UBS: ‘Incremental Improvement’ for Bizjet Market

 - October 19, 2009, 11:35 AM
Deterioration in the business jet market is continuing to slow, according to UBS Investment Research’s latest monthly business jet report, which was released on Friday. The September market Index came in at 43, 16 percent higher than in July and the sixth straight move higher. “Our index, which is weighed down by record used inventory levels, has not yet crossed the 50 mark indicative of market improvement that has historically led meaningful upside for the [companies],” noted UBS aerospace analyst David Strauss. “However, our straight-up measure of absolute business conditions has begun to show some incremental improvement.” Pre-owned business jet inventories are coming off their peak, declining 3 percent last month and now 4 percent below the May peak on the third sequential decline in the past four months. Despite recent declines, available inventories are still 26 percent higher than last year and still represent 17 percent of the in-service fleet. Aircraft inventories of aircraft less than 10 years old declined 5 percent last month and are now 10 percent below the peak. Meanwhile, UBS said the fractional fleet is “well undersold” and likely to shrink, with about a 15-percent contraction of this fleet expected by year-end.