Boeing lost $35 billion in market cap this year, dragging down other air travel stocks

It’s been a rough start to the year for air travel related stocks and one of their main suppliers, Boeing (BA). The industrial giant has lost about $35 billion in market cap since the start of the year. Almost $30 billion of that loss came after a door “plug” flew off an Alaska Airlines (ALK) plane in early January. In less than two weeks, the industrial giant’s stock went from $249 to $200 per share. The drop came as the Federal Aviation Administration grounded Boeing’s 737 Max 9 planes in the US and mandated increased scrutiny over the company’s practices and production lines. Shares of Alaska Airlines and United Airlines (UAL), the two US carriers which used Boeing’s 737 Max 9 planes, have shed more than 13% and 7% year to date, respectively. Alaska’s flight cancelations have totaled anywhere from 110 to 150 flights per day. “We will return these aircrafts to service only when all findings have been fully resolved, and meet the stringent standards of Boeing, the FAA, and Alaska Airlines,” Alaska Airlines CEO Ben Minicucci said in a video statement on Tuesday.

Jet Blue-Spirit merger blocked

The Boeing mishap comes on the heels of a softening in domestic travel demand and declining airfares. Low-cost US carriers have been looking for ways to cut expenses and expand their footprint. In another blow, JetBlue’s (JBLU) proposed $3.8 billion acquisition of Spirit Airlines (SAVE) fell apart on Tuesday after a federal judge blocked the deal amid antitrust concerns. Spirit stock shed a record 47% following the ruling. Shares fell another 22% on Wednesday amid bearish commentary from Wall Street. “We believe SAVE has a difficult path ahead to return to its historical level of growth and profitability,” BofA analysts wrote on Wednesday. With a market cap that has dwindled down to just under $700 million, Spirit may try to attract another suitor. But analysts aren’t optimistic about any industry merger in the near term. “We don’t expect other airlines to step up primarily because the DOJ will probably block any merger at this point,” TD Cowen senior research analyst Helane Becker told Yahoo Finance. “We expect that [Spirit will] file [for] Chapter 11 sometime in the second half of this year,” she added. “For JetBlue we think this is actually not a bad outcome because we think they’ll be able to get those assets in a liquidation of Spirit.” JetBlue, which announced a leadership change earlier this month, has seen its stock fall more than 14% year to date. Even though 2023 was a stellar year for international carriers as travelers splurged on longer-haul flights, 2024 has started on a cautious note. Delta (DAL), the first US airline to announce fourth quarter results, trimmed its full year 2024 profit forecast earlier this month, spooking investors and sending airline stocks tumbling. “We’ve had some delays over the course of the last couple of years in the supply chain. Maintenance costs are higher as well,” Delta CEO Ed Bastian told Yahoo Finance last week. Delta stock fell as much as 9% last Friday despite the companyending 2023 with record revenue, 20% higher than pre-pandemic levels.