Boeing- Flying High Again

gray and white airplane on flight near clear blue sky

Boeing (BA), is a long-time Total Return recommendation; the stock is riding the value wave that formed earlier this year.

The ride has been rough for Boeing investors over the past year. Boeing shares were trading in the mid-$300s when we entered 2020. The onset of the pandemic sent the shares spiraling toward terra firma. Shares trading in the mid-$300s were trading in the mid-$90s only a month later after COVID-19 roiled the market. 

Investors reacted as if Boeing was caught in descent from which there was no return. Those of us with longer memories knew otherwise. Yes, the immediate outlook last year was a concern, but nowhere near as ominous as the immediate outlook following 9/11. 

Boeing shares leveled out during the summer months. They began to gain altitude during the fourth quarter. They have continued to gain altitude over the first quarter of 2021. The shares trade in the mid-$200s as I write.

I see more altitude gains on renewed order momentum.

Before COVID-19, there was the 737 MAX fiasco. Following a pair of fatal 737 MAX accidents, airlines balked at placing orders for Boeing’s latest iteration of the 737 line. Boeing has finally convinced its customers that the gremlins found in the 737 MAX have been purged. Orders have resumed.

United Airlines (UAL) added twenty-five 737 MAX to the order book in February. Boeing also recorded orders for fourteen 737 MAX jets from one or more unidentified customers. 

Earlier this month, Boeing announced that 777 Partners — an investment firm affiliated with several low-cost carriers — ordered 24 737 MAXs. The order also includes purchase rights for 60 additional 737 MAXs. This deal is significant because 777 Partners is a new customer. Boeing had been relying on its current base to revive 737 MAX orders.

Boeing’s most loyal customer could be its most lucrative. The company is reportedly nearing a deal to sell dozens of its 737 MAX planes to Southwest Airlines (LUV). Since its founding in 1967, Southwest has flown only Boeing planes, nearly all 737s. Southwest had been a concern. The airline had been shopping other manufacturers to replace its aging 737 fleet.

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