My Return to Boeing: Can the Company Rebound?

It’s a common understanding that harming customers is detrimental to any business, regardless of intent. This is precisely why I, a small investor, opted to divest from a well-known company five years ago, as noted previously. Since that time, the company’s stock market value has plummeted by two-thirds.

Recently, with the share price reaching lows not seen in nearly a decade, I’ve decided to re-enter the market, investing 2 percent of my personal savings in hopes of capitalizing on a recovery. Being part of a global duopoly that provides crucial services for both business and leisure travel certainly adds to my optimism. Additionally, the company’s most notable customer is poised to take the reins of the world’s largest economy.

Enter Boeing (stock symbol: BA), the American aerospace manufacturer that faced a severe reputational crisis following two tragic crashes in 2018 and 2019 that resulted in the loss of 346 lives. Surprisingly, the initial reaction from the stock market was muted, possibly due to the crashes occurring far from major financial centers like New York and London.

Some may label my perspective as cynical, but I believed that had these incidents occurred closer to home, the market’s response would have been immediate and much harsher. After originally purchasing shares at $125 in 2014 with the intention of holding long-term, I sold my stake for $410 and $397 in February and March 2019, the former being a price point that has not been reached since.

This downward trend isn’t surprising given the inherent risks associated with aviation and specific challenges Boeing has faced. These worries have deep historical roots.

Just last Monday, a Boeing 737-400 operated by DHL crashed while en route from Leipzig to Vilnius, claiming the life of one crew member. The ongoing investigation includes potential sabotage.

Earlier in January, a significant incident occurred when a door-sized panel dislodged from a Boeing 737 Max 9 Alaska Airlines flight over Portland, Oregon, creating panic among the passengers. Fortunately, the aircraft landed safely without any casualties.

This led to a public and intense inquiry by a congressional committee directed at the CEO at the time, who faced tough questions regarding the missing bolts that had secured the panel. Some senators accused him of fostering a corporate culture prioritizing profits over safety.

Further complicating matters, Boeing’s Starliner rocket was recently derailed by helium leaks, leading to the cancellation of plans to safely return astronauts from the International Space Station (ISS). In a competing achievement, SpaceX CEO Elon Musk managed to bring back four astronauts safely, while two others remain at the ISS with extended timelines.

Meanwhile, Boeing’s workforce in Seattle endured a seven-week strike, estimated to cost the company $50 million per day, which concluded with a substantial 38 percent pay increase over four years. Yet, the newly appointed CEO, Kelly Ortberg, has announced intentions to significantly downsize by cutting 17,000 positions, equating to about 10 percent of the total workforce.

On the brighter side, Boeing has reinforced its financial standing by raising over $21 billion in October through share sales to institutional investors priced at $143 each, marking one of the largest fundraising efforts in its history.

Now, cautiously reconsidering my investment strategy, I’ve re-invested at $139 per share on the open market. This price is slightly more than my original investment over a decade ago and less than half the amount I received upon my exit.

Considering the turbulent journey so far, these facts offer some reassurance as typical financial indicators seem almost irrelevant. Clearly, I’m relying on instinct more than concrete data.

Although it might seem irrational to invest a portion of my life savings based on the mere hope that the situation cannot worsen, it’s essential to remember that Boeing represents one of the few critical players in the global economy, with only two primary manufacturers of commercial aircraft—Airbus being its European counterpart.

Furthermore, I’m not alone in this belief; even former President Donald Trump, despite Boeing’s troubles during his tenure, once remarked on the company’s potential, stating, “We can’t let anything happen to Boeing. It’s a company with tremendous potential.”

For those wary of placing too much faith in Trump’s judgment or my own, a promising evaluation by Musk offers hope. He noted on a social media platform that the new Boeing CEO is actively engaging with the factory and comprehends engineering principles—significant enhancements that could foster the revival of this once-great company.

Despite recent challenges, including the tragic Lithuanian crash, Boeing shares were valued at $155 on Friday, indicating room for growth.

Learning From Loss: A Regretful Investment in Bavarian Nordic

One of my more regrettable investment choices has been the vaccine developer Bavarian Nordic (BAVA). Shares that I purchased for 258 Danish krone last August have since dropped to DKK 194. This downturn stings!

As some may recall, my interest in this investment was driven by the World Health Organisation’s declaration of a global health emergency due to an outbreak of Mpox, previously known as monkeypox, particularly in Africa. Bavarian Nordic is one of the few companies producing vaccines for this distressing yet generally nonfatal illness.

On a minor financial scale, this decline has converted BAVA into an immediate regret, with a 10 percent drop within a month. I managed to sell half of my stake at DKK 234 in September.

Things worsened when the selection of an antivaccine advocate as the US health chief triggered another 16 percent plunge in shares, prompting me to buy more at DKK 182 last month, now placing me down by 22 percent overall.

Nonetheless, I remain optimistic as I observe collaborative efforts by the US, Canada, the EU, and the WHO in distributing vaccines across 17 nations, including several in Africa. This is a rare beacon of humanitarian teamwork in these challenging times.

Bavarian Nordic’s other vaccines for cholera, rabies, and typhoid may also see increased demand in light of the resurgence of international travel.

Thus, I plan to remain invested, despite the temptation to question the efficacy of these drugs, or to ponder if it would have been wiser to step back entirely.

Full disclosure: Ian Cowie’s shareholdings

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