UTX - Here's Why Aerospace Stocks Are Under Threat in 2020
Unless you've been living in hiding for the last month, you already know that the COVID-19 coronavirus outbreak is a genuine threat to the global economy and corporate earnings -- notably in the aerospace sector. Indeed, the International Air Transport Association (IATA) projections for 2020 are now building in scenarios that suggest a significant impact on airline profitability and, in turn, aerospace stocks in general. Let's take a closer look.
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It's a simple fact that airline profitability is the key to the commercial aerospace industry. If passenger traffic and load factors are increasing, airlines are likely to make more profits. In turn, more profitability usually translates into aircraft orders for Boeing (NYSE: BA) and Airbus, and that means more orders for original equipment manufacturers like General Electric (NYSE: GE) and United Technologies (NYSE: UTX). Moreover, if more passengers are traveling, there will be an increased demand for aerospace aftermarket parts.