Failed Negotiations are Raining on Boeing’s Comeback Parade
The market reacted unfavorably to some bad news on this airframer yesterday – but all I see are potential profits.
The last couple of years haven’t been kind to the air travel industry.
After COVID-19 related lockdowns nearly bankrupted much of the airline industry, the enduring global pandemic continues to suppress air travel demand from reaching the levels we saw in the year 2019.
Despite that, airline passenger numbers have grown steadily in 2021, according to TSA data. That give us a clear indication that consumers are returning to the skies, albeit in fits and starts.
Amid the recovery of the airline industry, The Boeing Company (BA) has also been making a comeback of its own – a subject we touched on a couple of weeks ago here at Profit Pregame.
After two tragic, high-profile crashes, Boeing has made huge strides in getting its 737 Max aircraft back in the skies of some of the world’s largest markets.
But a new development is putting a huge damper on the optimism surrounding Boeing, just as the company is in the process of seeking recertification with China -the largest aircraft market in the world.
And if other companies follow suit, it could cause a tremendous impact on Boeing’s revenue in the coming years.
Where’s the money?
Yesterday, as traders returned to the market after the long Labor Day weekend, they were met with troubling news regarding Boeing.
Reports were surfacing that negotiations with Ryanair over the purchase of 737 Max 10 aircraft had fallen apart over disagreements on price.
The talks broke down between Boeing and Europe’s largest airline after 10 months of back and forth, with Ryanair’s CEO Michael O’Leary stating that Boeing’s optimistic pricing outlook did not match Ryanair’s.
That stance is a huge blow to Boeing, which was hoping to secure a deal to deliver its newest and largest 737 Max aircraft to Ryanair, but now must face the possibility that its arch rival Airbus will gain a foothold in a company that has histroically been an all-Boeing fleet.
But I don’t believe all hope is lost for Boeing. Here’s why…
How do I get some?
When I first heard about the negotiation breakdown between Boeing and Ryanair, my fist thought was that this was simply a negotiation tactic.
It’s clear to see that Boeing, having suffered over the last two years due to issues with the Max and the pandemic, is not negotiating from a position of strength right now.
Boeing is desperate for new sales, and Ryanair knows that.
Ryanair’s CEO even made a point of talking about their disciplined track record of not overpaying for planes.
I wouldn’t be surprised at all to see the two sides come back together in the near future and reach an agreement. After all, the 737 Max isn’t even expected to fly commercially until 2023.
But in the meantime, Boeing does already have a contract to deliver 150 737 Max 10s to United Airlines Holdings, Inc. (UAL).
Boeing’s shares fell as much as 2.75% in what is likely another great opportunity to buy the dip as Boeing continues on its road to recovery.
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In the Spotlight: The odds are getting better for sports gambling
For months now, I’ve been banging the drum on the sports gambling industry, trying to let my readers know what a great profit opportunity some of the best names in the space are this year.
And if you haven’t placed your bet on this one stock yet, you just got one more reason to.
Penn National Gaming, Inc. (PENN) is the country’s largest and most diversified gaming company.
And it just got bigger.
In addition to partnering with Barstool Sports to launch its online sportsbook in states across the country, Penn also recently opened the doors to its newest casino – Hollywood Casino York in Pennsylvania.
With the kickoff of the NFL season just days away, and PENN still trading well below its $136 high from March 2021, now is the time to get in.