Bombardier Inc. T.BBD.A

Business Jets To Resume Growth in 2012

[jammerh]

Yeah, it's slow...yeah markets can whipsaw inside of a day lately. Some say that's typical of a bottom, but bouncing along with wide moves in either direction seems characteristic of a market that doesn't know which direction it wants to take. At least until something comes along to take it one way or the other.

Eventually, the European situation will move out of the limelight and things should settle down. At least until the media and other Chicken Littles find another bogeyman with which to fleece the newbies. It's an old story.

Anyone remember the debt crisis in South America? For a few years that's all we heard about. How it was such a terrible threat and would wind up sucking the rest of the world down the drain with it...

Then as if by magic, the public got tired of hearing how awful things were and the debts of South American countries didn't seem to matter so much anymore. After a few more years, they started calling them "emerging growth" countries and everything was wonderful again.

In any event, here's the piece from Aviation Week on how the Business Jet market is expected to recover in the coming year:

Business Jet Market To Return to Growth in 2012
Dec 12, 2011

Forecast International projects that business jet production will resume growing – albeit slowly – in 2012, after  declining in each of the previous three years. A new study issued by the Connecticut market research firm, “The Market for Business Jet Aircraft,” predicts that 10,907 business jets worth an estimated $230.3 billion (in constant 2011 U.S. dollars) will be produced between 2011 and 2020.

According to Forecast International Senior Aerospace Analyst Raymond Jaworowski, “Business jet production in 2012 will show some minor improvement over 2011, but more substantial growth in build rates will have to wait until 2013.” Production is forecast to total 728 units in 2012, signaling the start of a gradual, though potentially long-lasting, market recovery. The anticipated recovery is expected to be quite measured in its pace, with the 2008 production total of 1,313 business jets not expected to be equaled until 2018.

Manufacturers have a number of new business jets in development. These range from the Cessna Citation M2 light jet up to ultra-long-range models such as the Bombardier Global 7000 and 8000 and the Gulfstream G650. The manufacturers are hoping that the new models will not only benefit from improved market conditions expected in the future, but also contribute to the recovery themselves by stimulating demand.

The worst of the industry downturn is over, but much of the business jet market remains sluggish, especially the light and medium jet segments of the market. Demand is considerably stronger at the top end of the market, in the large-cabin and long-range sectors. This tale of two markets will not continue indefinitely, however.

In the meantime, the company says, other indices look promising, as business aircraft utilization is up and the market for used business jets has stabilized. Economic growth has returned, though it remains weak in key regions such as the U.S. and Europe. Corporate profits, a key leading indicator of future business jet demand, are strong.

Forecast International’s market forecast indicates that the top three business jet manufacturers in unit production during the 2011-2020 time frame will be Cessna, Embraer, and Bombardier. When new aircraft production is expressed in monetary terms, the top three companies are projected to be Gulfstream, Bombardier and Dassault.