Bombardier expects slow recovery in business jet market

Washington DC
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Bombardier is seeing gradual improvement in demand for business jets, but warns that new-aircraft prices remain depressed and it will be at least a few more months before prices return to normal levels.

The manufacturer delivered 176 business jets in the fiscal year ending 31 January, a 25% drop compared with the 235 jets from the previous fiscal year. It expects a further 15% drop in deliveries for the current fiscal year. But the cancellation rate, which peaked in the first half of last year, has slowed considerably and Bombardier is starting to rebuild its business jet backlog.

Bombardier had 186 business aircraft cancellations last year compared with 101 orders. But Bombardier Aerospace president Guy Hachey points out that the manufacturer had net positive orders for nine business aircraft in the second half, compared with negative net orders for 94 business aircraft in the first half.

For the current quarter, says Hachey, cancellations are slowing, but there is a net positive: "What were seeing is the tail end of what I call the clean-up of the skyline."

But, he warns, new-aircraft pricing levels remain depressed, especially for small jets, because used inventories remain high. Bombardier expects to have sold most of its own excess inventory, including pre-owned aircraft and white tails, by the second half of this year, at which point Hachey expects new prices to firm up.

Hachey also stressed the need for new orders. During its past fiscal year, Bombardier's Learjet backlog has shrunk from 17 months to only six, its Challenger backlog is down from 20 months to 13 and its Global backlog from 43 months to 26.

He adds there is still "a lot of pressure on the lower end of our portfolio" because the Learjet and Challenger ranges face more competition than the larger Global jets.

He describes China, India and Middle East "good areas for us in terms of the activity" while "the USA is still very slow". He says: "Europe is more towards the slow than the active but better than the USA."