Bumpy Bizjet Recovery Continues, Notes JPMorgan

The recovery in the business jet market was mixed again last month, according to JPMorgan North American Equity Research’s latest monthly business jet report, released on Friday. Indicators for pre-owned business jets deteriorated a bit further last month, the firm said, while manufacturers saw increased order activity for new aircraft. “October was a weak month for used jets,” said JPMorgan aerospace analyst Joseph Nadol III, “with inventory for sale rising again and prices falling significantly.” As a percentage of in-service aircraft, pre-owned inventory inched up 0.2 points, to 11.9 percent, last month. Average asking prices decreased 3.8 percent, to $10.9 million last month, falling below $11 million for the first time since August 1997. “We continue to expect the [overall] trend in inventories to be a downward one, with prices stabilizing and then rising,” JPMorgan said, “but this may unfold even more slowly than earlier anticipated.” As for new aircraft, Gulfstream, Embraer and Cessna are reporting increased order activity, JPMorgan noted, but not yet enough to keep backlogs from declining. “We remain cautious on new bizjet demand, and the next quarter or two should determine whether we see further downward pressure on rates,” it said. A bright spot is the fact that business jet flight activity climbed 12.1 percent year-over-year, JPMorgan said. “We expect bizjet flight ops to continue improving in the coming months,” it concluded.


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