Should the Government Bail Out Boeing and the Airlines?

In this episode of Industry Focus: Energy, Nick Sciple and Motley Fool contributor Lou Whiteman focus on the government bailout for the aerospace industry in general, and particularly, on Boeing (BA -1.02%).

The airlines have been one of the industries most affected by this current pandemic, with major routes suspended indefinitely. What are the airlines getting from the stimulus? What does their outlook look like? And should you consider their stocks?

Lastly, they answer listeners' questions. Find out if you should have a certain multinational conglomerate on your watch list, and much more.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on March 26, 2020.

Nick Sciple: It's Thursday, and we're diving into the government bailouts ahead for the aerospace industry. I'm your host Nick Sciple. Joining me today to break it all down is Motley Fool contributor Lou Whiteman. Lou, welcome back on the show.

Lou Whiteman: Thanks for having me, always a pleasure.

Sciple: Yeah, it's great to have you on. And you were on the show back on Feb. 27. Since then, the stock market is now down 12% after this rally the past couple of days, when we entered bear-market territory in that interim. What have you been doing as an investor during this kind of crazy volatility?

Whiteman: So, this is from Twitter, so it may not be true, but I actually just saw: Technically, we are up 20% in three days, so we are out of bear-market territory. So, congratulations, we did it.

You know, I've been doing what a lot of people are doing -- watching and just trying not to watch too closely. We talked last month about trying to separate material impact from permanent impact. And I've been trying to continue, as I look at the stocks: A lot of the economy is going to get beaten down, and a lot of companies are going to show poor results in 2020, but are trying to determine if there isn't permanent damage done, trying to weather the storm. You know, that's easier said than done, but, yeah.

Sciple: Trying to think long-term, you mentioned weathering the storm, and that ties into the news today. Late last night, the Senate unanimously approved a $2 trillion emergency relief bill intended to offset some of the financial damage going on from this pandemic. It's insane how quickly this happened, Lou. Have you ever seen anything happen like this before? You've been watching the markets a lot longer than I have.

Whiteman: You know, it's funny, it feels both quick and too slow. Yes, it's come together really quickly, but at the same time, parts of this, like the checks to consumers, I'd argue -- they should have been doing that two weeks ago to really stop the damage. But you know, it's still the old Winston Churchill quote about America [getting] it right eventually. And when push comes to shove, there is a need here. It's coming together; it sort of rhymes with 2008, but it's much different. But put on the spot, we are finally getting something together, and hopefully for the good.

Sciple: Yeah, a lot of stuff to unpack here, and just a signpost for our listeners: This could be one of our longer shows, since there's a lot of stuff to talk about. I'll just kind of run through some of the facts and figures from this bill:

• $1,200 checks going to all Americans earning $75,000 or less. It's going to be phased out for folks earning above that threshold.
• $367 billion in employee retention funds for small businesses.
• $500 billion in corporate rescue funding.

And the part that we're going to talk about today is monies allocated for passenger airlines -- $25 billion in loans and certain other guarantees, as well as $25 billion in things like grants. There's another provision of the bill that authorizes $17 billion in assistance for companies deemed crucial for national security. And many observers have signposted that that is likely to ensure assistance for Boeing.

So I want to talk about Boeing first, before we get into the airlines. This is a company that's been through the wringer in the last year. What was the financial position of this business even before the coronavirus disruption took place?

Whiteman: Yeah, Boeing has been a mess. The 737 MAX is the first thing that comes to everyone's mind. It was grounded almost more than a year ago now. It was early March 2019, after a pair of fatal accidents. Boeing is a huge company with plenty of financial resources. The MAX was going to be a big seller. So this hadn't been a great period going into this.

The issue now is, you know, the MAX was already off the table, wide-body demand, the larger commercial planes. That was showing signs of weakness even before that; now you have airlines grounding 70%, 80% of their fleet. And with that, that's going to be A, less demand for spare parts in the near term, and [B] potentially, if this lasts long enough, they're not going to need all those new airplanes. And so, this is a serious situation for Boeing, a company that was in a huge mess already.

