Boeing – A Headwind For The Airlines?

The aftermath of the crash of Ethiopian Airlines Flight 302 has had travelers stunned, scared, and wondering if Boeing (Ticker Symbol: BA) is going to get its act together and make air travelers feel safe again.  Five months ago, a Lion Air Boeing 737 Max 8, exactly the same type of plane as Ethiopian Airlines Flight 302, crashed into the Java Sea just after takeoff from Jakarta, Indonesia killing everyone on board.

New Evidence came out on Wednesday showing similarities between the two Boeing 737 Max jets that crashed.  This caused the Federal Aviation Administration to ground all Boeing 737 Max jets in the United States.  The two crashes combined have killed more than 325 people in less than half a year.  The black boxes, which contain cockpit voice recordings and flight data, from the Ethiopian Airlines flight are going to be sent to France to be analyzed.

There are more than 370 Boeing 737 Max jets worldwide, 74 of them are flown here domestically in the U.S., with the most flown by Delta and Southwest Airlines.  Let’s take a look at their charts and see how the Boeing news has affected them.

Above is the daily chart for Delta Airlines.  (Ticker Symbol: DAL) As you can see the chart has been trapped in a two-year range between the $60.00 and $40.00 price levels. After rejecting the $60.00 level twice, once in January and once December of 2018, Delta’s stock took a hard fall at the end of the fourth quarter of 2018, down over 25%.   Delta’s stock found resistance in today’s trading session at the 100-day Moving Average at $52.16.  The stock took a corrective bounce to start the year and now seems to be in a sideways congestion pattern. A break down through that pattern could open up a move to 2017’s low of near $44.00.

(Chart above courtesy of ​www.tipranks.com​)

Based on a survey of 36 analysts across Wallstreet, the average price target for Delta’s stock is  62.18.  Based on that number, the stock is priced at a discount relative to Wallstreet’s analysts. Delta Airlines stock closed today at $50.94.

Above is the daily chart for Southwest Airlines stock. (Stock Symbol: LUV)  The stock was having a great start to 2019 rallying up more than 25% in one month!  Great fourth quarter earnings boosted the stock in January to push it through the downtrend that started at the beginning of the fourth quarter of 2018.  The stock has since given up half of that move and currently the stock is trading around $56.00.  Southwest’s stock appears to be in the middle of its yearly trading range and seems like it could make a move in either direction.  We will have to see if Boeing influences this stock in time, one way or the other.

(Chart above courtesy of ​www.tipranks.com​)

Based on a survey of 36 analysts across Wallstreet, the average price target for Southwest Airlines stock is  62.67.  Based on that number, the stock is priced at a discount relative to Wallstreet’s analysts.  Southwest Airlines stock settled today at $51.16.

Boeing shares lost 26.6 Billion in the first two trading days after the news of the second crash came out on Sunday.  Hopefully, the analytics will come back from the black box and Boeing will be able to fix and mend whatever problems it is having with its Boeing 737 Max jets. For now, It seems like the airline stock charts are trying to keep it together.  If more negative news comes out for Boeing, the airliners could be in for more headwinds.

 

 


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