What happened

Shares of Boeing (NYSE:BA) traded down more than 5% on Friday morning, joining the broader coronavirus-fueled market sell-off. Airline stocks have been clobbered particularly hard this week, and a prolonged downturn for airlines could eat into demand for new airplanes.

So what

Boeing has a sprawling portfolio of defense and commercial assets, but in recent years the primary driver of revenue and profits has been its commercial aviation business. The global airline industry is in the midst of a decade-long fleet refresh, and Boeing and Airbus have been the primary beneficiaries of that buying spree.

A Boeing commercial aircraft flying over an industrial landscape.

Boeing's 787-10 Dreamliner. Image source: Boeing.

Aerospace tends to be a cyclical business, but Boeing and Airbus came into 2020 expecting the buying binge to continue into the next few years. Boeing expects 44,000 global deliveries over the next two decades, with particular sales strength in China and other developing markets in Asia.

It's too soon to say if the coronavirus outbreak will alter those plans, but with many airline stocks down more than 25% year to date, it is not too soon to at least raise the concern.

Now what

The coronavirus risk comes as Boeing is already trying to rebound after problems with its 737 MAX, which remains grounded. In some sense, a coronavirus-related temporary travel slowdown could help lessen the impact of the 737 MAX issues by decreasing the need for airlines to add capacity. But over the long haul, the outbreak is not good for business.

The most likely outcome for Boeing is that the 737 MAX will return to service, and airlines will survive a difficult first half of 2020 due to the coronavirus and continue with business as usual into the second half of the year and beyond. But on a day when investors are in no mood to take on added risk, the possibility of that most likely outcome not playing out is reason enough to pressure Boeing shares.