Sciple: Yeah, as a company, it more or less doubled its debt load in 2019, and then most recently, back in December, CEO Dennis Muilenburg was ousted from the company right on Christmas Eve, which is a great time to drop this type of news when, you know, everybody is getting ready for Christmas. But when you look at this new leadership in place, the issues around the company, I think Congress called them out as "culture of concealment": How confident are you in this leadership to navigate these issues ahead?

Whiteman: Well, Boeing is a real Jekyll-and-Hyde company. It's an amazing portfolio, an American powerhouse -- but at the same time, cultural issues. The 737 MAX really exposed a lot of just, you know, poor practices in the company. But this is a company, if you go back 20 years, their last big military win on the aviation side was a tanker program that the CFO ended up in jail over that. And that program comes in billions over budget. When they finally delivered a plane, the Air Force had to ground it immediately because there was construction debris left in the plane.

This is just a weird company. Dave Calhoun is new leadership. They definitely needed to replace the CEO, but then again, he's been on the board since 2009, so he has overseen a lot of this.

You know, Boeing is still -- I have no desire to touch it. I didn't have any desire to touch it when all the other stocks weren't on sale. And now, there's so much else out there you can buy, that you can look at right now. It's an amazing company, amazing potential, but you know, I have no confidence to buy in.

Sciple: Yeah, when you look at the duopoly this company is in, it's really hard to see them getting disrupted, but a lot of these cultural issues really give you some concerns. Reminds me some about GE [General Electric], you know -- we heard the news a couple of years ago about all the issues that [had] built up over time, then all of a sudden the stock collapsed.

You mentioned the tanker thing. My hometown Mobile, Alabama, originally won that tanker contract; Airbus originally had won that contract, [but] Boeing pulled some kind of political strings. So there's not a lot of goodwill around that company in my hometown either. You know hopefully, they can navigate this. As you said, this is a really important business.

When you look at the state of the business, you mentioned the sell-off or the issues in the demand for wide-body planes. However, this new CEO has said that if the government, as part of these bailouts, wants to take equity, they might not even take the money. So, are they positioned to ride this out, notwithstanding support from the government?

Whiteman: That comment was another in this long list of just, "Wow! what's going on there?" for me. And again, with a new CEO, but sort of the same talk. I think, honestly, they have $15 billion in liquidity, they have a $25 billion in annual sales defense business that, while it's a small part of Boeing, it would rank as a top five defense contractor. That's a company within a company.

Boeing has liquidity; Boeing has a runway. I would imagine when those comments were made, you probably heard a silent scream from the supply chain. That's what worries me. You have a second tier that is very reliant on Boeing, that is very reliant on new plane sales: Spirit AeroSystems [Holdings], Triumph Group; beneath that, you have their suppliers. These are very specialized equipment; you're building, even if it's just a small screw, it's a screw that is to a technical specification. All it takes is one liquidity issue in that supply chain, and the whole thing crumbles quickly.

Does Boeing need it? I think Boeing could certainly use it. Does Boeing's supply chain need it, and should Boeing's CEO shut up and take it? Absolutely. For the long-term good of the business and for, honestly, the defense side too; a lot of these guys work on defense too. There's a lot more going on there than Boeing's CEO deciding to flex his muscle in a television interview.

Sciple: Yeah, it's just, whether you need it or not, it's a really bad look in the context of all the things the company has gone through and the fact that they -- I mean, I think the number called out was they wanted $60 billion in assistance. Come on, if you're asking for me, the taxpayer, to bail you out, just take the money, all right?

And you called out the suppliers, this is another thing we're seeing across industries right now, through this rise of just-in-time inventory. Once some of these factories get closed, how long does this kind of bubble out through the system? Even assume that there's no financial difficulties, once one of these factories is closed and you disrupt the supply chain: How long until these things can really get back up and running? Is that something we should be thinking about as investors as well?

