This time last year analysts and investors were raving about aerospace companies. Stoking that optimism were lengthy order backlogs for next-generation aircraft from Airbus (FR:AIR) and Boeing (US:BA), underpinned by expanding emerging market (EM) travel patterns. Unfortunately, the well-documented economic slowdown in many EM regions means these once hopeful prospects have since been hobbled by uncertainty.
Civil aerospace stocks are historically punished when China's economy wobbles. That's certainly been the case this time around, even though the country's gradual shift from an export-led economy to one focused on consumption was supposed to benefit airlines and the companies supplying them with parts. Interestingly, both Airbus and Boeing have gone on record to say their respective Chinese airline backlogs remain sound. That point has been reinforced by analysts in Shanghai, who note that China's domestic airlines have actually under-ordered and, subsequently, are expected to expand fleets over the coming years.
Cheap aircraft financing under pressure