Airlines Struggling Amid Boeing Senate Hearings

|
Posted: Jun 22, 2020 12:22 PM
Airlines Struggling Amid Boeing Senate Hearings

Source: AP Photo/Elaine Thompson

After Friday’s lackluster close, the market is poised for a timid start to today’s session.   Much was made of Apple (AAPL) closing eleven stores in four states as a precautionary measure, but well before that news, Boeing (BA) lost altitude.

The stock has been reacting to any news from Senate FAA hearings, where there is rare bipartisan agreement.  Both sides of the aisle are livid about the FAA handling of 737 Max and other issues.  The cozy relationship between the FAA and Boeing reflects the balance of power the private sectors and potentially high paying jobs can have over officials that might one day leave government and seek industry employment.

Under the Aircraft Safety and Certification Reform Act of 2020, there will be greater oversight of the FAA and possibly greater barriers for the return of the 737 Max.


The skies will not get any friendlier this morning after news of American Airlines (AAL) latest efforts to find cash to ride out the pandemic. 

American is raising $3.5 billion now and in talks with Treasury for another $4.5 billion loan.   Meanwhile, today United Airlines (UAL) will not trade as part of the NASDAQ 100 its being replaced by Docu-sign (DOCU).

NASDAQ 100

In

Out

April 30th

ZM

WLTW

June 22nd

DOCU

UAL

 

There is still potential for the airlines, but the poorly run companies are not helping the others, and each swoon in Boeing has its own ripple effects.  We would stay long Southwest (LUV), but hang on for turbulence.

Key Technical Support

  • S&P 500 3,084 then 3,000
  • NASDAQ 9,834 then 9,500
  • Dow Jones Industrial 25,780 then 25,000

Portfolio Approach

There are no changes in today's model portfolio.