Whiteman: It's definitely something to monitor. I mean, it was really interesting to me that the defense side of this is much more stable. We're not going to see demand for military platforms fall off the cliff the way we could commercial jets. But the Pentagon has been, I would say, admirably proactive. They put out a memo telling their prime suppliers, they're actually going to make progress payments ahead of time, they're going to up the percentages with the goal for that liquidity to trickle through the system.

Again, this is the other side of the same coin. A lot of these suppliers are on razor-thin margins. They have a commercial business and a defense business. If the commercial business is falling off a cliff, it's not in the Pentagon's best interest to see the suppliers, you know, wounded or shutting down.

I mean, the Pentagon, it's good business for them to do that, but I think it also should be taken by the market as a signal that they saw a reason to do this.

It's hard to say, liquidity is coming into the system, so I'm not predicting gloom-and-doom, but it's certainly something we need to be watching.

Sciple: Yeah, all I have to say, I think both Lou and I agree, given the cultural issues at Boeing, that they were still in really dire straits when it comes to what was going on with 737 MAX, even leading up to this. Even if the government comes in and bails them out, this is not a company I'm superexcited about buying into, given the value across the entire rest of the market.

Whiteman: Right. And that's one last point, and I haven't checked it today, but you know they were so highly valued because of that commercial business, as much as they've fallen. Going into this week they were down 70% for the year, which is just crazy for a company that size, but even then they were on a multiple that is comparable to some of the other defense companies. This is not a company that was on sale necessarily.

And yeah, there's a lot of good aerospace companies that look a lot more attractive right now than they do.

Sciple: Yeah. So, moving on from Boeing to discuss the airlines, who are really the big focus of a lot of this legislation. What was the financial condition of these companies before the coronavirus disruption?

Whiteman: So, this is the part that's a Shakespearean tragedy, because this is an industry that throughout its history, since deregulation in the 1970s, has just been a miserable place for investors. Warren Buffett famously said, if a capitalist had been at Kitty Hawk, he would have shot them down. That kind of sums up investors' feelings on the industry.

Every downturn, we've seen storied names fall from the sky, whether it's TWA, Braniff, Pan Am, so many great companies. Last time around, post 9/11 they all went into bankruptcy, they all did deals. This industry was healthier coming into this than they have ever been before. American Airlines [Group] (AAL -1.60%) CEO Doug Parker, famously, and now regrettably, said: I don't know if airlines will ever lose money again. [Editor's note: Parker's actual quote was "I don't think we're ever going to lose money again."]

That quote doesn't look good right now, but there was a reason he said that. This industry came into this ready for a downturn, they didn't come into it ready for revenue to fall to zero, and that's what they got and so they end up in the same place anyway, even though they did the right things.

Sciple: Yeah, it's tough. You know, you look at the airlines and people say, "Why didn't you develop...have this rainy day fund for if this takes place?" And listen, given the probabilities of something like this happening, that was a risk they were willing to take. And I think a lot of investors thought that was a reasonable risk to take, and then these things happen, and you're kind of left holding the bag.

Whiteman: Sure. And if you look at the specifics of what some of these are saying and try to imagine what company in the S&P 500 could take it: Delta [Air Lines] (DAL -0.45%) predicts second-quarter revenue will be down 80% year over year. United [Airlines Holdings] (UAL -1.82%) has cut almost 70% of its schedule. Hawaiian Airlines [Hawaiian Holdings] (HA 2.00%) is suspending all but two flights off of the island. Yes, the whole economy is hurting right now, but find me a business that has just seen revenue go to zero in the near term, and then the question is: How long can any business survive, pay their employees, which mind you, for now at least, the airlines have continued to pay their employees. Find me an industry that can see revenue go to zero for months and not be in trouble. This isn't a matter of saving for a rainy day.

