By Benet Wilson
April 11, 2011
Guardedly optimistic” is how JP Morgan analyst Joseph Nadol describes a recovery in new business jet demand this year, but warns that the path is a winding one and data points are mixed.
“In March, for example, used inventory ticked up for the first time since October. The increase was slight, but a further decline would have inspired more confidence,” he writes. “Likewise, pricing was more or less flat after increasing in January and February. Most models saw price increases, however, and we still see a trend toward firming prices.”
The uneven data in the used market echoes recent readings from the new market, where Bombardier is showing solid book-to-bill ratios and growing optimism, while Dassault (for example) continues to report net cancellations, says the report. “As we evaluate the mixed data points, however, it is important to remember how much worse conditions were even a few short months ago,” writes Nadol. “First quarter results start later this month and should bring an update on demand.”
Used inventory of in production models increased by 10 basis points (BPS) to 11.1% in March. “By category, light and heavy jet inventories increased by 30 bps and 10 bps, respectively, while medium jet inventories decreased by 20 bps,” says the report. “Four out of six OEMs – Embraer (+100 bps), Hawker Beechcraft (+40 bps), Gulfstream (+10 bps), and Cessna (+10 bps) saw increases in inventories, while Dassault (-20 bps) had lower inventory. Bombardier remained flat at 11.5%.”
Source: AVIATION WEEK
Date: 2011-04-11