Boeing (BA) received a notable dual boost over the weekend as Israel approved a multi-billion dollar purchase of F-15IA fighter jets and EgyptAir took delivery of its first 737 MAX aircraft. These developments come as the aerospace giant continues to navigate production challenges and certification hurdles in its commercial business.
Israel's Ministerial Committee on Procurement gave the go-ahead on Sunday for the acquisition of a new squadron of Boeing F-15IA jets, alongside additional Lockheed Martin F-35s, as part of a sweeping 350 billion shekel ($119 billion) military expansion plan. This initial phase, valued in the tens of billions of dollars, marks the first step in a long-term defense buildup aimed at maintaining Israel's regional military edge. Defense Minister Israel Katz emphasized the need to 'keep pressing forward on force buildup,' drawing lessons from recent conflicts.
The timing of the defense deal is significant for Boeing, which reported a 21% surge in first-quarter revenue for its Defense, Space & Security unit to $7.6 billion, pushing the segment's backlog to a record $86 billion. The company's overall backlog now stands at $695 billion, reflecting strong demand across its commercial and defense portfolios. However, Boeing's recovery remains a work in progress, with free cash flow deeply negative at -$1.45 billion after capital spending in the first quarter.
On the commercial side, EgyptAir received its first 737-8, the initial aircraft in a lease agreement for 18 737 MAX jets from SMBC Aviation Capital. This delivery marks the 737 MAX's debut in Egypt and represents a key milestone for the airline's fleet renewal program. Boeing highlighted that the 737-8 offers a 20% reduction in fuel consumption and emissions compared to older aircraft. EgyptAir plans to deploy the new jet on short- and medium-haul routes to destinations including Paris, Brussels, Istanbul, and Vienna.
Boeing's 737 program is currently producing 42 aircraft per month, with the company targeting certification for the 737-7 and 737-10 variants in 2026 and first deliveries in 2027. Boeing has indicated it hopes to increase monthly production to 47 jets in 2026, pending Federal Aviation Administration approval. However, the company cautioned that any delays in deliveries, production shortfalls, or certification setbacks could negatively impact its financial results and cash flow.
Analysts remain cautiously optimistic. BofA Securities' Ronald Epstein reiterated a Buy rating on Boeing with a $270 price target, describing the company's progress as 'baby steps in the right direction.' He pointed to Boeing Global Services as a more reliable earnings driver and highlighted defense programs like the F-15EX as positives in the turnaround story.
Boeing shares closed Friday at $227.38 on the NYSE, down 0.7%. With U.S. exchanges closed over the weekend, Monday's trading session will provide the first indication of investor reaction to the dual developments. The key challenge for Boeing remains execution—translating robust demand into sustainable margins, positive cash flow, and consistent production output.
