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The Best Way to Play Boeing is to Buy American Airlines $AAL

While many investors who have been richly rewarded by owning Boeing Co have seen sharp share price appreciation, I’d say owning Boeing is dead money for now. It will take weeks if not months for the 737 Max to get recertified by the FAA and the reputational hit could take far longer.

After listening to American Airlines earnings conference call and Boeing executives, there is some doubt that Boeing is going to reimburse the victims of the Lion’s Air and Ethiopian Airlines for the crashes, it’s absolute certainty that Boeing will reimburse its major US airline customers like American Airlines and Southwest for losses related to their Max operations. Wall Street is fixated on the lost revenues and profits for the airlines and ignoring the fat checks these customers will receive from Boeing once the planes start flying again. Inevitably they will.

My favorite airline at the moment is American. While we made big bucks on Delta and you can’t argue with how well they are run, American Airlines stock is underloved.  It’s trading below what insiders paid for it a few months ago.  Director Benjamin bought $535.3K at $35.69 and Director Cahill bought $836.8K. Deutsche Bank analyst Michael Linenberg upgraded American Airlines to Buy from Hold with a $40 price target. The analyst sees last week’s guidance reduction as the “final cut.”

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