UBS: Used Bizjet Inventory Falls after 18-month Rise

By: Chad Trautvetter

July 2, 2009
Business Aviation

The pre-owned business jet market appears to have bottomed out last month, according to UBS Investment Research’s latest business jet update, released this morning. “Available business jet inventories stepped down 2 percent in June after sequential increases in each of the prior 18 months,” UBS aerospace and aviation analyst David Strauss noted in the report.

The investment firm regards the used business jet market as a leading indicator of the new business jet market. However, pre-owned inventories are still 48 percent higher than this time last year and represent 17 percent of the in-service fleet, meaning recovery of the industry will take some time.

UBS data shows that pre-owned inventories of young aircraft (less than 10 years old) slid 3 percent last month, which is their second consecutive decline but still roughly double prior-year levels. New delivery position inventories fell 10 percent last month, the third straight sequential decline, UBS said.

“We estimate average asking prices for most young aircraft models have now fallen 30 to 40 percent from peak levels, with pricing down another 3 to 4 percent in the past month,” Strauss said. “We think record high used available inventories will continue to overhang orders, pressure existing backlogs and force further production cuts.

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