TDG - Why Shares of Boeing and Its Suppliers Are Down Today
Shares of Boeing (NYSE: BA) were down 16% on Monday, and suppliers TransDigm Group (NYSE: TDG) and Heico (NYSE: HEI) were each down more than 10%, after a number of major U.S. airlines announced another round of capacity cuts. Less flying means falling demand for spare parts and new airplanes, which is going to eat into the bottom lines of companies spread across the supply chain.
Airlines have been among the sectors hit hardest by the COVID-19 coronavirus pandemic, with near-term travel demand plunging and consumers avoiding buying tickets for normally busy vacation periods including Easter, spring break, and summer holidays.
Major airlines including Delta Air Lines, United Airlines Holdings, and American Airlines Group have all announced cuts of 40% or more to capacity, extended into the typically busy summer season. Delta alone is likely to ground nearly 300 planes, which will save the airline money, but at the same time mean less business for aerospace parts suppliers.