gk-6mt/iStock Editorial via Getty Images
Boeing’s (NYSE:BA) improving production performance is restoring stability across the aerospace sector and could pave the way for a rebound in aircraft financing activity as early as late 2025, according to a new report from Fitch Ratings.
Fitch said Boeing’s (NYSE:BA) operational progress, particularly steady increases in 737 Max output, is enhancing confidence among suppliers, airlines and investors, with positive implications for Enhanced Equipment Trust Certificate (EETC) issuances, a key financing tool for airlines.
Boeing (BA) is a cornerstone of the global aviation industry, but its recent struggles — from pandemic-related disruptions to persistent supply chain constraints and high-profile safety incidents — have sent ripple effects across the aerospace sector. Production delays, regulatory scrutiny and uncertainty with aircraft deliveries have strained suppliers, complicated airlines’ fleet planning and stalled key financing markets.
Fitch notes that Boeing (rated BBB- with a Negative Outlook) has achieved tangible production gains following the resolution of its 2024 machinists’ strike, management shake-ups, and tighter oversight of manufacturing operations. The company is now producing 737 Max aircraft at rates in the mid-30s a month, with output expected to reach 38 a month by the third quarter of 2025.
The clearance of legacy inventory, with 10 to 15 previously built jets delivered each month, has provided an immediate boost to cash flow and working capital efficiency. Combined with Boeing’s (BA) recent $24 billion equity raise and the pending $10.55 billion sale of its Jeppesen division, these developments enhance Boeing’s (BA) financial flexibility to manage its significant aircraft backlog and invest in future programs, according to Fitch.
Supply chain, financing outlook improving
More reliable production rates are stabilizing Boeing’s (BA) supply chain and improving visibility for airlines planning fleet upgrades, Fitch said. The aerospace supply base, including key players like Howmet Aerospace (HWM) and Hexcel (HXL), is expected to benefit from steadier aircraft volumes, despite lingering risks such as trade tariffs and geopolitical tensions.
Fitch cautioned, however, that while the current supply chain can support near-term production targets, additional improvements will be required to sustain higher output levels in the coming years.
Crucially, Boeing’s (BA) operational stability could revive the market for EETCs, which has been subdued in recent years due to delivery disruptions and volatile interest rates. EETCs are structured debt instruments used by airlines to finance large batches of new aircraft, but they often require strict delivery timelines to avoid costly financing gaps.
The 2024 Alaska Airlines door-plug incident, which triggered regulatory scrutiny and further delays, underscored the challenges facing aircraft delivery schedules. Fitch expects EETC issuance to accelerate once Boeing demonstrates consistent on-time deliveries, providing airlines with greater financing certainty.
Substantial orderbooks requiring financing, coupled with improved production reliability, should support a recovery in EETC activity beginning in the second half of 2025 or into 2026, the report stated.
Fleet modernization to continue
While Fitch anticipates a moderation in global air travel demand, the agency doesn’t expect significant aircraft order cancellations or deferrals, particularly among large airlines that typically utilize EETCs. Airlines remain focused on fleet modernization for fuel efficiency, cost reduction, and higher passenger capacity, Fitch noted.
Order backlogs remain sizable, with Boeing (BA) holding nearly 6,000 commercial aircraft orders and Airbus (OTCPK:EADSF) (OTCPK:EADSY) exceeding 8,000. Delivery slots for both manufacturers now stretch several years into the future, reinforcing long-term demand for financing solutions like EETCs.
Certification milestones for Boeing’s 737 Max-7, Max-10, and 777X programs could further support production momentum and financing activity, Fitch added.
Despite broader industry challenges, Boeing’s (BA) production recovery marks a critical step toward restoring predictability for the aerospace supply chain and the aircraft financing market, according to the credit-rating firm.