How Southwest Makes Boeing Stock Look Great Right Now
At one time, Southwest Airlines and its upstart peers wouldn't fly long-haul routes because it was either too difficult or unprofitable to do so. But now Boeing is building the extended range 737 MAX while Airbus has the A320neo. Think of them as smaller-scale versions of the 787, says Motley Fool contributor Tim Beyers in the following video.
The extended range of both aircraft, which are expected to enter service between 2015 and 2017, makes it more likely that smaller carriers will compete for longer-haul routes such as Los Angeles to Honolulu or New York to London. And while that's no doubt good news for Boeing stock, it's bad news for legacy carriers, Tim says.
Who wins? We won't know for years, but Southwest is already the leading buyer of the MAX, and as such, seems to be a likely benefactor. There's also Alaska Airlines , which already flies from the continental west coast to various destinations in the Hawaiian Islands. The airline has ordered 37 of the planes to upgrade its fleet.
Regardless, the big point for investors in Boeing stock is that, in making more fuel-efficient aircraft, the company could be hurting its legacy carrier customers by making it easier for discount airlines to enter the longer-haul markets they've dominated for so long.
Now it's your turn to weigh in. Does rising interest in the MAX get you more interested in Boeing stock? Please watch the video to get Tim's full take, and then leave a comment to let us know what you think.
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The article How Southwest Makes Boeing Stock Look Great Right Now originally appeared on Fool.com.
Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He didn't own shares in any of the companies mentioned at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends Southwest Airlines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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