At one time, I had a job that required me to travel quite a bit. Over a nine-year span, I flew more than 200 times to cities throughout the country. Not once did a door (or door plug) on any of those planes pop off during one of those flights.

I never thought about that until last Sunday. That’s when a door plug detached from an Alaska Air Group (NYSE: ALK) plane while in flight. Fortunately, nobody was hurt and the plane landed safely.

The plane in question was a Boeing (NYSE: BA) 737 MAX 9 jet. The door plug was manufactured by a vendor, so it isn’t yet clear exactly where the fault lies.

Regardless, the stock market immediately weighed in with its verdict. The next morning, Boeing fell 10% while Alaska Air Group dropped by half that amount.

That makes sense. The airline that purchased the plane cannot be held responsible for a manufacturing defect. If anything, the adroit handling of the crisis by its flight crew speaks well for the company.

Nevertheless, Alaska Air will most likely suffer some flight cancellations by nervous passengers. Also, it must ground some of its fleet until the FAA has determined that it is safe to put those planes back up in the air.

Boeing, on the other hand, has a more serious problem. As the manufacturer, it has a duty to ensure that its planes are safe. And right now, it does not appear it is able to do that.

Boeing Nowhere

I have never been a fan of the airline industry from an investment perspective. Planes are enormously expensive to acquire and maintain. Bad weather can disrupt carefully orchestrated flight schedules. The cost of jet fuel, an airline’s single largest variable expense, is difficult to predict.

That’s why I do not own any airline stocks in the Personal Finance growth or income portfolios. If you think Boeing is a growth stock, consider this; Its share price was no higher this week than it was seven years ago.

That’s the last time Boeing was popular on Wall Street. After peaking near $450 in March 2019, BA plummeted below $100 one year later after the outbreak of the coronavirus pandemic.

Since then, BA has traded in line with the overall stock market. Over the past two years it has gained no ground at all. Neither has the S&P 500 Index.

Over the same span, Alaska Air has lost a third of its value. The pandemic was particularly rough on regional airlines. They have smaller balance sheets and had to retrench to remain solvent.

But now, the pandemic is all but over. According to the TSA, airline passenger traffic is all the way back to its pre-pandemic levels.

That is evident in the company’s fiscal 2023 Q3 results released two months ago. During the third quarter, Alaska Air increased its GAAP (generally accepted accounting principles) per share net income from 31 cents a year ago to $1.08 this year.

However, its non-GAAP net income fell during the quarter due to “special items and mark-to-market fuel hedge accounting adjustments.” That dampened Wall Street’s enthusiasm for what was otherwise a strong quarter.

Touch and Go Landing

As I said earlier, I am not a fan of airline stocks. But if I was going to own one now, I’d take a hard look at Alaska Air Group. In my opinion, the stock is undervalued and could rebound strongly in 2024.

That belief is based on the premise that (1) Alaska Air will be absolved on any culpability for the Boeing 737 door plug failure, and (2) the FAA will not prevent Alaska Air from flying that model jet once its investigation is complete.

We’ll soon found out what kind of year this could be for Alaska Air. In a few weeks, the company will release its 2023 Q4 and full year results along with guidance for 2024.

I expect those numbers to be good. I also expect Alaska Air to strongly refute any liability related to the door plug fiasco. As for guidance, that may have to wait until the next quarter after the FAA has had time investigate the door plug incident.

You could wait until then before buying shares of Alaska Air. But if you do, its share price could be a lot higher. If Alaska Air’s share price drop turns out to be a touch and go landing, this is the time to get on board.

Editor’s Note: For market-thumping gains with mitigated risk, I suggest you also consider the advice of our colleague Jim Pearce, chief investment strategist of Personal Finance.

Personal Finance, founded in 1974, is our flagship publication and it has helped investors build wealth for nearly 50 years.

Case in point: If you had taken the initial recommendation of Personal Finance to buy Chevron, and held on, you’d be sitting on a whopping return of nearly 3,200% (that’s not a typo).

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