Investors Bet on Airlines That Don't Need Boeing's 737 MAX
25 Julho 2019 - 02:41PM
Dow Jones News
By Akane Otani
The grounding of Boeing's 737 MAX fleet is continuing to have
ripple effects in the air-travel industry.
Southwest Airlines Co. said early Thursday that it would end
flights at Newark Liberty International Airport this fall. The
reason: The airline, which has the largest exposure of U.S.
airlines to Boeing Co.'s 737 MAX, is dealing with a reduced
capacity for flights while the jets are grounded.
American Airlines Group, which along with Southwest reported
earnings before the opening bell Thursday, delivered more bad news
for the industry. It said the Boeing grounding would likely shave
$400 million off its pretax earnings in 2019, up from earlier
estimates of $350 million.
The dual reports sent many airline stocks lower, with the U.S.
Global Jets exchange-traded fund -- which includes U.S. companies
such as Southwest, American and United Airlines Holdings Inc.,
along with foreign airlines -- falling 2.4% and heading for its
steepest one-day decline since May. Shares of Boeing, which said
Wednesday it might have to halt 737 MAX production if the grounding
dragged on, recently was down 3.5%.
Instead, investors are embracing airlines that don't rely
heavily on Boeing's troubled model.
JetBlue Airways Corp. jumped past the S&P 500 Thursday. It
is one of the airlines that had no plans to fly Boeing's 737 MAX in
the coming months, meaning the continuing grounding has had no
effect on its bottom-line. Shares were recently up 1%, on track to
set a fresh closing record.
Allegiant Travel Co., a discount airline that also doesn't have
exposure to 737 MAX jets, recently was up 4.8%.
Write to Akane Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
July 25, 2019 13:26 ET (17:26 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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