Thought I would never say this. But I am going to blurt it out: It's time to buy the stock of Boeing (BA) .
I know, that seems like taking your life in your hands. But I have been waiting for the head of the Federal Aviation Administration to fly on the 737 MAX and Wednesday he did, and the test looks like a good one. That might set in a chain reaction to get this jet sold.
Goldman Sachs recently put out an excellent piece talking about how the MAX recertification "could be a key catalyst." It thinks that this test and others from Canada and Europe, which I think will fall in line, are going to be milestones that could lead to a year-end recertification.
There is, indeed, broad skepticism about everything I just said. People want to wait and see. I don't think you can do that for a couple of reasons. Goldman says the free cash should be positive in 2021 and that it could surge to $22 a share in a most normalized 2022. How can you possibly wait until you see the MAX certified without the crowd flocking in ahead of you?
Yes, we need to see a bailout of the U.S. airlines if they are going to start buying planes. Even if things go awry in Washington, I think the airlines get their way, because there are too many constituents in too many areas who need competitive airlines to go places or the voters will go nuts. That's why the airlines are always getting money, and when they get money, they are eventually going to buy more planes.
But, you might say, who cares? No one's going to travel anyway.
Here's where I think the airlines have done a grave disservice to themselves. If you care about social distancing, Boeing contends that the design of the cabin and airflow system creates the equivalent of over six feet of social distancing, even on a full flight. Of course, you probably want to fly with the middle seat empty. But with demand that might not be possible. So you would want to wear a mask, anyway. The planes are all visibly cleaned. And, as Boeing told me, "sentiment analysis reveals that visible cleanliness programs are critical to passenger confidence."
Should we be confident?
Is all of that talk about how planes are safer than office buildings, because of the way air circulates, sending germs to the ground and not on each other? Here's some numbers to chew on: Since the pandemic through August, more than 1.3 billion people have flown on 19 million flights. How many cases of Covid have been documented in the airport and airplanes?
How about 19.
Nineteen cases of Covid-19.
I thought these numbers were fanciful, when I first read them. But the TSA recorded the flight statistics and the International Air Transport Association recorded the data and it has been peer reviewed in medical journals.
As terrific as these numbers are, we are about to get into a new world where you will be able to make an appointment at Walmart (WMT) , to get a test made by Abbott Labs (ABT) and in 15 minutes get results right to an app on your cellphone that could be used like a boarding pass if the airlines so choose. And, of course, a mask is standard.
I think once we conquer the testing issue, it will be difficult for countries to turn down our citizens from visiting, which would spur a huge amount of traffic. Again, I want to get into Boeing's stock ahead of that.
Right now Boeing's stock has got to be among the most hated out there. But we know air travel always recovers. It just takes time. But you have to anticipate that recovery and that means taking advantage of this low price right now.
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