From 24/7 Wall St. · Omor Ibne Ehsan · · 1m 20s
Boeing's $36 billion deal won't pay off for years
Korean Air's massive order highlights Boeing's record backlog, but delivery delays push revenue into the next decade.
In brief
Korean Air's massive order highlights Boeing's record backlog, but delivery delays push revenue into the next decade. Large aircraft orders take years to generate revenue because most payment arrives at delivery, not when the deal is signed. Originally reported by 24/7 Wall St..
The deal is already counted
Korean Air's $36.2 billion order for 737 MAX, 787-10, and 777X aircraft was previously logged as unidentified. Deliveries start in the early 2030s.
Record backlog, falling stock
Boeing's commercial backlog tops 6,200 aircraft worth $597 billion. The stock is down 11.66% this month as 737 MAX production lags.
Payment arrives at delivery
Order deposits trickle in during production, but the largest payment lands when planes are delivered. That's why headline deals take years to hit earnings.
“Order deposits and progress payments trickle in during the build cycle, with the largest chunk landing at delivery.”
Three risks to the timeline
The early-2030s schedule depends on 737-10 certification in 2026, 777X first delivery in 2027, and ramping factory output to 57 per month.
Airbus backlog locks Korean in
Korean Air can't switch to Airbus because the A320neo and A350 have their own multi-year backlogs. Boeing's duopoly position holds despite delays.
Bulls vs bears on execution
Bulls bet on $10 billion annual free cash flow if production ramps. Bears see a $155 billion market cap resting on a delivery track record Boeing keeps missing.
The essence
Large aircraft orders take years to generate revenue because most payment arrives at delivery, not when the deal is signed.
