Market research group: U.S. to account for more business jet deliveries in next decade

A business aviation market research group is revising its global forecast and expects more new business jet deliveries to occur in the U.S. and North America in the decade ahead.

That could benefit Wichita-based Textron Aviation.

“We’re going to be reflecting the strength of the U.S. in our new forecast,” Rolland Vincent, managing director of Jetnet iQ, said Wednesday.

Vincent said his organization routinely updates its forecast every three months, and the economic data and the owners and operators who participate in its quarterly survey are prompting the changes.

“The large-cabin market has been very robust, and we’re seeing signs of weakness – repeated signals that not all is well at the top end of the market,” he said.

Complete results of the revised forecast are expected to be released in another week or so, Vincent said, but in it the U.S. and North America will account for a greater share of new business jets.

“In our current forecast, North America represents over 50 percent of unit deliveries,” he said, adding that specific figures will be available once the updated forecast is released. “We’re going to be bringing that up; North America is going to be higher in the next 10 years.”

He said that will bode well for sales of light to midsize business jets, the categories of aircraft that sell the best in North America, as well as for Textron Aviation and its Cessna Citation business jets.

“I think Textron is well situated and well positioned for picking up orders,” he said. “They have a very strong presence in the U.S., and they’ve got a lot of people on the ground meeting with operators all the time.

“This new reality, where the U.S. is stronger than a lot of the other markets, should play out well for Textron.”

But, he adds, it should play out well, too, for Textron Aviation’s strengthening competitor in the U.S. That is Embraer, a Brazilian-based business jet competitor that in recent years has established and grown its business jet manufacturing capabilities in the U.S.

“Textron and Embraer, I’d say they’ll be locking horns the most (going forward),” Vincent said.

Drivers of the changing Jetnet forecast are the slowing economy in China – though he said it’s still maintaining a healthy economic growth rate of more than 6 percent – and worsening conditions in countries such as Russia, which he said is affected by plummeting oil prices, a weak currency and U.S. sanctions. Both countries, as well as others such as Brazil and India, have been until recently strong consumers of large-cabin business jets made by the likes of Bombardier, Dassault and Gulfstream.

“These international markets buying these jets have really slowed down,” Vincent said.

In May, the Canadian parent of Wichita’s Learjet announced it would cut more than 1,750 employees in Canada and Northern Ireland as it reduced production of its Global 5000 and 6000 business jets. It attributed the action to softness in demand in China, Latin America and Russia.

North America and the U.S. will have greater demand for business jets – mainly light to super midsize aircraft – not only because of stronger economies but also because of new jets that have been or will be rolled out by Textron, Embraer and Honda, Vincent said. Those include Textron Aviation’s Citation Latitude and Longitude, Honda’s HondaJet and Embraer’s Legacy 450 and 500, he said, which will help to further stimulate demand in North America in the next decade.

This story was originally published January 20, 2016 at 7:13 PM with the headline "Market research group: U.S. to account for more business jet deliveries in next decade."