Two separate analyst reports issued this week by UBS Investment Research and Brian Foley and Associates note that business jet order backlogs are at increased risk due to rising pre-owned inventory and recession. According to UBS, pre-owned bizjet inventory now stands at 16 percent of the in-service fleet, climbing 2 percent last month alone and 65 percent above prior-year levels.
UBS Investment Research’s recently issued business jet update indicates that flight activity, measured by takeoffs and landings, was 10 percent lower in November on a rolling 12-month basis and down 11 percent year-to-date. According to UBS analyst David Strauss, the decline has been led by reduced charter activity, which dipped 15 percent in November, while all other business jet activity fell 9 percent.
UBS Investment Research’s business jet survey released late last month shows a contracting market index that is “reflective of a market that continues to rapidly deteriorate.” According to UBS analyst David Strauss, “We believe this [is] a market with few serious buyers, too much supply and pricing that has fallen 25 percent or more over the past six to eight weeks.” A lack of financing is also endangering aircraft manufacturers’ backlogs, UBS
UBS Investment Research’s Business Jet Survey that was released today is a sobering account of the recession’s toll on the U.S. bizjet market. The firm’s “business jet market index” came in at 14 this month, slightly higher than last month’s all-time low of 13 but still well below 50, which is the dividing line between market growth (above 50) and contraction (below 50).
According to a UBS Investment Research report issued yesterday, the business jet market “is deteriorating at an accelerating rate” as pre-owned inventory continued to rise, flight activity fell and sales slowed last month. Worse yet, business jet financing appears to be drying up, threatening backlogs.
Business aviation consultancy Brian Foley Associates believes the peak for business jet backlogs likely occurred in the third quarter and will now begin shrinking.
Investment research by UBS published this month shows a marked increase in both used business aircraft available for sale and in delivery positions for sale. The investment bank’s conclusion is this: “We believe the deterioration…and decline in flight activity presage what we think will be a significant slowing in new order activity.
Pre-owned business jet inventories rose by 10 percent last month and are now 57 percent above year-ago levels, according to a report issued yesterday by UBS Investment Research. “Used inventories have been building steadily since the end of 2007 and in October reached a fourth consecutive all-time high at 2,564 aircraft,” noted UBS aerospace analyst David Strauss.
UBS Investment Research’s business jet report–released yesterday–shows that business jet flight activity was 13 percent lower last month compared with the same period last year, although the data was slightly better than the 18-percent year-over-year decline in August. Year-to-date, flight activity is down 9 percent.
According to UBS Investment Research’s business jet update issued on Friday, U.S. and international bizjet flight activity was “sharply lower” in August. However, about 86 percent of the flights UBS tracked were domestic flights within the U.S., meaning the international sampling is somewhat under-represented.