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Boeing (BA +6.5%) is trading nicely higher following its Q1 report this morning. As expected, Boeing reported another large loss, its 15th consecutive quarterly loss. But it was much narrower than expected. Revenue grew a healthy 17.7% yr/yr to $19.50 bln, which was in-line. It was good to see Boeing return to yr/yr revenue growth after four consecutive declines. It helped a lot that the IAM work stoppage ended in Q4 and Boeing is resuming deliveries.

• Its Commercial Airplanes segment was the star of the show with revs surging 75% yr/yr to $8.15 bln with (6.6)% segment operating margin vs (24.6)% a year ago. CA segment results primarily reflect higher deliveries. Importantly, BA has made changes to strengthen its quality system and it is delivering results. BA says almost every customer it talks to reports an improvement in quality.
• Boeing is currently producing 737s in the low 30s per month, and expects that to grow to 38/mo over the next few months. The company then plans to request an increase to 42/mo with the FAA later this year. The 787 program continued to stabilize production at 5/mo in Q1 and expects to increase to 7/mo this year. The 777X program began expanded FAA certification flight testing in Q1 and BA reaffirmed its goal of a first delivery of the 777-9 in 2026.
• Boeing's Defense segment did not perform as well with revs down 9% yr/yr to $6.30 bln, but op margin improved slightly to 2.5% from 2.2%. More importantly, Boeing said it's seeing a stabilizing operational performance in Defense. Defense also snagged a key win in Q1 as the US Air Force chose Boeing to build the F-47, its next-generation fighter aircraft. The F-47 is expected to have a significantly longer range and more advanced stealth.
• Tariffs were a key topic on the call. Boeing is not being impacted much on the input cost side with much of its supply chain being based in the US. However, many customers in China have indicated they will not take delivery. As such, BA is actively assessing options for remarketing already built or in process airplanes. The silver lining is that BA has many customers who want near term deliveries, so the plan is to redirect the supply to the stable demand.

The key takeaway from the Q1 report is that Boeing's business seems to be stabilizing. That was readily apparent in its plans to increase production later this year. Also, the balance sheet is in better shape thanks to an equity raise in late 2024 and BA announced yesterday it will sell portions of its Digital Aviation Solutions business to Thoma Bravo for $10.55 bln, which will allow it to focus more on its core business.

It has been a rough few years for Boeing given all its well-documented safety issues, production delays, and the IAM strike. Recall that the Boeing recently named Robert "Kelly" Ortberg as its new CEO. He took the helm on August 8, 2024 and has been making important changes, including making the company leaner and focusing more on quality.