JPMorgan: Bizjet Deliveries To Rise 8 Percent in 2012

 - February 21, 2012, 2:45 PM
Deliveries of large-cabin business jets, such as this Bombardier Global 6000, are expected to account for most of the growth in shipments this year, continuing a trend seen over the past two years.

“We sense an eagerness for a pickup in the long-depressed business jet market, particularly at the lower end, but we continue to observe mixed signals,” JPMorgan Investment Research notes in its latest market report. Despite the conflicting signals, the investment research firm still predicts an 8-percent rise in business jet deliveries this year. Keeping with recent trends, large-cabin jets will be driving much of this increase, with only “modest pickup for smaller jets.”

JPMorgan saw a “few pockets of strength” in the fourth quarter, but did “not see a decisive turn.” As positives it cited Gulfstream’s 1.0x book-to-bill ratio and Bombardier’s 0.9x ratio.

But other indicators were “mixed,” it said. “We view the U.S. as an important driver of the next major leg of a recovery, and FAA [data on] flight ops fell another 2.9 percent year-over-year in December.” Additionally, pre-owned inventories of in-production business jets remained stagnant in January on a month-over-month basis and remain high in historical terms at 10.8 percent of the in-service fleet.

Meanwhile, pre-owned jet average asking prices slid 2.1 percent last month to $12.2 million, “the lowest level since 1998,” said JPMorgan analysts.