What happened

Shares of industrial giant General Electric (NYSE:GE) fell more than 5% in early trading Thursday before recovering to about a 2.3% loss as of noon EDT.

Why is GE stock suffering? Airplanes may be the answer.

The silhouette of an airplane over a world map labeled "coronavirus"

Image source: Getty Images.

So what

A couple of days ago, key GE customer Boeing reported selling precisely zero new airplanes in the month of April. Subtracting out plane orders that have been canceled, or ordered by airlines so financially unsound that it's unlikely they'll actually be able to pay for them, Boeing has suffered a net drop in plane orders of 516 aircraft so far this year.  

Logically, that's not good news for GE's airplane engine business.

Adding to the company's troubles, it was reported yesterday that the U.S. and Canada are probably going to extend their restrictions on non-essential travel between the two countries through June 21. Combined with a similar travel advisory that the European Union issued last week, the net effect of this is going to be to keep air travel levels depressed for at least another month, decreasing the demand for new airplanes (and airplane engines) in the near term. At the same time, this will increase the chances of one or more airlines going out of business -- subsequently decreasing demand for airplanes and engines in the longer term as well.  

Now what

General Electric may be a link or two up the supply chain from the airline business, which is suffering the brunt of COVID-19-inspired stay-at-home orders and travel bans. That's not helping the stock much today, though, or protecting it from the inevitable fallout of decreased demand for air travel.

Until the airline business recovers, times are going to remain tough for GE.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.