An analyst says Boeing's hold on half of a plane-making duopoly will save it
Boeing $BA is in a lot of trouble after a door plug blew out on an Alaska Airlines-operated 737 Max 9 plane, but a Bank of America $BAC analyst says the planemaker is “too big to fail” and that the challenges in front of it are not too big to overcome. It and Airbus are the only players able to field orders for commercial jetliners, and that should make it easier for Boeing to survive.
“Boeing remains uniquely positioned to the robust air traffic demand environment, with the moat that the duopoly creates,” Ronald Epstein, an analyst at Bank of America who covers airlines, wrote in an update. “However, on the other hand, turning around operations could take time and uncertainties remain in the near future.”
Some of those uncertainties include the ongoing negotiations for re-acquiring Boeing’s former division that became Spirit Aerosystems, its search for a new CEO, and bargaining for a contract with its employees represented by the International Association of Machinists and Aerospace Workers union, among others. On top of that, the company is hemorrhaging cash.
In its research note, Bank of America said it was upgrading its price target on Boeing’s stock to $200 a share from $180, which is about where the manufacturer’s shares are currently trading. That would represent a 10% increase from present levels. Boeing’s stock price is down more than 28% for the year.
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