What happened

On Thursday, the airline industry was hit by fresh bad news, and stocks of companies that rely on airlines for profits are taking it on the chin on Friday. Shares of Spirit AeroSystems Holdings (NYSE:SPR) fell as much as 14% on concerns a new COVID-19 variant could push back airline growth plans and crimp demand for new planes. As of market close Friday, shares were down 8.3%.

So what

Spirit makes fuselages and other large pieces of planes for Boeing, its former parent, and Airbus. The company is in the middle of a very complex supply chain and needs strong demand for its customers' products in order to make a profit.

A Boeing 737 MAX fuselage.

Image source: Spirit AeroSystems.

The company has dealt with a series of blows in recent years. A major supplier to Boeing's 737 MAX, Spirit saw revenue and production scaled back during the 18 months the MAX was grounded. It then was hit by a manufacturing slowdown due to the pandemic, as airlines shifted from growth mode to grounding jets and orders for new planes were deferred.

Spirit should benefit as conditions normalize and demand for planes rebounds. But headlines out this week from South Africa have called into question when that will happen. A new COVID-19 variant threatens to halt the recovery, causing broader markets to tumble on Friday and Spirit to trade down more than most.

Now what

Spirit has been working hard to diversify its business, but given its reliance on Boeing in particular and commercial aerospace in general, there is no way for this stock to soar as long as the pandemic is weighing on the airlines. The airline stocks are suffering today due to the COVID headlines, and Spirit is falling along with them.

Spirit is a well-run supplier in a tough position. There is potential here, but given the uncertainty investors would be wise not to jump in and go bargain hunting here as the stock falls.

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.