Sciple: Right. And you have to think about the operating leverage of this industry, the fixed costs to just maintain your fleet, all those sorts of things. If you don't have revenue coming in the door, it really starts to eat up on you really, really fast, when you have the kind of operating leverages that these businesses have.

So, one of the criticisms around the airlines and them getting, kind of, support from the government has been this number: I think Bloomberg came out with the article saying [that] over the past decade 96% of free cash flow has been spent on buybacks, and that you know the airlines should have been more prepared for this. So what are your thoughts on those criticisms of the industry?

Whiteman: All right. Well, as much as it pains me, as I said before in articles, as much as it pains me to be the defender of moral hazard in corporate welfare, and there are some ugly stats here and it's hard to defend some of these practices. But for one thing, you should never set policy based on a tweet, and you should never set public policy based on one stat. That 96% of free cash flow number [that] went into buybacks is accurate. It is also only accurate because [it's] industrywide, and is heavily weighed by American, a company that was doing a huge amount of investment in its fleet which limited its free cash flow, which makes the number look really bad. You know, United isn't great either, so it's not just [that] I don't want to pick on American, but if you look at a company like Delta, you look at a company like Alaska [Air Group], their numbers were actually lower as a percentage of free cash flow than the S&P 500 average.

I would hate for lawmakers to set a policy or decide on the fate of the industry based on one stat that takes the whole industry and not look at these companies. And while it exposes a problem in the system, this is hardly confined to the airlines. And it makes for bad policy when you try and correct long-term issues in the moment of a crisis.

Sciple: Yeah, I agree with that. I will say, when you look at Doug Parker out of American pulling in almost $200 million in stock-based compensation over that time frame: This is a company that did spend more than its free cash flow on buybacks. When you look -- I mean, the whole industry, $431 billion in buybacks, just makes me, as someone kind of bailing out this industry, really conflicted on, you know, we want to protect the employees -- but also, I mean, gosh! Should these folks be able to pull $200 million out of the company, and then get bailed out by the government with any consequences? I don't know.

The other thing we think about a lot here is [that] Warren Buffett is a massive owner of this industry, 10% across the board. So, as we come in and save the equity here, we're really kind of bailing out Warren Buffett to a certain extent.

Whiteman: To a certain extent. Again, nuance, nuance, nuance in all of these things. Warren Buffett owns a major stake in all of the big four airlines. They control about 80% of the market, so you are correct.

For me right now, the bigger worry is some of the airlines Buffett doesn't own, the smaller ones. There's also -- and I remember this from the TARP program [Troubled Asset Relief Program] back in 2008 -- part of this is a confidence game. All of these airlines have billions in unencumbered assets that they can borrow against. The question is, will someone make those loans? Part of what we're trying to do with a bailout is for the government to come in, flex its muscles, [and say: "We're not going to let this industry fail." The counterparty on the other side holding an existing loan, or thinking about making a loan, is going to be more willing to step in if they believe the government will be there if things get worse. And that is, as far as just yelling "Let the private markets handle it," this is a very blunt instrument and a not great way to do it. But in effect what we're doing is, we are clearing the way for more private investment.

Sciple: Yeah, exactly. It's kind of that liquidity backstop. So, if you're someone who's going to loan to this business, you have some assurance that you'll recoup your investment. So, as a result, [laughs] if I was having to loan to these airlines right now and I was worried they're going to go bankrupt here in a few months, the interest rates that I'd be demanding or the types of covenants I'd be demanding would just be so prohibitive. So, that's been very important.

Another part of this bill that has been called out is they've rolled out waivers on fuel and excise taxes through 2020, which a Bernstein analyst came out and said that should save American $1.3 billion in taxes, $2.32 a share; $1.53 a share for Delta; $3.73 a share for United Airlines; and $0.90 a share for Southwest [Airlines]. So, that's really helping them as well, even away from the direct cash infusions.

