Boeing shares advanced more than two percent on Friday, buoyed by a pair of significant defense contracts from the U.S. Department of Defense. This support from the company’s military division arrives as its commercial airplane unit continues to grapple with persistent manufacturing challenges.
A Closer Look at the New Awards
The larger of the two agreements is a contract modification from the U.S. Air Force valued at $2.43 billion. This funding is allocated for the continued development of the E-7A Wedgetail, an airborne early warning and control aircraft built on the 737 platform. With this latest award, the total value of the E-7A program rises to approximately $4.9 billion. Work under this contract is scheduled for completion by August 2032.
In a separate transaction, Boeing secured an additional $289 million order to supply precision-guided bombs to Israel. The combined value of these defense deals appears to have outweighed ongoing concerns in the market regarding Boeing’s civil aviation segment.
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Persistent Headwinds in Commercial Aviation
Meanwhile, regulatory and production issues continue to pressure Boeing’s commercial airplane business. On March 12, the Federal Aviation Administration (FAA) proposed a new Airworthiness Directive. This directive would mandate inspections of 787 Dreamliner aircraft for potential fatigue cracking resulting from manufacturing flaws.
Concurrently, the company has temporarily halted deliveries of some 737 MAX jets. This pause stems from a wiring configuration issue discovered in early March, which requires rework on undelivered airplanes. Boeing has stated that aircraft already in service do not face an immediate safety risk from this issue. Despite these delays, the aerospace giant maintains it will still meet its annual delivery targets for the year.
Market Perception and the Path Forward
For now, the multi-billion dollar influx from the defense sector is dominating market sentiment, offsetting the negative news flow from production setbacks. Whether this balance holds depends significantly on Boeing’s ability to swiftly stabilize its 737 MAX production line. The company’s broader financial recovery is closely tied to this crucial factor, as it works to restore confidence and operational consistency in its flagship commercial program.
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