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Coronavirus Hits Boeing-Airbus Jet Production: 3 Stocks to Lose
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The global aerospace market has hit a rough patch as the coronavirus outbreak has brought airline operations to a grinding halt in view of travel bans across nations. While airlines bore the initial brunt, aircraft manufacturers are now at the receiving end, descending to zero orders along with unspecified delays in deliveries of jets.
Impact of the Pandemic on Boeing and Airbus
The aircraft bigwigs Boeing (BA - Free Report) and Airbus (EADSY - Free Report) have been crippled by the slump in demand for air travel. The companies have thus been forced to temporarily shut down many of their manufacturing facilities.
Per a Reuters report, Boeing recently extended the suspension of production at its Washington state facilities and also looks to shut down its manufacturing facilities in South Carolina. It has also reportedly halted production at its Philadelphia factory, while the factories in the Seattle area are announced to remain closed indefinitely.
The pandemic has had a similar impact on Airbus as the European aircraft giant has also decided to temporarily halt production in Alabama and most of its manufacturing plants in Europe, after suspending production operations in Spain and France last month. In fact, per major media sources, Airbus is reducing production by one-third.
As a consequence, shares of Boeing and Airbus have plunged significantly over the past three months.
Aircraft Component Suppliers to Take a Hit
The halt in production at Boeing and Airbus’ manufacturing units has raised an alarm for companies that provide supply parts, components and other associated services. To start off, Spirit AeroSystems (SPR - Free Report) , Boeing’s biggest supplier, has halted production activities till an unspecified period and would also furlough workers supporting Boeing programs in Wichita, San Antonio and sites based in Oklahoma.
Spirit AeroSystems, which also supplies Airbus with wing components and fuselage systems, will be negatively impacted by Airbus’ decision to cut down production.
The production halt has also cast a pall over aircraft parts suppliers like Hexcel Corp. (HXL - Free Report) and Woodward Inc. (WWD - Free Report) . On Apr 6, the companies also decided to terminate their previously-announced $6.4-billion merger deal, which was their attempt to tide over the setback caused bythe prolonged grounding and halting of production of Boeing’s 737 MAX.
Adding to the woes in the aerospace market, Woodward has decided to lay off some workers and cut 10% pay of all non-CEO officers and 25% of the CEO and independent directors. Back in January, Spirit AeroSystems had retrenched approximately 2,800 employees at its Wichita, Kansas facility because of the 737 MAX production suspension and uncertainty surrounding this program’s return to service. Now that the COVID-19 has aggravated matters, more layoffs might follow.
No doubt, shares of these aircraft component manufacturers have suffered notable losses in the year-to-date period.
The aforementioned suppliers will be under the gun until production resumes. This, in turn, is expected to impact their top and bottom-line figures.
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Coronavirus Hits Boeing-Airbus Jet Production: 3 Stocks to Lose
The global aerospace market has hit a rough patch as the coronavirus outbreak has brought airline operations to a grinding halt in view of travel bans across nations. While airlines bore the initial brunt, aircraft manufacturers are now at the receiving end, descending to zero orders along with unspecified delays in deliveries of jets.
Impact of the Pandemic on Boeing and Airbus
The aircraft bigwigs Boeing (BA - Free Report) and Airbus (EADSY - Free Report) have been crippled by the slump in demand for air travel. The companies have thus been forced to temporarily shut down many of their manufacturing facilities.
Per a Reuters report, Boeing recently extended the suspension of production at its Washington state facilities and also looks to shut down its manufacturing facilities in South Carolina. It has also reportedly halted production at its Philadelphia factory, while the factories in the Seattle area are announced to remain closed indefinitely.
The pandemic has had a similar impact on Airbus as the European aircraft giant has also decided to temporarily halt production in Alabama and most of its manufacturing plants in Europe, after suspending production operations in Spain and France last month. In fact, per major media sources, Airbus is reducing production by one-third.
As a consequence, shares of Boeing and Airbus have plunged significantly over the past three months.
Aircraft Component Suppliers to Take a Hit
The halt in production at Boeing and Airbus’ manufacturing units has raised an alarm for companies that provide supply parts, components and other associated services. To start off, Spirit AeroSystems (SPR - Free Report) , Boeing’s biggest supplier, has halted production activities till an unspecified period and would also furlough workers supporting Boeing programs in Wichita, San Antonio and sites based in Oklahoma.
Spirit AeroSystems, which also supplies Airbus with wing components and fuselage systems, will be negatively impacted by Airbus’ decision to cut down production.
The production halt has also cast a pall over aircraft parts suppliers like Hexcel Corp. (HXL - Free Report) and Woodward Inc. (WWD - Free Report) . On Apr 6, the companies also decided to terminate their previously-announced $6.4-billion merger deal, which was their attempt to tide over the setback caused bythe prolonged grounding and halting of production of Boeing’s 737 MAX.
Adding to the woes in the aerospace market, Woodward has decided to lay off some workers and cut 10% pay of all non-CEO officers and 25% of the CEO and independent directors. Back in January, Spirit AeroSystems had retrenched approximately 2,800 employees at its Wichita, Kansas facility because of the 737 MAX production suspension and uncertainty surrounding this program’s return to service. Now that the COVID-19 has aggravated matters, more layoffs might follow.
No doubt, shares of these aircraft component manufacturers have suffered notable losses in the year-to-date period.
The aforementioned suppliers will be under the gun until production resumes. This, in turn, is expected to impact their top and bottom-line figures.
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Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
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