Mechanical engineering and airline stocks are falling

Engineering and airline stocks fell across Europe on Tuesday after Boeing (BA) decided to halt production of its troubled 737 Max airliner.

Boeing announced late Monday evening that it would stop production of the 737 Max starting in January. Instead, it will focus on delivering stored aircraft.

“During the grounding of the 737 MAX, Boeing has continued to build new aircraft and currently has approximately 400 aircraft in storage,” the company said in a statement.

“We previously stated that we would continually evaluate our production plans should the MAX grounding ban last longer than expected. As a result of this ongoing assessment, we have decided to prioritize delivery of stored aircraft and temporarily suspend production of the 737 program beginning next month.”

Boeing is one of the world’s two largest aircraft manufacturers and the update sent shockwaves across the global aerospace industry, hitting suppliers and customers.

Shares in engineering group Senior (SNR.L) fell 7% on Tuesday morning in London. The company had previously warned that Boeing’s 737 Max emissions would weigh on margins.

Rolls-Royce (RR.L), which builds engines for Boeing, saw shares fall 1.5%. Melrose Industries (MRO.L), which owns aerospace parts maker GKN, fell 1.1%. Meggitt (MGGT.L), another supplier that warned last month about its involvement in the 737 Max, fell 0.4%.

In Paris, Safran (SAF.PA) lost 3.8%. The company makes landing gear and other components used in the 737 MAX. Analysts at Bank of America estimated that the production stop could cost the company 300 million euros.

In Frankfurt, MTU Aero Engines (MTX.F) lost 0.8%.

Bank of America said in a Boeing investment note on Monday: “A pause on the 737MAX would disrupt the supply chain. “A pause could also make it more difficult for the supply chain to return to previous production rates.”

Airline stocks also fell. Ryanair (RYA.L) shares fell 1.7%, British Airways owner IAG (IAG.L) shares fell 2% and Norwegian Air (NAS.OL) shares fell 1.6% . easyJet’s (EZJ.L) share price fell 3.9%, but the company was also hit by a rating downgrade by UBS. The Swiss bank asked its customers to sell the shares on Tuesday.

Shares of Boeing rival Airbus (AIR.PA) initially rose 2% in Paris, but the rally quickly faded. The stock was trading unchanged after almost an hour and a half of trading.

Boeing’s 737 MAX planes were grounded worldwide in March after two crashes that killed hundreds of passengers. The fatal crashes have been blamed on problems with the plane’s software and U.S. authorities are investigating. The incident has cost Boeing at least $9.2 billion (£7.1 billion) so far.

Boeing said last month that it may be possible to resume deliveries of the 737 MAX in December and that commercial operations of the jets could possibly even resume as early as January. Both decisions depend on approval from US regulators.

“We will continue to assess our progress toward return-to-service milestones and make appropriate decisions about resuming production and deliveries,” Boeing said in a statement on Monday.