Aerospace Investment Watch

A major IT outage hit Boeing operations on the last day of Q2, halting production and deliveries. However, confirmed June deliveries of 64 jets and Q2 total 171 beat consensus 160. H1 deliveries 314 best since 2018. 737 production rate increased to 47/month. Record $695B backlog. At Farnborough, Boeing won major orders: SMBC Aviation Capital committed to 100 MAX (including first 737-10 for a lessor), Riyadh Air expanded 787 fleet by 28, Philippine Airlines ordered up to 20 787-10s, AerCap ordered 15 787-9s, Uganda Airlines became a new 787 customer with 19 Dreamliner orders, and Vietnam Airlines plans to lease 19 MAX 8. However, Airbus also secured orders (Flynas 25 A320neo, SMBC 100 A320neo, Riyadh Air 6 A350), showing competitive split. The overall order race was low-key (327 total, 218 net), reflecting supply constraints. A Farnborough wrap-up analysis highlights that engine orders outnumbered airframes 2.56:1, confirming production capacity as the real bottleneck, and discounts are compressing in a seller's market – a bullish margin signal for Boeing. CEO Ortberg stated financial repair will take 'a couple more years', pushing new plane launch to near end of 2030s. GuruFocus article confirms Q2 revenue +6% but still loss, negative FCF, $42B debt, and GF Value suggests slight overvaluation with Financial Strength 3/10. Hexcel expanded long-term supply agreements with Boeing across commercial, defense, and space programs. Earnings preview (July 28) shows consensus loss of $0.24, with sharply negative estimate revisions (573% lower over 30 days), Earnings ESP -67%, and Zacks Rank #3, raising risk of a miss. Options market implies 4.9% move. Zacks analysis confirms negative estimate revision trend and Hold rating. Investors will scrutinize Q2 earnings for cash flow and revenue recognition. AerCap selecting GEnx engines for 15 more 787s reinforces widebody demand. A Seeking Alpha piece reinforces the bull case (2025 rev +34%, 600 deliveries, narrowing FCF) but remains cautious ahead of Q2 earnings. Boeing plans expansion of Mesa facility by 267k sq ft for carbon military parts, tied to $4.7B Apache contract – positive for defense production ramp. A PwC/AIA survey highlights structural headwinds to scaling production beyond 2x current rates, directly relevant to Boeing's ramp challenges. A recent sentiment piece notes analyst bullishness vs retail skepticism, with Polymarket 65% probability of earnings beat. Lockheed Martin reported a beat-and-raise Q2: sales up 11% to $20.1B, $7.94 EPS, $2.9B FCF, record $230B backlog. Lockheed also secured a $35B THAAD contract and reported 12.4% operating margin. RTX also beat and raised with $289B backlog, GTF recovery accelerating. This sets a brutal benchmark for Boeing's July 28 earnings and reinforces defense sector tailwinds. Additionally, Lockheed's 10-Q reveals $3.45B Ultra Maritime acquisition, $500M ULA guarantees, and $1.8B/$1.5B classified program losses, showing aggressive investment while managing fixed-price risks. RTX received its first US Patriot order in 30 years, a massive signal of domestic missile defense demand materializing. This reinforces the structural defense tailwind and could accelerate Boeing's Patriot seeker production scaling (Boeing supplies parts). A Barron's piece highlights the strategic divergence at Farnborough: Airbus aggressively pushing next-gen narrowbody and Wing of Tomorrow, while Boeing remains cautious, prioritizing 737 MAX production ramp and financial recovery. CEO Ortberg says airlines want better existing fleets, not new planes. CFM Rise engine adds a technology wildcard. A new analysis highlights engine makers diverging on open-fan vs conventional designs, adding to Boeing's technology strategy uncertainty. This reinforces Boeing's defensive posture and near-term focus on cash flow over long-term competitiveness, widening the gap with Airbus. A Farnborough wrap-up article confirms the industry's collective patience, with backlog math (10+ years coverage) explaining why airlines aren't rushing to order new jets. Philippine Airlines committed to nine more A350-1000s while also ordering 787-10s, showing balanced widebody demand and Boeing's ability to win back a customer after nearly two decades. This nuance adds to the competitive picture but does not change the overall duopoly order flow. Boeing's Q1 2026 beat (revenue, EPS, reduced cash burn) reinforces the turnaround narrative, especially with MAX 7/10 certifications and regained self-certification authority. This positive data point contrasts with recent negative headlines on China orders and 777X, providing a counterweight ahead of Q2 earnings. Also, Boeing highlighted new MQ-28 Ghost Bat partnerships (Hensoldt, Eaton, Leonardo) at Farnborough, signaling international interest and supply chain depth for the CCA program – incremental positive for defense growth narrative.