Thinking About Investing in Air Travel? Listen to This.

In this episode of Industry Focus: Energy, Nick Sciple and Motley Fool contributor Lou Whiteman bring you an update on what’s going on in the airline sector, including what’s going on with Boeing‘s (NYSE:BA) 737 MAX and how air travel is faring.

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This video was recorded on October 22, 2020.

Nick Sciple: Welcome to Industry Focus. I’m Nick Sciple. This week we’re checking back in on the air travel industry with an update on Boeing’s 737 MAX and a deeper look at our favorite way to invest in an air travel rebound.

Joining me to help break it all down is Motley Fool contributor Lou Whiteman. Lou, thanks for joining me once again on the podcast.

Lou Whiteman: Glad to be here.

Sciple: So, we last talked about air travel back on September 10th. What’s new? We’re, kind of, in the middle of airline earnings right now,

Whiteman: We are, and the biggest thing that’s new is that we finally had the CARES Act aid end, which also included a limit on involuntary separations. And sure enough, this industry needs to get smaller and we have seen tens of thousands of layoffs, mostly focused on a few carriers. But yeah, we are in the middle of a very bad period and we’re, kind of, finding out now how long it’s going to last or getting a feel for how long it’s going to last.

Sciple: Right. A lot of uncertainty around how long it will take for the air travel recovery to play out. But airlines appear to, at least, be getting their feet underneath them a little bit, getting their cost structures under control, so that they have some ability to continue into the future. When we look at an air travel story that’s really been dominating the news, even back before the pandemic, that’s the Boeing 737 MAX saga. The plane has been grounded since March 2019 following crashes in Ethiopia and Indonesia that killed 346 people.

However, it appears that the 737 MAX may be ready to return to the skies soon. Earlier this week, American Airlines announced plans to return the 737 MAX to its flying schedule on December 29th, assuming Federal regulators approve the aircraft to fly.

Lou, when we look at this story, we’ve been talking about the Boeing 737 MAX, when it is going to return, for over a year now. How significant is this news for Boeing?

Whiteman: Oh, it is the story. And let’s just, to underline it, American would not be doing this if they didn’t have strong confidence that they can be doing it. The FAA has finished their review, the Europeans have said it’s about time, we’re ready, it’s going to happen. Boeing burnt through almost $10 billion in the first half of this year. Some of that was COVID-related, but a lot of it is penalties, support payments for suppliers, costs from maintaining planes that have been built but are…