Modest Recovery Expected For Biz Jets — Transportation & Aerospace Weekly


Modest Recovery Expected For Biz Jets — Transportation & Aerospace Weekly

What’s The Event?

With the NBAA Convention being held his past week, there were a number of business
jet industry headlines. Key takeaway is that while business jet demand is improving
and overall delivery levels for new aircraft should return to positive growth in 2018,
there remain pockets of softness.

Modest Growth Expected Over The Next Decade: Honeywell is calling for a modest pace
for business jet growth over the near term in its 26th annual Global Business Aviation
Outlook. Overall, it is forecasting up to 8,300 new business jet deliveries worth US$249
billion from 2017 to 2027, down 2-3 percentage points from the 2016 10-year forecast.
The longer-range forecast through 2027 projects a 3%-4% average annual growth rate.
Aviation Week’s Fleet Discovery and 2017 Business Fleet & MRO Forecast expects the
business aircraft fleet to grow from 32,000 aircraft at the end of 2018 to more than
36,500 aircraft by the end of 2027. Deliveries are expected to total more than 11,200
aircraft including turbofans and turboprops as well a civil aircraft involved in
government and militaries valued at US$238.5 billion. While 2017 new business jet
aircraft deliveries are expected to be down Y/Y, we should see an improvement in

Business Jet Resale Transactions Pick Up But Pricing Weak: The business aircraft resale
market has seen continued transaction growth but pricing continues to decline
according to Amstat. Overall, almost all markets segments saw inventories decline, but
with used jet prices still soft, this suggests larger pricing discounts for new aircraft.

Business Jet Activity Continues Climb: Business aviation departures in Europe rose 3%
Y/Y in September to 79,280 flights according to WingX’s Business Aviation Monitor. We
have seen increasing business jet activity in Europe and North America which should
provide an eventual tailwind for aircraft demand.

Net-net, on balance we see improving fundamentals within the business jet market
which bodes well for Bombardier given Bombardier Business Aerospace is its most
profitable division and with the Global 7000 entering into service next year.