Some of the conditions on accepting these funds have been, they'll have to suspend dividends and buybacks through 2021, caps on CEO pay, that sort of thing. When you look at these conditions placed on these bailout funds, what are your thoughts on those?

Whiteman: Sure. Just to back up real quick to the taxes thing, that is interesting, I was just pulling for one company. I think you said $2.32 per share for American, that it's a benefit.

Sciple: Yes.

Whiteman: In the last 90 days, American's consensus estimate for 2020 has gone from a $5.34-per-share profit to a $3.12-per-share loss. Which again, not as to say good or bad, but that $2.32 is a huge number -- but what we're talking about here is a much bigger number. And that's kind of all of these things, just the context and the, yeah-buts.

But, yeah, as for the conditions on the bailout, the package, and this gets to sort of the moral hazard: I think what I've read is appropriate. I am curious, especially on the equity side of it, if it's required. Because I can see some of these stronger airlines turning it down, honestly, or at least saying, "Not now."

The loans make sense, the loans the government gets back. We forget, but the government actually did really well on TARP, way back when.

I get the lack of grants. I think the argument for grants would be, in effect, it's an employee stimulus plan, because you give us the money, we'll make sure, even though we're only flying 30% of our flights, we're not laying off employees. You can go back and forth, but certainly there should be some accountability, especially when the loans are in place. I get nervous about permanent stipulations, because it's hypocritical to both say, "You guys are private companies, you should use the private markets," and then handcuff them in terms of what they can do relative to other companies.

Delta isn't competing for capital with American, Delta is competing for capital against every other company out there. And if Delta has rules either on executives or on their stock or on their repurchases long-term, it is harder for Delta to get private sources of capital.

So, permanent things, trying to write legislation for one industry when you have a bigger problem, I don't like that. But I don't know how you can say, "As long as you have these loans, you can't do X, Y and Z," which is capital going elsewhere. I don't know how you can object to that.

Sciple: Yeah. Even private lenders when they'll lend to a company, they will put covenants in place that restrict the dividends they can give out and that sort of thing. And the government, in this case, is the ultimate lender of last resort, and I think you should be able to extract these sorts of terms, because that's what a private lender would be able to extract as well.

One thing I've thought about here, Lou, and maybe it's a little bit off the beaten path here, is how quickly the government has rushed in to backstop these industries. If I'm somebody like Warren Buffett and I'm sitting on $120 billion of cash that I can deploy, does this hurt his opportunity to get those kind of bargain-basement deals and to rush in and be the lender of last resort, given that the government has really hopped in and done that role?

Whiteman: So, we've talked about this and we've written about it. I mean, personally, as a Berkshire [Hathaway] shareholder and a shareholder of a couple of airlines, I think I'd be shocked if in six months Warren Buffett hasn't done a big deal. I wouldn't have guessed, going into this year, it would be an airline, but watching them fall, a company like Delta, you know, that's interesting.

I don't know, I mean, Buffett got a great deal on some of those banks when he bailed them out. I don't know if that was great policy either, you know. [laughs] So, yes, I think marginally this has hurt the bargain shopping, but I don't know if that's bad policy that even Warren Buffett can't come in and just grab assets on the cheap. You know, that's something out of It's a Wonderful Life, and we didn't like it when Mr. Potter did that.

Sciple: That's true. He's the bad guy in that movie, if you remember well. So as we talk about kind of grabbing assets on the cheap, these companies potentially receiving bailout funds, there's two views on that. There is, "Well, the government is going to backstop these companies, and so the bottom may be in in them." Or, this signals that there's the rough financial condition, and maybe it's just you don't want to borrow trouble buying into these companies.

As an investor yourself, Lou, how are you thinking about investing [in], or maybe avoiding, these airline companies? And if you are to invest in them, is there any company that jumps out to you as: This would be where I would go?

