RE:2023 NBAA recap The Desjardins TakeawayJacques4444 wrote: We continue to confidently forecast 139 deliveries in 2023
Lastly, on the topic of aerospace supply chain issues, Gulfstream experienced a shortage of parts from its engine supplier Honeywell earlier this year, which is also an engine provider for BBD. Mr Demosky reiterated that BBD has been able to successfully mitigate these risks for some time now and that it is already focused on securing supply for its 2024 deliveries. We continue to confidently forecast 139 deliveries in 2023, 143 deliveries in 2024 and 152 deliveries in 2025, as BBD has been the best company in our aerospace coverage in dealing with the difficult post-COVID-19 supply chain environmentMarket environment still strong and supportive of a book-to-bill ratio of ~1.0x for 2023.
more than 200 options with high conversion rates from large operators
The bidding pipeline is currently close to record levels, with more than 200 options with high conversion rates from large operators for Challenger and Global aircraft (Global 7500/8000 account for almost half of that number). Historically, the conversion rate was very high (above 80%), which gives management fairly good visibility on what’s ahead. The robustness of the pipeline is also supported by a greater diversification of clients than in the past (high net worth individuals, corporations, operators, etc) and
expect Bombardier to book a large Flexjet order in the future
While BBD did not announce the anticipated Flexjet order yesterday, the Honeywell survey reinforces our positive long-term view on the bizjet industry and fleet operator demand. We still expect BBD to book a large Flexjet order in the future, but the timing is unclear. BBD has a two-year delivery backlog and announced yesterday that it also has more than 200 order options from large operators on standby, ready to be converted into firm bookings, which provides a nice security blanket for investors who had concerns about BBD hitting a 1x book-to-billWhile Bombardier did not announce the anticipated Flexjet order yesterday, the Honeywell survey reinforces our positive long-term view on the bizjet industry and fleet operator demand. We still expect Bombardier to book a large Flexjet order in the future, but the timing is now unclear (still on the table but just pushed back, in our view). In the meantime, BBD has a delivery backlog spanning two years and announced yesterday morning that it also has more than 200 order options from large operators on standby, ready to be converted into firm bookings (Global 7500/8000 accounts for almost half), which provides a nice security blanket for investors who were uncertain if BBD could hit a 1x book-to-bill (historically, >50% of all options are converted but we would not be surprised by a higher number given the long-range skew and elevated fleet operator demand; see our upside vs downside scenario analysis for details)“we remain in negotiations on a Flexjet aircraft order, while details were not finished in time for an NBAA announcement, something will be forthcoming soon”. As we stated in our chart of the week, we still expect Bombardier to book a large order, but the timing is now less clear (still on the table but just pushed back, in our view). Flexjet’s 2022 SPAC IPO presentation shows that it is currently operating 50 large cabin jets (mix of Global 6000s, G450s and G650s), with the goal of reaching 94 by 2025. Given the company has now fulfilled all of its outstanding Embraer and Bombardier orders, and the certification delays facing the G700, we believe BBD’s Global 7500/8000 is perfectly positioned for whenever it decides to pull the trigger.
Finally, we believe a potential Flexjet order is not required for the company to achieve a 1.0x book-to-bill ratio for 2003. If it is successful, we believe the news would be incremental.
This sure looks like blue skies ahead , don't you agree ??? ... GLTA