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Boeing (BA +3%) is trading nicely higher following its Q4 report this morning. The stock has been recovering nicely from its mid-November low of $137.03 and this report keeps the momentum going. In terms of the numbers, the aerospace giant had just issued downside guidance on January 23, so there were not a lot of surprises. As expected, Boeing reported another large loss, its 14th consecutive quarterly loss.

• Revenue in Q4 fell 30.8% yr/yr to $15.24 bln, roughly in-line with last week's guidance of $15.2 bln. Plane deliveries and financial results in Q4 were impacted by the IAM work stoppage, charges for certain defense programs, and costs associated with workforce reductions announced last year. Investors were prepared for a difficult Q4 financial result, so the shares are not likely getting punished for it.
• Our sense is that investors are focusing more on positive developments on the production front. The 737 program resumed production in Q4 following the labor strike and plans are in place to gradually increase the production rate. The numbers provide some hope. The 737 program delivered 36 airplanes in Q4, including a step up to 18 in December. Importantly, it has already delivered 33 airplanes in January with four days to go. BA expects to go above 38 per month later in the year.
• Boeing also sounds like it's going to focus on quality as much as quantity. Coming out of the strike, the company did not jump right in on building aircraft. BA spent time training the workforce, getting them up to speed and balancing the line. It was very important to get the line up in a stable manner and it's already paying dividends. Boeing also noted that it has a significant amount of inventory, both in airplanes and in supply parts. As such, it does not expect any constraints from the supply chain in terms of ramping up the 737 to 38 per month.
• The 787 program exited the year at a production rate of five per month and recently announced plans to expand its South Carolina operations. In January, the 777X program resumed FAA certification flight testing, and the company still anticipates first delivery of the 777-9 in 2026. Like the 737, BA is working to ensure the 787 production system, including the supply chain, is also stable prior to making the next rate increase.

Overall, it seems investors are focusing on the improvements on the production front and focusing less on the financial results. We suspect that will be the case in the coming quarters. We also think investors are looking a few quarters ahead on the hopes of a turnaround. Demand for air travel remains strong and while 2025 could be a rough year for BA's financials, BA has said in the past that it expects to exit 2025 with real momentum in the business as it returns to normal production rates.