Tue, 01 Nov 2016 03:10:47 +0200Private jet deliveries dive, 10-year outlook forecast cut by 600 planesBLOOMBERG$ 882https://meltwaternews.com/ext/xcago/BT/20161101/pages/01020/articles/BT-20161101-01020004.pdfDallas BUSINESS-JET deliveries are dropping and won’t rebound before 2018, according to a benchmark forecast of corporate aircraft demand over the next decade. Honeywell International Inc lowered its annual long-term forecast for private jets by 7 per cent, or 600 aircraft, as emerging markets suffer from low commodity prices and the US economy limps along. As many as 8,600 new planes are expected to be delivered from 2016 through 2026, down from 9,200 in last year’s outlook, according to a survey of more than 1,500 business-jet operators worldwide. Sales of those aircraft are estimated at US$255 billion, down from US$270 billion in the previous study. “We have a fair amount of uncertainty and instability in the economy and political environment around the world right now,” said Charles Park, director of market analysis at Honeywell’s aerospace unit. The number of used jets for sale that are less than five years old has risen and prices continue to drop, which drags on demand for new aircraft, Mr Park said. The introduction of new models from manufacturers such as Gulfstream and Bombardier in 2018 should stimulate sales, he said. Those planemakers have announced production cuts for some models that eventually will help stem supply in the market and reduce the drop in used-jet prices, said Shawn Vick, chairman of Global Jet Capital, which finances aircraft purchases and is backed by Blackstone Group, Franklin Square Capital Partners and the Carlyle Group. “We’re clearly in an environment where there has been oversupply,” said Mr Vick, whose company agreed last year to buy General Electric Co’s corporate-jet-financing business and expects to underwrite US$500 million of aircraft purchases this year. “It’s the right course of action.” Over the next five years, North America is expected to garner 65 per cent of jet purchases, up from 61 per cent in last year’s survey, while Europe’s share is set to remain unchanged at 14 per cent, Honeywell said. Asia’s share will increase to as much as 6 per cent from 4 per cent and the Middle East will be less than 4 per cent, falling short of its historical range of 4 per cent to 7 per cent. Latin America’s estimated share over the next five years will fall to 12 per cent from 18 per cent last year as sales cool in Mexico and Venezuela, Mr Park said. Worldwide business-jet deliveries will decline to 645 this year and to 625 next year before rebounding back to 645 in 2018, according to a report by Seth Seifman, an analyst with JPMorgan Chase & Co. Deliveries had increased in 2014 to 689 and remained the same last year. They hit an all-time high of 1,136 in 2008. Not everyone sees gloom in the private-jet market. Business for Directional Aviation, which owns the fractional operator Flexjet, is up about 15 per cent from last year and profit will increase more than that. “People are flying,” said Kenn Ricci, principal of Directional. “Excuse me for not commiserating with my manufacturer friends, but that on airplanes.ause we get better deals ” ”
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