- Boeing missed Wall Street estimates on both earnings and revenue.
- Travelers face grounded jets and higher fares for some time to come.
- Traders and consumers can mitigate the effects.
In its first-quarter report, Boeing Co. (BA) missed earnings and revenue estimates. These results reflect the reactions of governments, airlines and passengers following two Boeing 737 Max plane crashes in less than six months.
The impact goes well beyond the company and the passengers who tragically lost their lives. With fewer planes available, airlines have had to delay expansion plans and cancel flights. Travelers also feel the effects as they pay higher fares for the seats that remain.
However, not all investors and flyers will face negative consequences. By planning in advance, you can minimize the impact that this tragedy will have on your pocketbook and possibly find new travel options.
Earnings and Revenue Came in Below Estimates
The Chicago-based aerospace giant reported earnings of $3.16 per share, 17 cents per share below expectations. It’s also a substantial decline from the $3.64 per share in first quarter 2018. Revenue came in at $22.9 billion. The company fell short of the $23.51 billion in revenue that analysts had predicted. In the same quarter last year, the company brought in $23.38 billion.
Interestingly, Boeing stock rose by almost 0.4% in Wednesday trading. This could indicate that traders had prepared for a highly negative report. Before the tragedy, Wall Street predicted about $4.30 per share in earnings. Moreover, investors have watched the profit predictions for Boeing stock fall since soon after the latest plane crash, which took place on March 10.
Effects on Travelers May Linger
Wall Street may have adapted to Boeing’s situation, but airline passengers are beginning to feel the effects. According to CNN, airlines have grounded 371 Boeing 737 Max planes. Fewer seats will affect ticket costs. United (UAL) said it expects sales from airfares to rise by 2.5% from April through June.
Still, perhaps no U.S.-based airline will face more profound effects than Southwest (LUV). Southwest flies Boeing 737 jets exclusively. Grounding the 737 Max forced the airline to take 34 aircraft out of service. Neither Boeing nor transportation authorities have given airlines a timeline on when these planes will return to service.
What Investors Can Do
Although the financial impact will remain widespread for some time to come, there are things you can do to lessen the effects of the tragedy. Those with a comfort level for beleaguered stocks should consider a position in Boeing. Boeing stock has fallen by more than 11% since March 8, the last trading day before the plane crash in Ethiopia. Despite the negative sentiment, Boeing remains profitable amid the turmoil. Moreover, with Airbus (EADSY) being the only other manufacturer of large commercial aircraft, too many entities need Boeing for it to go away. Furthermore, while they wait for a recovery, investors can collect an annual dividend of $8.22 per share, a payout that has risen for seven straight years.
Options for Travelers
Travelers may want to reconsider their summer travel plans. With the higher cost of flying, you might want to consider a shorter plane trip or a vacation destination reachable by car. On the other hand, if you have not yet booked a nonrefundable hotel room, you might look for different ways to save on the trip you originally planned. While you might have to pay higher ticket prices, it is possible that some hotels may have cut rates due to lower demand.
Nobody can change the destructive and financially costly effects of the issues with the 737 Max. However, with careful planning, you can mitigate the adverse impacts and find options not previously available.
Keep reading to see eight great stock buys from companies that survived major downturns.
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