Aerospace ETFs Advance Amid Optimism Around Air Travel And Boeing

The aerospace and defense sector is showing considerable gains Tuesday, as disease control pundits are examining pathways to safer air travel.

While the sector has been beaten down recently, Boeing and Airbus, have been reportedly working with health and aviation regulators and announced they are working on efforts alleviating coronavirus risks for air travelers, amidst news that a key customer deferred more aircraft orders.

Boeing stock rocketed higher on the news, gaining 5.25%, while other aerospace names like Raytheon rallied as well, climbing over 8%, helping to lift ETFs like the Direxion Daily Aerospace & Defense Bull 3X Shares Direxion Daily Aerospace (DFEN) a massive 13.87%.

CDC experts had a call with the aerospace giants along with the Federal Aviation Administration to explore ways to make way air travel safer as scientists uncover more about the spread of Covid-19, according to the Wall Street Journal.

While airplane filters are useful in eliminating pathogens circulated in the air, the difficulty in enforcing social distancing on a plane makes it challenging to deter the dissemination of germs from a sick passenger coughing on his or her neighbors.

In the meantime, U.S. carriers have encouraged mask-wearing, and Southwest Airlines and Delta Air Lines are leaving seats vacant in an attempt to stem coronavirus transmission and encourage social distancing.

Boeing is supposedly considering options to provide research grants and is researching ultraviolet light as a disinfectant and installing antimicrobial coatings on high-touch surfaces, sources told the Journal. The aerospace giant is also developing a computer model that would simulate the cabin in an effort to grasp any potential risks.

Boeing stock gapped decisively above its 50-day moving average line after largely moved sideways for over two months and still sits more than 60% below recent highs. Airbus’ U.S. listed shares also rocketed, gaining 15%.

AerCap Holdings also said Tuesday that it has negotiated the postponement of 37 aircraft originally projected for delivery in 2021 and 2022 to later years, giving the aircraft leasing company more flexibility to contain issues during the COVID-19 pandemic.

“We have taken these steps to better align our delivery schedule with the needs of our airline customers and our OEM partners during this period of market dislocation,” company CEO Aengus Kelly said in a statement. “We expect to reschedule additional aircraft deliveries in the future as we continue to work with our customers and the manufacturers.”

Despite the news, air travel sank 96% in April and the International Air Transport Association projects that passenger traffic won’t recover to pre-pandemic levels until 2023.

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