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Business jet market to grow again
May 19, 2011
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  • May 11, 2011 By: Francois Shalom
    MONTREAL – Three industry forecasts on the long-range prospects for business jets differ on many particulars but agree on the essential; the so-called “green shoots” are taking root after the unprecedented slump that started late in 2008.
    The private-jet business, the three agree, is off the critical list.
    Those accounts, however, run counter to empirical evidence about the business aircraft industry, at least for the first three months of this year.
    On Tuesday, the General Aviation Manufacturers Association (GAMA), said that first-quarter delivery revenues for business jets and small private aircraft fell 19.6 per cent to $3.73 billion U.S.
    Montreal’s Bombardier Inc., the world’s largest corporate jet maker in revenue terms – Cessna leads in unit deliveries – fared marginally better than the average, dropping by 16.5 per cent in the three months.
    Brian Foley of New Jersey’s Brian Foley Associates said that his 10-year forecast calls for a compound annual growth rate in business jet deliveries of 3.3 per cent, or to 11,822 business aircraft worth $256 billion U.S. to be delivered between 2011 and 2020.
    He differed from George Tsopeis of Montreal’s Zenith Jet forecast, which expects deliveries to bottom out this year at 730 units for all manufacturers, slightly below last year’s 763 planes. But he also predicts a steep climb starting next year that will peak at 1,468 jets shipped in 2016 – just before the next cycle bust.
    Zenith Jet calls for 11,103 business-jet deliveries between 2011 and 2020.
    Foley said that his forecast is not necessarily inconsistent with GAMA’s figures.
    “We’re troughing now, and hoping that 2010 will have been the trough. But I think we’ll do well coming out of this year and coming up to the numbers.”
    Like Tsopeis, he calls for consecutive annual increases in deliveries until a summit in 2016, after which both agree the next industry downturn will start.
    Joseph B. Nadol III of Wall St.’s J.P. Morgan said in a report that he also expects the trough to come this year for the overall industry.
    However, Bombardier’s worst days are already behind it and Nadol estimates it will pick up 10 orders more this year than last, to 160 units, although mostly in the lower-margin Learjet division.
    Tsopeis wrote he sees no future for Bombardier’s Learjet 40XR in the light jet category after the Learjet 85 enters service.
    But Danielle Boudreau of Bombardier Aerospace’s business aircraft division countered speculation about discontinuing the model – or Bombardier selling Learjet to Chinese interests, for that matter – by saying that “Learjet is not for sale and we are not discontinuing any product.”
    “We fully intend to keep marketing these products.”
    By all three accounts, the business aircraft recovery will be zig-zaggy, dotted with hiccups, detours, pauses and conditions.
    And the three segments – light, medium and large – will not all perform equally. Since 2008, large cabin personal jets, for instance, fared better than light jets, whose potential owners took a rougher drubbing in the recession than the super wealthy.
    Foley said that “interestingly, because they tumbled so far, small- and medium-cabin (annual growth rates) will be higher at 3.4 per cent and 4.4 per cent respectively. The growth rate of large cabin aircraft will be less (2.3 per cent) since they weren’t as affected during the downturn.”
    But Foley cautioned that the road to recovery must be held in perspective.
    “If you call for a 20-per-cent increase, it can be in a category that’s down to practically nothing. I mean, if you sold 20 Learjets, it would mean that you go up to 24.”
    http://www.montrealgazette.com/business/Business+market+grow+again/4767083/story.html#ixzz1M9CuaBLz

    Source: THE MONTREAL GAZETTE
    Date: 2011-05-11