Wichita planemakers say they see recovering market for light, midsize jets
07/16/2014 6:44 AM
08/08/2014 10:24 AM
The market for light and medium-size business jets has been slow to recover, but there’s some light at the end of the tunnel, Bombardier’s head of business aircraft said this week.
There are signs that the market is getting stronger, said Eric Martel, president of Bombardier’s business aircraft division.
For one, used airplanes are starting to sell a little faster, and inventories are beginning to decline.
“It’s going to happen eventually,” Martel said. “We’re not out of the woods yet, but I think we will be.”
The market has been returning so slowly that some have wondered whether the market for light jets would recover or whether it had been permanently diminished, Martel said.
“We do still believe there’s a market for the light segment in the future,” he said. “I think it’s important to mention that.”
That’s why the company continues to invest in products such as the Learjet 70, 75 and 85, he said.
Textron officials told analysts recently that it’s seeing more aircraft buyers and has already closed some deals in the second quarter of this year, Cowen and Co. analyst Cai von Rumohr wrote in a report to investors.
Embraer and Gulfstream officials are also more optimistic, noted Brian Foley, an aviation consultant with Brian Foley Associates.
The smaller end of the business jet market is important to Wichita, where Cessna Aircraft, now Textron Aviation, and Bombardier’s Learjet facility builds jets in those market segments.
The market has been stronger for larger business jets.
“Everybody sees the potential of how things will shape up in the future,” Martel said. “We think we have the right product offerings. We think the market is beginning to come back and that it will grow much more than it is today.”
Martel’s remarks came before the opening of the biggest business jet show in Europe, the European Business Aviation Conference and Exhibition in Geneva, Switzerland.
EBACE runs from May 20 to 22. Last year, it drew 12,350 attendees, 460 exhibitors and 400 reporters from around the world.
“That show has been growing year after year,” Martel said. “It’s always been very significant.”
As Textron Aviation, both Cessna and Beechcraft will exhibit a broad array of products including the Baron G58, King Air C90GTx, King Air 250, Special Mission King Air 350ER, Cessna Grand Caravan EX, Citation M2, Citation CJ4, Citation XLS Plus and Citation Sovereign Plus. It will be the EBACE debut for the Sovereign and M2.
Bombardier will display its Learjet 75, Challenger 300, Challenger 605 and Global 6000.
Europe is the second-largest market for business aircraft after North America.
Bombardier expects business jet deliveries in the next 20 years to total 24,000. That includes 9,800 in the next 10 years and 14,200 in the following decade, the company said.
Of those, the light business jet segment will represent 10,500 deliveries, or 44 percent of the units and 18 percent of the total revenue.
Europe remains an important market for small and midsize business jets because cities there are fairly close together, Foley said.
“You can get there with the smaller equipment,” Foley said.
By contrast, Asia has more appetite for larger jets because cities are typically farther apart.
The market is “still kind of dragging along, showing some upward percolation from time to time but no firm forward recovery,” Foley said.
Wichita manufacturers are reporting that small and midsize cabin jets are finally beginning to sell again, he said.
In North America, “we expect that to continue and Europe joining that push in the 2016 time frame,” Foley said.