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Investing.com -- Wolfe Research has argued in a note to clients that Boeing’s 777X programme, often dismissed as a “white elephant,” could in fact become a key free cash flow (FCF) driver later this decade.
“BA investors fixate on the MAX & 787 today, with the rest of the portfolio (save Services biz) held as ‘do no harm,’” the analysts wrote. “In that context, the 777X is underappreciated as a source of positive FCF inflection [from $3–4B burn to $2–3B source in 2030] as cert becomes more real.”
Wolfe noted that Boeing’s original 777 was both a commercial and financial success, commanding some of the industry’s highest cash margins.
They believe the 777X, despite its long and costly development cycle, is nearing a turning point. “Certification flight activity, a full fleet of test aircraft, and all (known) major technical issues now tackled drives a confidence level in certification that has been absent in the past,” the analysts said, highlighting the FAA’s recent approval to advance to the next testing phase.
The firm suggested a successful certification could help re-establish Boeing’s widebody advantage over Airbus.
“Mission profiles of the 787/A330, 777X/A350 are different enough to avoid dog fights on price, which coupled with strong demand means Boeing’s historically attractive widebody margins could emerge on the 777X into the end of the decade,” Wolfe wrote.
They estimate margins of around 20%, adding $2–3 billion annually.
Still, risks remain. “Certifying planes is hard,” Wolfe cautioned, pointing to potential discoveries in the final stretch or ramp-up challenges. But they added that once certification is achieved, “much of the external system risk” would be removed.