Dividends and Taking flight

After 20 months grounding Boeing 737 Max made its first flights in the US flying from Miami to New York. The flight which started the long process by Boeing was an American Airlines Flight 718 and the new year celebrations came early to Boeing.

In an article by Niraj Chokshi of the New York Times News Service, the Max is the workhorse of the global airline fleet, used for domestic flights and some shorter international flights. The benefits include being significantly more fuel efficient (the airlines save money on fuel), has a single aisle plane which passengers like because of the direct, non-stop flights.

Ryanair, the low-cost European airline has agreed to buy 75 planes and Alaska Airlines bought 24 planes.

As more and more people are vaccinated, American Airlines expect to operate 91 Max flights a day. In the meantime all American airline pilots will have gone through a retraining process. The capacity of the Max 737 is 172 passengers with 16 in business class.

United Airlines expects to begin flying Max on Feb 11 out of Dallas and Houston. Southwest Airlines which has an all Boeing fleet, expects to fly the Max in the second quarter. Delta does not use the plane.

Internationally, Gol, a Brazilian company became the first company to fly the Max and Aeromexico has begun using the plane. Equally importantly to Boeing as President elect Biden becomes President and the policy towards China changes, expect China to buy planes from Boeing.

Linking to dividend paying stocks, every company has a workhorse product or service which they have to accumulate revenue. It is something investors look at, expect to have recurring revenues and when it happens all is good. Every company has faced problems, but only deep pocketed ones such as Boeing which operates in a very controlled environment can bounce back. Normally, if the big revenue base is gone, it is time to find alternatives very quickly.

There are more questions than answers, till the next time – to raising questions.

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