UBS Bizjet Market Snapshot Isn’t a Pretty Picture

 - December 18, 2008, 11:14 AM

UBS Investment Research’s Business Jet Survey that was released today is a sobering account of the recession’s toll on the U.S. bizjet market. The firm’s “business jet market index” came in at 14 this month, slightly higher than last month’s all-time low of 13 but still well below 50, which is the dividing line between market growth (above 50) and contraction (below 50). This is “reflective of a market that continues to rapidly deteriorate,” UBS analyst David Strauss noted. “We believe this [is] a market with few serious buyers, too much supply (used and new delivery slots) and pricing that has fallen 25 percent or more over the past six to eight weeks.” Worse yet, the UBS survey said lack of financing is endangering aircraft manufacturers’ backlogs. “While our survey has indicated slowing end-market demand for some time, financing looked to be there to deliver the backlog. However, over the past two months…business jet financing looks to have dried up considerably. The surge we have seen in delivery slots available for sale is likely at least partially attributable to this and indicates that backlogs are at risk.” Meanwhile, an increase in inventory of pre-owned aircraft and decline in flight activity “presage what we think will be a significant slowing in new aircraft demand.”