Thursday, April 13, 2006
Funny thing about gut feelings -- Boeing, you're killing me
Boeing (BA) stock raises to record levels is something I only heard in my head 4 years ago. I can't remember when it was but after 9/11, Boeing stock dropped to all time lows and then again a couple years later. (3/12/03 at 24.73 ... okay I looked it up.) I thought to myself, I should buy as much of that as I can. I didn't. DOH!
It was just one of those "gut feelings" and then this morning I find myself wondering why I had gas over that company. I doth pondereth.
Another thing that happened right after 9/11 is the US Federal Government approved a subsidy for airline who were loosing money in a big way. If I remember correctly, this subsidy was in the billions of dollars. I wrote to my favorite congressman Ron Lewis who also happens to be my representative here in the bluegrass state. I presented a concept that I thought was good and the reply I received acknowledged the idea and made no promise... I felt heard... that's good enough.
In my letter to the Congressman Lewis, I suggested that instead of sending all that cash money to the airlines, perhaps it would be more wise to send it to Boeing. (I have a soft spot in my heart for Boeing because of my time as an aircraft Crewchief on the greatest airframe they ever produced, the B-52.) My justification for this was multifaceted but in a nut shell, the airlines would have benefited, the manufacturer would have benefited and the American people would have benefited.
The idea: Use the subsidy to purchase brand new airframes. Sounds weird I know but bear with me.
The United States airline fleet is aging to the point of hazard. New materials, manufacturing methods, electronics and processes make modern aircraft safer and more economical to operate. From structure to avionics, our domestic fleet of aircraft could use an overhaul. By underwriting the production of new aircraft, the Fed could ensure that new safety standards are implemented (and now in hindsight, even hazard detection and avoidance). The money could have been used to purchase the aircraft and perhaps put them on long term low (no) interest payment thus costing the American tax payer much less.
By sending the money to manufacturing, more US citizens are affected by the investment over sending it to the general funds of the airlines. To be clear, I wasn't suggesting that the airlines didn't need the money nor was I suggesting they didn't need immediate assistance, I was simply suggesting an alternate idea that may not have been considered. But I digress...
From the work spaces of the sub contractor to the family traveling to see grandma, so many people would have benefited from a tangible investment in new and modern jumbo jet airliners. Look at the 787 Dreamliner for example, it safer, faster and uses 20% less fuel than comparable aircraft. Look at the flight deck and the safety. Think of all the people involved in producing, maintaining and flying on these new aircraft. Yes, that would have been a great investment I think. But... it wasn't to be.
Back to my point.
Having thought about our aging fleet of aircraft and having a pretty good idea of the life expectancy of a large airframe, I had a gut feeling that Boeing stock would increase in value. I was right. This past week, Boeing stock has flown through the roof dragging the entire Dow Jones average with it. This on an order from China? I don't think that's the only reason. From my outsider perspective, they have been doing a good job addressing internal issues in supply, production and cost reduction as well. I say outsider because I'm no financial guru nor am I actively researching Boeing. It's just what I read in the news.
Had I gone with my gut, I could have quadrupled my equity in 3 years... darninit all. When am I ever going to learn?
For the record, I don't own ANY Boeing stock nor am I any kind of financial advisor. I'm a small businessman who likes to type out his thoughts at 6:00 in the morning.
