Why Shares of Aerospace Suppliers Are Tumbling Today
Shares of aerospace suppliers fell on Wednesday after Boeing (NYSE: BA) sent out a distress signal concerning the health of the industry. Spirit AeroSystems Holdings (NYSE: SPR), a one-time Boeing subsidiary, and TransDigm Group (NYSE: TDG) were each down nearly 30%, and shares of Heico (NYSE: HEI) and United Technologies (NYSE: UTX) both lost nearly 20% in late morning trading.
We know the COVID-19 coronavirus pandemic has severely crippled airlines, as travel demand has all but evaporated as the outbreak has spread globally. The pandemic is expected to cost global airlines more than $100 billion in lost revenue in 2020, and airlines have responded by cutting flights and bringing down capital expenditures.
Fewer flights mean fewer airplanes are needed, which in the near term will cost aftermarket and spare-part suppliers, and over the long term could eat into demand for new Boeing and Airbus jets.
Source Fool.com
