Integrated avionics provider Rockwell Collins is taking a bear's view of the anticipated recovery of the business jet market, with estimates for deliveries in the next several years as much as 30% below the Teal Group's typically conservative estimates through 2014. JP Morgan, UBS and Merrill Lynch are also predicting a heartier delivery rate.

Rockwell's outlook is the product of an analytical process the company has put in place to better anticipate production needs, says Colin Mahoney, vice-president of sales, marketing and support for commercial systems.

"The biggest flaw in our forecasts traditionally was that it was US-centric," says Mahoney, noting that international deliveries now account for an increasingly significant portion of business jet deliveries.

In its new prediction tool, Rockwell uses the International Monetary Fund's gross domestic product estimates for 31 "advanced" economies to predict year-over-year changes in the Morgan Stanley capital international index, which measures the current economic health of companies in 23 countries and matches up with business jet deliveries, historically.

"If you can predict the Morgan Stanley index, then you can predict business aircraft deliveries with 97.6% accuracy," he notes.

Using those assumptions, Mahoney is predicting 714 business jet deliveries this year, down from 1,139 in 2008. There will be a bottoming out, or trough, in 2010, with 606 deliveries, he says. Gains will be made in 2011, however, with 648 deliveries, but deliveries will not approach 2008 levels until 2016, assuming another cycle does not occur.

A major caveat in Mahoney's projection is that second-half turnaround in 2009 "has to happen for our assumptions in 2010", he says. That translates to an increased order rate and decreased used aircraft residuals, down to more like a healthy 10% of the fleet from 18% now.

"We're eroding backlogs," says Mahoney. "Before those production rates are going to change with any materiality, there will have to be years of backlog in there."

Source: Flight International