By Kate Sarsfield
Demand for business jets “remains weak, but is not getting much worse,” says JPMorgan Investment Research.
In its latest monthly report, the US analyst concedes that while aircraft backlogs decreased in the third quarter there are “bright spots” in the market.
The top end of the spectrum is singled out: “Bombardier and Gulfstream both exhibited flattish backlogs in Q3 in the large cabin market, and further fleet orders appear to be on the way,” says JPMorgan. The light business aircraft sector is expected to remain to remain flat, however.
Demand for these types is concentrated in the US, JPMorgan argues and President Barack Obama’s re-election will “not help bizjet sentiment” given his negative attitude towards business aviation. It adds: “Tax policy could [also] weaken demand at the margin. Moreover, decelerating corporate earnings growth does not bode well.”
JPMorgan says Hawker Beechcraft’s plans to exit the business jet market “would be a positive for the remaining players, particularly Cessna and Embraer”.
Meanwhile, pre-owned business jet inventories of in-production models crept up by 0.1% to 10.6% in October “and has not moved from the 10.4[%] to 10.6% range in the past six months”, it says. However, average asking prices spiked 2.6% month on month in October “representing the strongest price movement in percentage terms since 2008”.