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Stocks  | March 10, 2020

Boeing stock slid more than 10% in Monday morning trading, to levels not seen since 2017. Investors, it appears, are hitting the sell button now, unwilling to wait for a return of the 737 MAX. And a new issue is on their minds: What the coronavirus might do to long-term air travel demand.

Before coronavirus fears escalated, Boeing stock (ticker: BA) had lost about $60 billion of market value. The drop was all about uncertainty swirling around the MAX. And Boeing shares slid over the course of 2019 as investors, once eager to catch a bounce in Boeing, gave up predicting a MAX return to service. The company kept pushing back MAX recertification throughout 2019.

It is almost a year ago to the day that Ethiopian Airlines flight 302 crashed—the second fatal MAX crash inside of five months. The two crashes, both tied to new flight control software, led global aviation regulators to ground the MAX in mid-March 2019.

The grounding has been a big deal for the industry, but, for the most part, not for the share prices of commercial aerospace suppliers. That can feel strange. Boeing was on pace to make about 560 MAX jets in 2019 before the grounding. The shipment halt cost suppliers tens of billions in sales. Still, commercial aerospace supplier stocks didn’t feel Boeing’s pain. The aerospace sector, overall, continued to advance, in most cases beating the broader market.

The reason for the aerospace optimism was twofold. For starters, the MAX, while large, is only one part of the industry. Suppliers miss the MAX, but they are still busy with defense and other commercial aerospace work. The second reason is air travel demand has continued rising, indicating the need for more planes in the future.

The growth in air traffic has been very consistent over the past decade, and most investors expected growth to continue far in the future. But coronavirus, known as Covid-19, is now testing how firm Wall Street’s faith in future growth really is.

German airline Deutsche Lufthansa (DHA.Germany), for instance, announced plans to cut 50% of its capacity because of demand concerns. “Other airlines announcing cuts and suspended guidance are Air New Zealand, Garuda, Hawaiian, Icelandair and Alaska,” wrote Vertical Research Partners analyst Rob Stallard in a Monday research note.

The moves should be temporary, but Boeing isn’t getting the benefit of the doubt. Shares are now down about 25% year to date, including Monday’s drop. That’s as bad as the airline sector has been hit.

Airlines, of course, have felt coronavirus pain acutely. U.S. airlines stocks are down, roughly, between 15% and 40% year to date, worst than the decline of the S&P 500.

Commercial jets are supposed to be a business with a long lead time, with products ordered years in advance. Boeing rival Airbus (AIR.France) predicts the world will need 39,000 commercial jets by 2038.

It is probably still the case that air traffic demand will bounce back when coronavirus fears fade. But for now, Boeing investors, having been burned once trying to be early regarding the MAX’s re-entry to service, aren’t willing to wait to see coronavirus improvement.

Boeing stock was down around 11% to $232.98 in recent trading. The Dow Jones Industrial Average was down 5.8%.

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