Log Out | Member Center

65°F

86°/63°

Bombardier courting operators in emerging markets

  • Bloomberg News
  • Published Saturday, May 24, 2014, at 8:12 a.m.

— Bombardier Inc., the world’s second-biggest maker of corporate jets by revenue, is courting air-charter services in emerging markets amid rising global demand for private planes.

“The global market for business jets has gotten a lot bigger,” said Eric Martel, who heads the Montreal-based company’s business-aircraft unit. “There is a market opening for some of the smaller players that hope to become the next NetJets or VistaJet.”

Emerging markets such as Brazil, China, India and Russia will probably account for about 45 percent of all business jets delivered in the two decades ending in 2032, according to a February forecast by Bombardier. Ten years ago, countries outside of Europe and North America represented only about 20 percent of global deliveries, Martel said.

Bombardier’s business jet unit has been successful in wooing U.S. and European fleet operators the last few years, including a $7.8 billion deal with luxury air-charter service VistaJet Holding and an agreement to sell as many as 275 of its Challenger planes to the NetJets unit of Warren Buffett’s Berkshire Hathaway Inc. for $7.3 billion.

In Wichita, Bombardier’s Learjet plant builds the Learjet 60 and Learjet 70 and 75. It also is developing its largest Learjet to date, the Learjet 85, which is currently in flight testing.

Bombardier sees growth for its products shifting to different markets.

“We see possibilities with other players who would be interested in starting fleets,” Martel said. “There are things we are discussing now, though they are far from being completed.”

Bombardier is preparing for an increase in demand in the Far East. In February it opened a service center in Singapore and has plans to build a joint venture maintenance facility in Tianjin, China. In China alone, private jet ownership is projected to grow more than sevenfold by 2032 from 2012 levels.

Martel, who attended the European Business Aviation Convention and Exhibition in Geneva this week, didn’t name the potential clients or identify the countries.

Bombardier and Gulfstream, a General Dynamics Corp. unit that ranks No. 1 in terms of business-jet revenue, are reaping the benefits of a rebound in corporate flying globally. The delivery of large jets including Gulfstream’s G650 and Bombardier’s Global 6000 rose 32 percent to 249 jets last year from 2011, while medium and small planes dropped 15 percent.

To boost its share of the large-cabin market, Bombardier is developing two versions of a new jet, the Global 7000 and 8000. Bombardier Aerospace President Guy Hachey told investors in March the jets would probably bring in additional revenue of $2 billion to $3 billion annually in about five years.

“Business jets are by far the most profitable segment of activity for Bombardier aerospace, and the large-cabin business jets are the most significant contributor,” said Nicholas Heymann, a New York-based analyst at William Blair & Co. “As they bring the Global 7000/8000 out they will have the longest range, the greatest functionality and the largest cabin.”

Shipments of business jets at Bombardier amounted to $1.57 billion in the first quarter of 2014, according to data from the General Aviation Manufacturers Association. That trailed Gulfstream’s $2.05 billion, the data showed.

“Even with the recession, we have seen no slowdown in the large cabin market,” Martel said. “Quite the contrary – the market continued to grow. We think that the large-cabin market could represent 25 percent of deliveries in the next few years, and 50 percent of revenue, which is huge.”

Subscribe to our newsletters

The Wichita Eagle welcomes your comments on news of the day. The more voices engaged in conversation, the better for us all, but do keep it civil. Please refrain from profanity, obscenity, spam, name-calling or attacking others for their views. Please see our commenting policy for more information.

Have a news tip? You can send it to wenews@wichitaeagle.com.

Search for a job

in

Top jobs