J.P. Morgan Sees Slow Start To First Quarter

 - April 4, 2013, 1:35 PM

J.P. Morgan Aerospace & Defense’s April Business Jet Monthly report sees “little evidence that new jet demand is gathering momentum” and “we are not expecting a particularly strong Q1.”

Factors contributing to the lack of demand include elevated inventory of younger jets, prices of used jets still declining and flight ops that are “barely growing in the U.S. and shrinking in Europe.”

The report, however, highlights some positive news. For example, J.P. Morgan doesn’t expect cuts in 2013 first-quarter delivery forecasts and raises the possibility that market recovery in subsequent quarters could “overcome a weak Q1.” The ranks of used in-production jets “could soon see inventory break below 10 percent for the first time since September 2008.”

Used prices, however, remain weak, “falling for the eighth time in 12 months.” And flight operations during February dropped 0.4 percent in the U.S. and 1.4 percent in Europe (both adjusted for the leap year). J.P. Morgan also warned that the China market could see depressed demand due to the Chinese government’s austerity campaign, although “business jets do not appear to be a target thus far.”