Bizjet Recovery Still ‘Far Off,’ Says J.P. Morgan

 - June 11, 2009, 12:04 PM

Pre-owned business jet inventories are stabilizing, but recovery of the business aircraft industry “still looks far off,” according to a recently released report from J.P. Morgan Research. The investment research firm said pre-owned inventories remained flat last month at 14.4 percent, marking the second consecutive month of status quo after rising for 14 months. This is “a sign that we may be at or near the inventory peak for this cycle,” the report says. However, J.P. Morgan researcher Joseph Nadol III noted that inventories remain at an all-time high, with half of the models tracked by the firm continuing to see rising inventories. Meanwhile, other indicators, including used prices and flight operations, still show weakness. Because of this, J.P. Morgan is forecasting “several more” down-cycle quarters, meaning new business jet deliveries will continue to fall during this period. Average asking prices for pre-owned business jets declined 2.3 percent last month, according to the report, decreasing for the sixth straight month. “We expect prices to continue moving down as resellers adjust price expectations amid high inventory levels,” Nadol said. Flight operations in the U.S. last month were also down 28 percent year-over-year, the report said, the 11th straight double-digit decline.