Whiteman: Sure. Let's talk about a couple of names really quick. For one, I don't want to call a bottom, you're right. Until we know the extent of the pandemic and the long-term impact of it, you know, even if the outbreak is over in a month, if we are in a recession, it's going to be hard for these companies to really bounce back until that recession is over, that could be 2021 or something. So, we can't call a bottom, we can say that there are seemingly good assets at interesting prices.

The best airlines to buy right now, for safety, I think are Delta and Southwest. If all the rest of them fail, Delta and Southwest have the balance sheets, have the business to be the last standing. Of the two, I'd favor Delta because it has fallen so much further.

Another one, if you really want to risk-reward, and there's a lot more risk here, but Spirit Airlines is a very small company; it's much more vulnerable, but it's also very well-run. And it is what they call an ultralow-cost carrier, which basically for these purposes means, they can make money at fair levels that most companies can't. If we come out of the pandemic in a recession, the airlines are going to try and stimulate demand with low fares. That usually doesn't work for corporate travel, but it is usually pretty effective on filling planes with tourists. Spirit is positioned to make money on lower fares than most of its rivals. So if it gets through this, even in a recessionary scenario, Spirit has been beaten down, and there's a decent investment there.

On the other side, of the big airlines, American is clearly the most vulnerable. They have $25 billion-plus in debt, they were in a different part of their life cycle. They were the last one of the big ones to go through bankruptcy, they are just further behind on a lot of things that the others are doing. I think they will make it. I think they have plenty of liquidity, they have assets, but if there is a vulnerable big airline, it's them.

I also worry about Hawaiian. It's a good company, it's well-run; but it is a niche operator, it's got huge expenses because all of your flights are trans-Pacific, there's no little puddle-jumpers. Again, I don't see them failing, but I do worry about them. And again, Spirit, you know I just spoke well of them, but their debt-to-EBITDA [ratio] is 4.0, I think. This is a company that if this is extended, or if the bailout doesn't get to the smaller companies, this is a company that can easily get wiped out as well, which is why it's a huge risk-reward.

Sciple: So you raised this, so a couple of things I want to call out, since a couple of those tickers are ones that aren't intuitive. So, Spirit is SAVE. Southwest is LUV. Delta, DAL. American Airlines, AAL. So, just so you have those tickers.

Whiteman: Southwest: Love Field, Dallas, Texas, that's where they started. That's a great ticker.

Sciple: There you go. You mentioned the bankruptcy thing; that does kind of raise a question that I've had kind of going back to the bailout. Why is bankruptcy not the route that we're going this time? You know, GM [General Motors], we let them go bankrupt in 2008; the airlines have gone through this process many times before. Why is the bailout the route that we're choosing now, versus kind of letting bankruptcy go out and letting that process take its course?

Whiteman: This is a great question, and I'll be honest, 90% of the arguments I've had on Twitter over the last few weeks have been about some version of: Why don't we do a nice, orderly bankruptcy like we did with GM? And you know I was covering the autos back then, and I remember that process a little differently than a nice, orderly bankruptcy.

First and foremost, it wasn't overnight. General Motors first received money in December of 2008, it was $13.4 billion for one company alone, and it came from the TARP program, which was another advantage over now, where there was a program that was set up, there [were] very controversial views there, but at least there was an instrument in place for the government to use.

GM got another, I think it was, $4 billion in April. And then they finally filed for bankruptcy in June of 2009, more than six months after that first injection of cash. So in that case, Treasury spent $18 billion on one company to glide it into bankruptcy over six months. Now, we're talking eight maybe more simultaneous processes, which is a lot of bandwidth for the Treasury, even if they have it, on a much tighter time frame. I would argue, maybe none of these companies would need the $20 billion [sic] GM used, but you know $50 billion would be nothing, would be peanuts compared to what we would spend just to glide these companies into bankruptcy.

And then it worked out well, but half of what I was writing about with 2009 and 2010 were all of these questions, and government control and equity. And all this, you know, it worked out relatively well, it didn't work out so well for [Fiat] Chrysler [Automobiles], but Chrysler was a different story. But it had its own challenges of its own. And there were a lot of people, just like there's a lot of people complaining about what we're giving to the airlines now, there were a lot of people complaining about that too. It points to just how hard this is, especially if you have to move quickly.

