Airbus (EADSF) in recent years, the credit watch removal could catalyze renewed investor confidence. A rebound in cash flow from operations, driven by higher commercial aircraft deliveries and defense contracts, further underpins this optimism.

Labor Peace and Production Gains
Boeing’s turnaround hinged on resolving its protracted labor disputes. The November 2024 resolution of the machinist union strike—which had idled production lines for months—was a turning point. The strike had slashed monthly 737 MAX deliveries to 15 planes in late 2024, down from 50 in 2019. With labor peace restored, Boeing ramped up production, aiming for 25–30 monthly 737 MAX deliveries by mid-2025. This acceleration aligns with pent-up demand from airlines, many of which delayed orders during the strike.

Operational Momentum and Financial Results
Boeing’s first-quarter 2025 results provided further proof of its recovery. Revenue rose to $17.8 billion, exceeding analyst expectations of $16.5 billion, while net income hit $1.2 billion, marking a 40% increase year-over-year. The commercial aircraft division, once a drag on profits due to production delays, saw operating margins expand to 8%, up from 5% in 2024. Defense and space divisions also contributed, with the $24 billion Artemis III lunar lander contract securing long-term revenue visibility.

Risks and Remaining Challenges
While S&P’s decision reflects progress, Boeing’s BBB- rating—the lowest investment-grade tier—underscores lingering risks. The company still faces pressure to reduce costs in its struggling 777X program, where delays have led to customer cancellations. Additionally, competition from Airbus’ A321neo and regional rivals like Embraer (ERJ) remains fierce. A sustained rise in fuel prices or a global economic slowdown could also test Boeing’s recovery.

Conclusion: A Turnaround Rooted in Real Metrics, Not Just Hope
Boeing’s removal from S&P’s credit watch is more than a symbolic win—it’s a data-driven validation of its strategy. With $24 billion in cash, a 25% reduction in net debt since 2023, and production rates climbing to pre-crisis levels, the company has laid a foundation for sustainable growth. Its Q1 results, which beat forecasts across key metrics, further solidify this narrative.

However, Boeing’s long-term success hinges on executing its backlog of 4,500 unfilled commercial aircraft orders, while managing cost overruns in its defense programs. Investors should monitor Boeing’s cash burn rate, production ramp-up timelines, and margin expansion in coming quarters. If these trends continue, Boeing’s stock—currently trading at a P/E ratio of 15x versus Airbus’ 18x—could finally catch up to its European rival.

For now, S&P’s decision is a green light for Boeing: a signal that its darkest days may be behind it. But as the aerospace industry evolves, the company’s ability to innovate, control costs, and adapt to a post-pandemic travel landscape will determine whether this turnaround is more than a fleeting victory.

This analysis underscores that Boeing’s recovery, while still fragile, is now grounded in tangible progress. For investors, the path forward is clear—but the finish line remains distant.