Business Jet Market ‘Perking Up,’ Says JPMorgan

Demand for new-production business jets “showed signs of perking up” in the second quarter, JPMorgan North American Equity Research notes in its latest monthly business jet market update. However, it is perturbed about macroeconomic concerns. “Updates from the business jet OEMs were generally encouraging, though mixed signals persist,” said JPMorgan aerospace analyst Joseph Nadol III. The firm notes that the gap between the “healthier high end and the still sluggish lower end remained in place, with the strongest numbers coming from Gulfstream.” JPMorgan believes the sustainability of the business jet market recovery will depend in large part on macro developments, which have shown much volatility over the past few weeks. “If another recession begins, the good news for bizjets is that a recovery never took hold in earnest, so the main risk is that it is simply pushed out further,” said JPMorgan. Since second-quarter deliveries reported by GAMA were 57 percent off the peak in the second quarter of 2008, “the risk of another downturn of similar magnitude looks minimal,” it concluded. “We do believe that bizjets are somewhat insulated from further [production] rate cuts.”

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