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Boeing's Strategic Resurgence: Why the $22B Order Signals a Turn in Fortunes

Edwin FosterMonday, May 12, 2025 4:25 pm ET

70min read

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The aerospace giant Boeing (BA) faces a pivotal moment. Two transformative contracts—the $22 billion commercial aircraft order from International Airlines Group (IAG) and the $20 billion defense contract for the F-47 sixth-generation fighter—mark a critical inflection point. These deals validate Boeing’s operational turnaround, diversify its revenue streams into defense, and leverage geopolitical and trade tailwinds to offset lingering debt risks. For investors, the question is no longer whether Boeing can recover, but why they should act now.

The $22B IAG Order: A Commercial Turnaround Catalyst

Boeing’s $22 billion order from IAG—32 Boeing 787-10 Dreamliners and six 777-9 aircraft—signals a strategic reset. These aircraft will replace aging fleets and expand transatlantic capacity, capitalizing on strong demand for premium travel. IAG’s first-quarter 2025 results, showing a 9.6% revenue surge and improved operating margins, underscore the Group’s financial health and confidence in Boeing’s products.

Crucially, the U.S.-U.K. Trade and Cooperation Agreement has slashed tariffs on aircraft components, lowering costs for Boeing and incentivizing IAG’s order. The 787-10’s fuel efficiency (burning 20% less fuel than older models) and the 777-9’s 8,700-nautical-mile range align perfectly with IAG’s goal to reduce emissions while expanding premium services.

Production ramp-up is feasible. Boeing’s $1.8 billion St. Louis facility, set to begin operations in 2026, will support both commercial and defense programs. While past production missteps (e.g., the 737 MAX crisis) loom, the modular design of the 787-10 and Boeing’s focus on supply chain resilience suggest a disciplined execution phase.

The F-47 Defense Contract: A New Revenue Engine

The F-47, the world’s first sixth-generation fighter, represents Boeing’s most significant defense diversification in decades. The $20 billion Engineering and Manufacturing Development (EMD) contract, with potential lifecycle value exceeding $200 billion, positions Boeing as the sole developer of a platform designed to dominate contested Indo-Pacific skies.

Key advantages:
- Broadband stealth and AI-driven drones: The F-47’s interoperability with Collaborative Combat Aircraft (CCA) drones creates a networked combat system unmatched by rivals.
- Modular design: Upgradable systems ensure relevance for decades, reducing obsolescence risk.
- Political momentum: Backed by President Trump’s vision of U.S. air dominance, the F-47’s timeline could accelerate—potentially entering service by 2028 instead of the 2030s.

Critics cite engine selection delays and cost overruns, but the F-47’s classified X-plane testing since 2020 provides a mature foundation. With Lockheed Martin sidelined and Northrop Grumman focused elsewhere, Boeing’s dominance in next-gen fighters is unchallenged.

Geopolitical and Trade Tailwinds: A Shield Against Debt Risks

Boeing’s debt-to-equity ratio remains elevated, but improving cash flows and external catalysts justify optimism.

Trade Agreements: The U.S.-U.K. deal and potential Indo-Pacific partnerships (e.g., Japan, South Korea) could unlock further commercial orders.
Defense Spending: Global military budgets are rising, with the U.S. prioritizing air superiority amid China’s sixth-gen fighter ambitions.
Cash Flow Turnaround: The IAG order and F-47 program are projected to generate $30 billion+ in annual cash flow by 2028, reducing reliance on debt financing.

Why Invest Now?

Boeing trades at 14x forward earnings—a discount to peers like Airbus (18x) despite its dual commercial-defense growth engines. The $22B and $20B orders are not one-offs but pillars of a multiyear recovery.

Catalysts for upside:
- F-47 engine selection (GE’s XA102 vs. Pratt & Whitney’s XA103) could resolve lingering uncertainty.
- IAG’s 787-10 deliveries starting in 2028 will boost Boeing’s commercial revenue visibility.
- U.S. defense budget allocations for NGAD (Next Generation Air Dominance) in 2026 could add billions to the pipeline.

Conclusion: Boeing’s Turnaround is No Longer a Gamble

The IAG and F-47 contracts are not just orders—they are markers of Boeing’s reinvention. The company has stabilized its commercial operations, diversified into high-margin defense, and leveraged geopolitical and trade tailwinds to offset debt risks. With a valuation that underprices its turnaround trajectory, Boeing offers a rare blend of growth and security. For investors seeking exposure to aerospace’s next chapter, the time to act is now.

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