Sciple: Right. Again, as we said at the top of the show, [it's] kind of unprecedented to see an entire industry go from firing on all cylinders more or less -- travel was at all-time highs -- to zero in a matter of a couple of months. One other thing, in the context of -- and you may not have, I mean, there's no hard-and-fast answer to this, but it's something I've been thinking about in the context of everybody being on lockdown. This rise, and folks doing meetings over Zoom [a product of Zoom Video Communications], working remotely -- snap your fingers and the airlines get through this disruption: A big part of airline travel demand is business travel. With this kind of a continued rise in remote meetings, Zoom meetings, that sort of thing, should we be prepared for airline travel demands to be less strong, particularly, in the business-travel part of the market, coming out of this?

Whiteman: You know, there's no way to answer this question the way I want to without sounding like an old Luddite; which, you know, might be accurate. On the margins, yes. But I've heard a lot of people both amazed at Zoom and frustrated with -- and not to pick on Zoom, I think, actually, I'm very impressed with Zoom.

I remember 15 years ago, I think it was United Airlines, ran an ad campaign that was basically: There's still a place for that handshake, for the face-to-face. On the margins, yes, the world is changing. We do more in email right now than we could. So there are things that used to require a visit that now are done automatically. I would be surprised if this meant the end of corporate travel, or even a huge divot.

And also, as we're growing into more of a global economy, the more lucrative business, the global travel, I think, will continue to rise even if jumps up to New York do take a hit on this. I would be surprised if that's a long-term, real balance-sheet-altering legacy of this. But you know I've been surprised by a lot of things.

Sciple: Yeah, the time will tell. And to your point, I think that in-person sales process, it's hard to get past that. The charm doesn't work the same way over Zoom as it does in person. We'll have to see. It's worth calling out that this may not be the end of legislative action when it comes to stimulating the economy, helping these businesses out. Nancy Pelosi, Speaker of the House, has said, we have some unfinished business and their next bill will lean toward recovery; this current bill is to make it through this situation. So as we have more information on that, we'll sure be here to cover it.

I want to move on to a listener question from Christian. Lou, you and I maybe a year ago had talked about United Technologies, and Christian's question is on that company. He says, "I recently started listening to the podcast and love the insights everyone gives. It has helped me understand more of the market as a whole, as well as looking at each industry." He's been wondering about United Technologies. He knows they announced a three-part split of the company, but since he hasn't heard any news at the time he wrote this, the current price was around $83, down from about $150; United Technologies is now at back up to a $102 today with the market rally. "With the sudden fall in the market and the potential of the split-up, should this be a good company to keep on your radar and start building a position today?" Thoughts on that, Lou.

Whiteman: I like United Technologies, I really do. I mean the issue for them, and as far as we know, it will still close -- they are in the process: They are very close to merging with Raytheon (RTN). It's a complex deal. United Technologies is a conglomerate, they're going to break off Otis Elevator, they're going to break off Carrier HVAC into their own companies, and basically merge a commercial aerospace heavy business with Raytheon, which is a defense business.

You know, it's funny, a year ago everybody on both sides hated this deal, because the defense people didn't want commercial and commercial didn't want defense. This last month, we've seen the value in diversification. As far as I know, the deal is on, and the deal will close in the coming weeks. I like the long term.

If I was Christian right now, I don't know if I'd buy in, unless I wanted to be an owner of Otis and Carrier too. You can wait a few weeks, because those two companies are going to be spun off as new stocks for shareholders, and then United Technologies is officially going to buy Raytheon. So, if you bought today, you'd end up with shares of those two companies and the new Raytheon Technologies.

