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Analysts raise concern on Boeing aircraft profitability

Inside the Boeing manufacturing plant in Charleston, S.C.
Meghan Reeder | CNBC
Inside the Boeing manufacturing plant in Charleston, S.C.

Analysts at Bank of America Merrill Lynch downgraded Boeing's stock to "underperform" from "neutral" on Wednesday, citing concerns over the 787 Dreamliner's profitability over the long term.

"Boeing's current outlook assumes that the 787 will generate $29bn of cash by 1Q22, while our analysis shows that Boeing will only generate $14bn of cash. Boeing will likely take a charge on the 787 program and/or extend the block size," they said in a note Wednesday.

Boeing shares fell nearly 1.6 percent Wednesday and have dropped 9.7 percent this year. They were the biggest drag on the Dow Jones industrial average Wednesday.

The Dow component introduced the airplane in 2011, but has faced numerous production issues since then.

The BofA analysts noted Boeing's current 787 program totals 1,300 aircraft and that the firm has already delivered 393 units. "This means that if Boeing were to burn off the entire 787 deferred production costs in the current accounting block, it would need to generate at least an average unit profit of $30mn for the next 907 787s. In our view, $16mn average unit profit is more achievable."

Boeing did not immediately respond to CNBC's request for comment.

Boeing in the last year