Boeing: History As An Indicator

Apr. 15, 2020 9:15 AM ETThe Boeing Company (BA)AAL, ALK, CPCAF, CPCAY, DAL, JBLU, LUV, UAL42 Comments


  • SARS pandemic showed V-shaped recovery. COVID-19 recovery likely will not show this near-perfect rebound.
  • SARS pandemic occurred on top difficult years in the industry driven by the 9/11 attacks and the subsequent War in Iraq.
  • Boeing deliveries took years to recover.
  • I do much more than just articles at The Aerospace Forum: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

In a previous report, I had a look at some of the cost benefits Boeing (NYSE:BA) could be having regarding its liabilities in connection with the Boeing 737 MAX in China. In a subsequent piece I expanded that to map the impact on the Boeing 737 MAX for global operators using an extended model. The bottom line, however, remains that the damage a pandemic does is far greater than the good it can do for Boeing’s >$8B in liabilities related to the grounding of the Boeing 737 MAX. Currently there's a lot of downward pressure on the markets, but we also are seeing revivals. Investing in this environment, especially in airline and commercial aircraft names, is challenging. What's currently happening is unprecedented. The only thing we can do is what happened during previous disease outbreaks. In this report, we have a look at what happened to the markets during the SARS pandemic, but also to orders and deliveries from Boeing and explain why there are big differences between the SARS-outbreak in 2002 and today’s COVID-19 pandemic.

Boeing 777X COVID-19 Seeking Alpha Dhierin Bechai

Source: Boeing

History: Recovery takes months

An important starting point is determining the timeframe based on previous outbreaks. IATA already did that part for us showing that it takes 1-3 months for the revenue-passenger-kilometers to bottom and returning to pre-outbreak levels takes 6-7 months or 3-4 months from the bottom. The most important observation when looking at SARS is that it took the Chinese domestic market three months to hit the bottom and another 3-4 months to recover. In other parts of the world the hit to the RPK was less, though it should be noted that SARS was smaller in scale and global spread.

Currently we are seeing that schedules already are recovering in China after 1.5 months while in the US and

*Join The Aerospace Forum today and get a 15% discount*

The Aerospace Forum is the most subscribed-to service focusing on investments in the aerospace sphere, but we also share our holdings and trades outside of the aerospace industry. As a member, you will receive high-grade analysis to gain better understanding of the industry and make more rewarding investment decisions.

This article was written by

Dhierin Bechai profile picture
In-depth insights from an expert on the aerospace and airline industries
Dhierin is a leading contributor covering the aerospace industry on Seeking Alpha and the founder of The Aerospace Forum. With his Aerospace Engineering background he has a more indepth knowledge about aerospace products enabling him to cover a complex niche. Most of his reports will be about companies in the aerospace industry or airlines industry, comparing products and looking at market forecasts providing investors with unique and thorough insights. Dhierin has accumulated nearly 20 million views never failing to spark healthy and thoughtful discussions for investors and aerospace professionals.

His reports have been cited by CNBC, the Puget Sound Business Journal, the Wichita Business Journal and National Public Radio. His expertise is also leveraged in Luchtvaartnieuws Magazine, the biggest aviation magazine in the Benelux.

AeroAnalysis offers wide variety of services, ranging from providing data and cost models to consultancy possibilities. Check out our website for more information. Though we believe in the strong nature of our analysis, we are in no way giving buy or sell recommendations and advise everyone to do their own due diligence before making investment decisions.

Disclosure: I am/we are long BA, EADSF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (42)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.