Last year “should mark a bottom” for the business jet market, but the path of recovery is “unclear,” according to J.P.Morgan’s latest business jet monthly report. “We estimate that there were about 650 business jet deliveries last year, which would represent a 43-percent decline over five years. Deliveries in 2014 should be up–we estimate by about 10 percent–with help from new and upgraded platforms,” it noted.
“Nonetheless, demand remains weak, and our confidence in a recovery is based on leading indicators such as falling used inventory, especially among young jets, accelerating flight ops growth and faster GDP growth, including in the U.S., which is by far the largest business jet market,” J.P.Morgan aerospace analysts noted. “More concrete signals such as orders have yet to emerge, except from Bombardier fleet customers, and we still do not expect much optimism on this front when OEMs report fourth-quarter results in the coming weeks.”
Pre-owned market data last month was consistent with full-year 2013 trends of falling inventories and sliding prices, it said. However, the inventory decline last month was broad based and price declines were more concentrated among heavier jets. “We believe the inventory down/pricing down phenomenon is seller capitulation and a blow off bottom for the market,” J.P.Morgan said, “which we see as a positive that should bring the used market toward equilibrium.”
Inventory of in-production, pre-owned business jets stood at 9.2 percent last month, down 0.9 points from last January. Average asking prices, however, fell 1.6 percent month-over-month in December, the firm said.