Boeing shares have lost 15.4% over the past twelve months, underperforming the S&P 500's 17.0% return, as production constraints at the company's own factories emerge as a primary headwind. Despite holding a backlog of more than 6,200 airplanes, the aerospace manufacturer is struggling to convert that demand into delivered aircraft, a challenge management has explicitly acknowledged.
The core of the operational issue lies in the 737 MAX assembly line. In a report from Reuters, Boeing management noted on September 16 that stabilizing the production rate at 47 jets per month is taking longer than expected. The delay is attributed to wing production issues at one facility, which the company says it plans to address. The stock declined following these remarks. This target of 47 units per month is only the first step in a broader scaling plan. During its July 28 earnings call for the second quarter of 2026, executives outlined a next planned rate of 52 jets per month and warned that subsequent increases to 57 and beyond would be more difficult to achieve. Thus, Boeing is already behind schedule before tackling the production steps it predicted would be harder.
External factors compound the internal manufacturing risks. Management stated during the July 28 call that supplier readiness, particularly for engines, remains a critical variable for its 2027 production and delivery plans.
Financially, Boeing's largest segment, Commercial Airplanes, generated $41.5 billion in fiscal 2025 revenue, representing 46% of total company revenue and an 81.5% increase over fiscal 2024. However, the division remains unprofitable. In the second quarter of 2026, Commercial Airplanes revenue rose 8% year-over-year to $11.8 billion, yet the unit reported an operating margin of negative 2.7%. Although this margin improved from the prior year, management noted that the 737 and 787 programs are operating only slightly above breakeven due to pricing. Executives expect higher-priced jets from the backlog to improve margins, but this depends on successfully building and delivering them.
The company’s financial health is further pressured by leverage. Boeing carries debt equal to 30.8% of its market value, compared to 21.0% for the S&P 500. On the July 28 call, management maintained its 2026 free cash flow outlook at $1 billion to $3 billion, noting that late-year cash flow would benefit from rising delivery rates. However, this projection was set before the September 16 comments regarding the 737 delay, meaning it may not fully account for the production slowdown.
Boeing stock currently trades 25.5% below its 52-week high. The upcoming third-quarter report will be the next opportunity for management to update its cash flow outlook. A revision below $1 billion would indicate that slower deliveries are beginning to impact the company's liquidity.