Foley: Bizjet Orders Could Be Net Negative for 2009

 - August 4, 2009, 1:12 PM

This year will be one of the most challenging on record for new business jet orders, according to business aviation industry consulting firm Brian Foley Associates. “We could easily end the year with the industry as a whole having more order cancellations than new [orders],” said company president Brian Foley. “Some companies will buck that trend, but taken as a whole the industry could see net-negative orders for the year.” While Foley noted that cancellations have subsided, there is potential for additional fallout if more aircraft progress payments can’t be met. “Some buyers had the financial wherewithal to pay for their jets back when they ordered them, [but] they’re now scrambling to find financing to make their next progress payment as their airplane nears final delivery.” With the tight credit markets, it’s not certain that all of them will be able to obtain financing to meet these progress payments. Foley believes as much as 26 percent of the industry’s backlog peak in the third quarter of last year is at risk of cancellation, with some manufacturers’ backlogs significantly more vulnerable than others. “In early September we took a lot of criticism for publicly warning that manufacturers’ backlogs weren’t as sticky as they’d like to think,” he concluded. “Unfortunately, we were spot on.”