As Boeing burns through $3.8 billion in cash, it exposes a painful truth for investors: Right now, it can’t make planes fast enough to turn a profit

In the early hours of April 24, the Boeing Co. posted staggering losses for Q1 of 2024. The troubled manufacturer suffered a deficit of $3.8 billion in free cash flow, meaning that it bled 22 cents for every dollar collected in revenue. Though its numbers were better than those Wall Street predicted, investors weren’t reassured: By midafternoon on Wednesday, Boeing (BA) shares were trading down around 3%, at $164. Its stock has dropped over 35% this year, and hovers near October 2015 levels. The notorious door-plug “blowout heard round the world” on Jan. 5 killed a budding resurgence in its shares, and nixed management’s forecast that the more than century-old stalwart would rapidly regain its pre-COVID delivery rate, driven largely by soaring shipments of its two bestsellers, the 737 Max, and 787 Dreamliner.

Indeed, Boeing’s big problem is that it’s a huge fixed-cost manufacturer that’s not making nearly enough commercial airplanes to pay for all those buildings and people, let along generate a profit. In Q1, Boeing shipped just 67 narrow-body 737 Max to customers. But even that lowly number exceeds what it’s actually producing. Around 25 of those aircraft were built several years ago for Chinese airlines, and were part of 140 planes made before 2025 that, as of the end of last year, were sitting stored in its “shadow factories,” where they required expensive maintenance and rework. Frozen since the Ethiopian Airlines crash in March of 2019—the second of two disasters that killed 346 people—deliveries to China only restarted at the close of last year.

Hence, Boeing shipped just 14 737s every four weeks in Q1, as well as four Dreamliners; those figures contrast with 33 and six, respectively, last year, and 44 and 11 in 2018, the last pre-disaster years when the manufacturer was immensely profitable. Most analysts put its 737 production rates much lower, in the mid-teens to single digits. Put simply, Boeing’s making roughly one-quarter as many commercial planes as five years ago, on a similarly gigantic cost base that it must maintain to prepare for the ramp to come. Hence, the losses on every flying machine that rolls out of its plants in North Charleston, S.C., and Renton, Wash., are immense.

Boeing should come back strong, but the path will be long and arduous

For now, the FAA requires that Boeing hold its output of top-seller, the 737 Max line, at a maximum of 38 per month. Analyst Seth Seifman of J.P. Morgan predicts the pace will hit just 30 per month this year, rising gradually to 46 in 2027, still below the high reached a decade before. As of the Q4 earnings call, CEO David Calhoun was still predicting that Boeing would reach $10 billion in free cash flow sometime in 2025 or 2026, though he cautioned that it would get there toward the end of the target period. Largely the result of this long span of muted production, Seifman is positing a much longer path. His forecast: Just $4.5 billion in 2025, and $7.5 billion the following year. Even by 2028, he sees Boeing falling slightly short of its $10 billion goal. The reason: At Boeing, profitability’s all about how many planes it can deliver per month to offset, then far exceed, those super-high fixed costs.

The markets don’t believe Boeing will get to $10 billion on schedule, either. Its current, beaten-down market cap of $100 billion would give it a super-bargain valuation of 10 times cash flow expected in just two years or so. A price to projected cash flow ratio that low means the investment world reckons that Boeing will make far less by 2027 than Calhoun was predicting.

Boeing needs to conquer ‘traveled work’

One huge and looming issue? The misguided practice Boeing brass call “traveled work.” It occurs when workers at stations on the assembly line lack parts that should be installed in their posts, but managers allow the plane to keep moving ahead, even though they’re key missing components. When the mechanics, say, finally get the right parts, they need to rush ahead, often by several stations, to install them.

Over the past several years of earnings calls and 10-Ks, traveled work received scant mention. But management is now stressing that the method leads to rushed, out-of-phase production—and that greatly reducing it is now job one. “Traveled work has existed for a very long time, and in recent years, we’ve tried to get ahead of it,” CFO Brian West stated at a Bank of America conference on March 20. “Turns out, it wasn’t enough.”

Top managers are now admitting that Boeing faces a broader challenge than just erasing traveled work. They’re conceding that the company strived to produce planes much too fast, and that its manufacturing machine needs a big overhaul. “For years we prioritized the movement of the airplane through the factory over getting it done right, and that’s got to change,” West stated at the BofA event. “The management team got it in the immediate aftermath of January the 5th … We acknowledge that we need to improve upon safety and quality and conformance.”

Only by going slow can Boeing shelve traveled work and restore its tradition of high-quality manufacturing. And low production rates equate to subdued earnings. But that’s the price this maker of airborne wonders must pay to restore the profitability it once garnered by cutting corners, and now can only restore by doing everything right.

This story was originally featured on Fortune.com