This is what happens when the US taxpayers put up $50 or so billion dollars to buy your company and then don’t take it away from the shareholders.
BA (Boeing) is up 85 percent this week (in four days) thanks to the general market bounce and being a large part of a $50-billion taxpayer bailout in the stimulus bill.
It’s up 55 percentage points higher than the next nearest stocks in the DOW Industrial Average (CVS, UTX, HD).
All those percentage points this week for a company that was crying for a bailout even before the market selloff, and a company that last week shut down its operations in the Puget Sound area (laying off 7000 employees) even before the Washington State Governor ordered ALL essential business closed to fight the virus.
It turned out in the last couple of years, Boeing has become the poster child of all of American corporate malfeasance. Buying back stocks with tax breaks instead of attending to core businesses. Taking advantage of artificially low interest rates, courtesy of a loose Federal Reserve, to add debt and to hide diminishing earnings per share. Having wildly over paid chief executives. Those guys at Boeing a few years back moved their executive offices to Dennis Hastert’s district in Chicago when he was Speaker of the House – just before he was indicted and sent to prison. Having atrocious labor relations. They moved an entire manufacturing division to South Carolina to avoid the unions in Seattle and had to admit later they would never make up the multi-billion-dollar shortfall it took to train those yahoos to make airplaines. And finally, characteristically in the Trump era, the company got caught slipshod production values, but not before it killed a lot of passengers in two crashes. Simply said, it’s probably more known for the Max-737 and that fuck-up grounding of what? A third of the fleet?
Nevertheless Boeing, admittedly, is also so important to the US economy it is truly too big to die. It does not, however, need yet another corporate bailout by beleaguered US taxpayers.
It needs to be nationalized.
Instead, it’s pretty much leading the bounce and flying in the same thin bear-market air as the rest of the market.
And along with it, there are the rest of the birds feahtered in its bailout nest. AAL (American Airlines) up 45%, DAL (Delta) up 44%, UAL (United) up 39%, ALGT (Allegiant) up 39%. We all love these airlines, right? Love the service? Paying for extra bags? Getting stranded by canceled flights?
And the food, airline food, now that’s the best the world has to offer, right?
See the chart below. Big pop. And, of course, it better not come down with the next decline otherwise the big check from the taxpayers will be wasted.