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NEW YORK (Real Money) -- Apple (AAPL) - Get Apple Inc. (AAPL) Report isn't the only big-capitalization company that shot the lights out today. Boeing's (BA) - Get Boeing Company Report performance is nothing short of amazing. It's almost as if CEO Jim McNerney and company answered every single question, rebutted every single objection that we have heard about this company's performance for the last year.
Remember, Boeing was the best-performing stock in theDow (DIA) - Get SPDR Dow Jones Industrial Average ETF Trust Report in 2013, and then took last year off as there were many issues about cash flow, labor and pensions, design, defense spending and overall demand, particularly in a declining oil price environment.
What did Boeing do besides blow the earnings away? It did it in style, with the highest-quality components possible. The cash generation was much better than last quarter and last year. The labor situation, dramatically improved with the huge production increase coming from management-friendly South Carolina, will take a huge turn for the better when Boeing goes from a defined benefit to a defined contribution plan. That's a gigantic de-risk for a company with a gigantic number of employees.
Starting this quarter, there simply were no production issues from any aspect of their portfolio, including the once-troubled defense side of things. Speaking of defense, not only are Boeing's programs fully funded but they are starting to get a lot of orders from countries that recognize we can't defend them and they have to defend themselves.
Finally there's demand, and the demand is amazing. Eight-year backlog. Who has that kind of visibility? And a definitive, put-it-to-bed discussion about how lower oil prices don't derail orders. Let's do some quoting. Here's what McNerney said about demand: "Our view of the business environment remains positive given favorable global air traffic trends, improving airline profitability and the continuing need for efficient and value-creating products we provide." He goes on: "Strong growth in the commercial airplane market continues to drive demand that supports our planned production rate increases over the remainder of the decade." The airlines, he says, "want a superior economic and a rapid return on investment to replace older, less-efficient models."
How can that be given how lower oil prices would seem to cut against new orders of fuel efficient planes? "Historically," McNerney says, "we've seen aircraft orders more correlated to airline profits and, as many of you may recall, we closed the business case for a launch of the 787 when oil was at $40 a barrel."
Lower oil prices haven't changed commitments or planning, he went on to say, in part because "the new, technologically advanced airplanes not only have far better fuel efficiency and lower maintenance costs but also often deliver higher passenger and cargo revenues, increased residual values, a better overall passenger experience and greater range allowing for new fares and more optimal routes."
In other words, it is all about a much bigger value proposition than just fuel savings.
I say case closed.
The simple fact is that healthy airlines and jammed planes mean more planes are needed, especially when the newfound consolidation keeps fares high.
We had a lot of pieces of the puzzle. We had the airlines all reporting amazing numbers and are buying all the planes they can and yet are still able to return capital. We have planes jammed to the gills. We had Alcoa (AA) - Get Alcoa Corp. Report , Honeywell (HON) - Get Honeywell International Inc. (HON) Report and United Technologies (UTX) - Get United Technologies Corporation Report all say aerospace demand is unprecedented.
But because of worries about the weak euro giving Airbus an edge as well as the lower oil prices, most figured that Boeing would blow it. They had become used to the 2014 pattern of a stock that shot up after it reported only to go down as the conference call came on and we heard caveats to the numbers.
Not this time.
It was as good as it gets. And that's how Boeing could be so strong even as so many people have given up on the stock and others had started shorting it at every increase.
Editor's Note: This article was originally published at 3:30 p.m. EST on Real Money on Jan. 28.
At the time of publication, Jim Cramer's charitable trust Action Alerts PLUS was long AAPL and UTX.