In a report to investors titled “Bizjet Party Time is Now,” analysts at investment bank Cowen see a number of factors improving fortunes for the next couple of years for the business jet industry and, in particular, for OEMs Gulfstream Aerospace and Textron Aviation. “The combo of Covid concerns, a robust stock market, and firming economy are creating the strongest business jet environment since 2007,” the report said.
Analysts noted the inventory of used business jets for sale reached an “all-time low” of 4.5 percent of the fleet while the 275,000 business jet departures in May—led by fractional and charter operators—were near the October 2019 peak of 278,000. With demand driven by ultra-high-net-worth individuals and an increase in first-time buyers, that should push them toward the purchase of new business jets. OEMs likely won’t see the fruits of that demand on deliveries because of production lead times until 2022 “and possibly 2023,” according to the report.
“Also, Fortune 500 customers are just starting to perk up, and foreign buyers have yet to return,” the report added. “Thus, the demand surge likely still has runway.”
As for the OEMs, Gulfstream “looks best positioned in bizjets” because preowned jet demand is highest in the large-cabin category. In addition, increasing G500 and G600 deliveries and the fourth-quarter 2022 entry-into-service of the G700 are pluses for Gulfstream, the report added.
At the lighter end of the market, Cowen analysts see a strong second-quarter 2021 book-to-bill for Textron Aviation and a “solid sales lift” in 2022, potentially extending into 2023. However, the report said, “demand durability is a bigger issue for smaller business jets, and has a less compelling product story than .”
Lastly, the report added that OEMs Embraer and Bombardier “face issues” […]