New Bizjet Demand ‘Still in Doldrums,’ JPMorgan Says

 - May 13, 2010, 11:38 AM

In its latest monthly business jet market report, JPMorgan North American Equity Research said demand for new business jets is “still in the doldrums.” As proof, the firm said Cessna Citations aren’t even 70 percent sold out this year, while Embraer “has seen little pickup in demand” for its executive jets. “Gulfstream was the most bullish OEM to report” in the first quarter, JPMorgan noted, “but funded backlog fell by about $800 million due to about $1 billion of defaults.” According to the company’s aerospace analyst, Joseph Nadol III, “New bizjet demand is one of the few areas in commercial aerospace not to show signs of a healthy bounce this year. We expect one eventually, but believe it could still be a few quarters away.” He added that large-cabin jet demand is relatively stronger than that for smaller aircraft, “but severe production cuts still have not been made and backlogs remain under pressure.” Meanwhile, pre-owned inventories–even though JPMorgan said they dropped from 12.5 percent in March to 12.3 percent last month–remain higher than they were at their peak in the 2002 recession. The firm said that while the pre-owned aircraft market’s recovery has been under way for several months, “It has unfolded slowly, and we expect this to continue.”