J.P.Morgan: Pre-owned Bizjet Market Weakens in May
The pre-owned business jet market showed “incremental weakness” last month, according to the latest business jet monthly report from J.P.Morgan North American Equity Research. “A single month does not make a trend, but May used-market data, including a sequential increase in inventory by 0.4 percentage points and 3.6-percent decline in pricing not seen since the first half of 2009, suggest that business jet demand will remain weak,” it said. On the positive side, J.P.Morgan researchers added, the younger part of the used fleet is performing better, “but overall the trends were not favorable.”
Pre-owned inventories of in-production business jets jumped to 10.3 percent last month, just as “inventory had looked set to break decisively below the 10 percent level.” Meanwhile, the inventory of younger jets–those less than five years old–declined to 7.4 percent last month. The range was 7.5 to 7.9 percent in the previous nine months.
Low residual values are holding back a recovery, according to J.P.Morgan. “While used inventory peaked in the first half of 2009, used pricing has yet to bottom,” it said. “The low values on trade-ins leave owners who want larger or newer aircraft with a wide gap to bridge. Firming prices are an important ingredient for a recovery and this should take more time.”