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  /  News   /  The Boeing 737 Crash Isn’t Worrying the Market. How We Know.

The Boeing 737 Crash Isn’t Worrying the Market. How We Know.

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A China Eastern Airlines passenger aircraft at Shanghai Hongqiao International Airport.

Qilai Shen/Bloomberg

A plane crash in China has clearly shaken investor confidence in


Boeing
.
Shares dropped. But the rest of the aerospace supply chain is holding up better, which could mean the crash won’t drag down the industry like two deadly crashes of Boeing’s MAX model a few years ago.

A Boeing (ticker: BA) 738-800 jet operated by


China Eastern Airlines

crashed Monday in the mountains on a domestic flight. The model was the prior version of the 737 dubbed Next Generation, or NG. The MAX jets were grounded worldwide from March 2019 through mid-November 2020 after deadly crashes—one in Indonesia, the other in Ethiopia—within five months.

In late trading, Boeing stock was down 3.6%. It had been off considerably more right after the market opened. The drop shaves roughly $5 billion off Boeing’s market capitalization.

Investors are anxious because they’ve had a lot of heartache since the second Max crash. The stock is down almost 60% from its all time high, set just before the fatal flight operated by Ethiopian Airlines.

The rest of the aerospace supply chain is experiencing a bit of turbulence, but nothing like what Boeing was going through Monday.

The engine for a 737-800 aircraft comes from CFM International, the 50/50 joint venture between


General Electric

(GE) and


Safran

(SAF. France).


Safran

stock dropped 2.8% in overseas trading. That move shows investor nervousness extended beyond Boeing. GE shares were down about 0.9%. GE’s performance was similar to the broader market—the

S&P 500
and

Dow Jones Industrial Average
were down 0.5% and 0.9%, respectively.

Shares of engine component maker


Woodward

(WWD) were down 0.2% and shares of diversified aerospace supplier


Raytheon Technologies

(RTX) were up 2.1%. Stock in


Honeywell International

(HON), another conglomerate with a large aerospace franchise, was down about 1.2%.

Aerospace materials supplier


Howmet

(HWM) shares were off 0.3%. Stock in after market components manufacturer


TransDigm

(TDG) was lower about 1.5%.

Boeing aerostructures supplier


Spirit AeroSystems

(SPR) has perhaps the most head-scratching stock reaction. Its shares were down about 3.8%.


Spirit

generates most of its sales from Boeing, but doesn’t do much a lot of business in NG jets.

Adding all the changes in the aerospace supply chain up amounts to about a $2.4 billion reduction in market capitalization—about 0.5% of the combined caps of all the aerospace supply stocks mentioned. That reaction, in aggregate, makes it look as if the overall market is driving the aerospace stocks.

Boeing stock, of course, is different. Investors will probably trade based on the China Eastern tragedy until they know a cause.

While Boeing stock remains down almost 60% from its all time high, the rest of the aerospace supply chain, in aggregate, has fared much better. The value of the aerospace supplier stocks is down roughly 10% compared to their value in early 2019—before the second MAX crash and the pandemic.

Shares of


Southwest Airlines

(LUV), which flies an all-Boeing fleet, were down 1.8%. Other airline stocks were struggling as well, though.


Delta Air Lines

(DAL) was off 4.4%.


American Airlines

(AAL) was down 4.7%. And


JetBlue

(JBLU), which flies mainly


Airbus

(AIR. France) jets, was 3.8% lower.

Write to Al Root at allen.root@dowjones.com

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