For me, I want to see how this company post-merger is, and I might look into buying it in the second half of the year, if things are going as planned. I don't, so much, have a desire to own some of those other businesses; it's just not what I'm looking for, so I personally wouldn't. But United Technologies has been a great company; the new Raytheon Technologies, which is what they're going to call it, is a very, very interesting concept, and I think it could do real well. I just wouldn't pull the trigger today.

Sciple: Yeah, I think the aerospace theme, more broadly, is just massive growth over time. And to your point, bringing together that defense arm of Raytheon with the commercial aerospace part of the business really gives a lot of optionality there for them. I will say, if you're a dividend-focused investor, I think Otis could be pretty attractive, because they have really stable revenues from maintenance on elevators that's required regulatorily, so that kind of helps them.

One question I had for you: On Tuesday, Jason and Emily talked about Dividend Aristocrats. United Technologies is a Dividend Aristocrat; however, with the company getting split up, do you know how that maybe affects their status, or does it at all?

Whiteman: Well, you know, this was an interesting rabbit hole to dive down, because we're trying to figure out. And this was news to me that this is actually determined by a board at S&P [Global], which I wasn't aware of. I knew the term, but I didn't know where it came from. That's going to be up for them to do, to figure out.

From what I've seen in past situations, because United Technologies, the aerospace arm, is spinning off the other two units, and they are buying Raytheon, that that heritage -- it appears, if they go as they have in the past, that that legacy will stay with the aerospace business, and become Raytheon Technologies as a Dividend Aristocrat. I'm not on that S&P board, so I can't speak for them. I'd love for them to hit me up, because I was trying to find an answer to that, if I'm wrong. But it seems like Raytheon Technologies will inherit that title. But I agree with you, both of those businesses -- Carrier, who knows, but Otis and Raytheon Technologies, should be [good payers].

Sciple: Yeah, I think if you're looking for dividend stocks, I think each of those are solid choices. And on this bailout stuff, a lot to continue to play out, we'll be talking about that into the future. I wanted to ask you one other question unrelated to stocks before we hit the road. We're all working from home now, and all of us at team FHQ are -- I know probably tons of our listeners are -- you're someone who's been working at home since long before any of this stuff ever happened. Do you have any tips for those of us new to working at home about how we should handle it?

Whiteman: Yeah, feeling pretty smug right now. I've been self-quarantining since 2002. [laughs] So, you know, I was way ahead of the trend on this. And it's funny, because the interesting thing to me has been watching my wife and watching my neighbors and everyone trying to do this. I think we're all creatures of habit, we all have our routine, and the routines of all have been screwed up.

The best advice I have is just either, stay on your routine the best you can, if that's possible, or forge a new one. Because that is the disruption in what we're used to, I think, [that] really slows you down. There's plenty of distractions at work, there's plenty of distractions at home; it's just try and stay in the same routine, and maybe not watch the markets all day, but it depends on where it's going. But just try and be as normal as you can.

Sciple: Yeah, I was talking to my fiancee this morning. It's kind of like Groundhog Day around here, you get up, and you know, rinse-repeat. But, yeah, getting in that routine has been really valuable. I'd say for me, listening to a lot of music really helps me out when things are going crazy. Do you have any music stuff that you like to go to in these stretched times?

Whiteman: You see, I'm the opposite, I usually listen to music all day, but now I got other people in my house all day. [laughs] So, just stuff like that. You know, I'm old, so for me it's normally 80s alternative rock. But, yeah, I don't know if that helps get you through bad days anyway, because a lot of that is somewhat dark. [laughs]

Sciple: Yeah. Well, you know, we've been talking about airlines and aerospace this whole day. So, maybe I'll just turn on some Kenny Loggins' "Danger Zone" to get in the mood.

Lou, thanks, as always, for coming on the show.

Whiteman: Pleasure to be here.

Sciple: As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against the stocks discussed, so don't buy or sell anything based solely on what you hear.

Thanks to Austin Morgan for his work behind the glass. For Lou Whiteman, I'm Nick Sciple, thanks for listening and Fool on!