By Molly McMillin
February 10, 2011
The small and medium end of the business jet market – where Wichita planemakers compete – appears poised for a new growth spurt, although it’s coming from a severely depressed base.
Analyst Brian Foley projects business jet deliveries will grow an average of 8 percent a year for the next five years, beginning in 2011.
Growth in the beleaguered smaller-cabin market could grow as much as 15 to 20 percent a year, he said.
Cessna, Hawker Beechcraft and Learjet – companies building small and medium jets – have “just been the whipping boy in this downturn,” Foley said.
“We think the market overcorrected in the down side too far. It can really only go up now.”
Still, he warned, while it will be a good percentage increase, “the unit increase isn’t too high. But it will stop the slide.”
Meanwhile, growth in the large-business-jet segment – which has been on an upswing for some time – could increase more modestly at 5 percent a year.
Many of the general aviation segments, such as charter and fractional ownership companies, fuel sales, maintenance and other service providers, have seen measurable improvements, Foley said.
Avionics supplier Rockwell Collins said recently that business jet white tails, planes built without having a buyer, dropped from 65 planes at the end of September, to 10.
Cowen and Co. analyst Cai von Rumohr agrees that signs suggest the low to midsize end of the business jet market has troughed.
A Cowen and Co. survey of business jet dealers “suggests a strong turn in confidence and demand over the past 30 to 45 days, although pricing still is mixed,” von Rumohr wrote in a report.
One dealer reported that there’s an “amazing difference between the market today and what we were seeing 30 to 60 days ago,” von Rumohr wrote.
Another said that December was a strong month and activity remained solid in January. But financing is still an issue and a high level of used aircraft inventory is a pricing constraint, although “many listed aircraft are not actually for sale,” von Rumohr wrote.
“Owners feel public pressure to list planes,” but they don’t want to sell or they can’t afford to take a loss, he said.
This year, Cessna is unlikely to have the capacity to deliver much more than 180 to 190 jets because of nine- to 12-month supplier lead times, von Rumohr wrote. Last year, the company delivered 178 jets.
He said next year should be much stronger, however.
http://www.kansas.com/2011/02/10/1714065/upturn-expected-for-business-jets.html#ixzz1Dakvqc6f