[ad_1]
Only a dozen or so pre-owned Falcon 7X planes are on the market now, says Steve Varsano, an aircraft broker in London. When a customer wants to buy the Dbadault Aviation SA model, the tightening market has been set up in India.
Going that far afield would have been unheard-of until recently, so much so. Varsano cam up empty.
"The tables have turned," said Varsano, founder of The Jet Business in London. Just last year, the person running the sale "Hey, when are you coming over?"
The private-plane market is finally tilting towards sellers after years in which a glut of used jets enabled buyers to call the shots. Emerson Electric Co., NextEra Energy Inc. and Anadarko Petroleum Corp. are fueling a rebound of purchases.
Good Timing
Bombardier Inc., Embraer SA, Textron Inc. and General Dynamics Corp.'s Gulfstream unit, which are all rolling out new models. New aircraft deliveries are poised to rise 8 percent next year after being flat or down since 2014, according to JetNet IQ, an advisory and forecasting service.
"People are flying, the economy is strong, corporate investments are taking over the business jet," Michael Amalfitano, head of Embraer's private-aircraft unit, said Monday at an industry conference in Orlando , Florida. "These are all positive signs for growth in the fundamentals of our business."
The said Rolland Vincent, a consultant in Plano, Texas, who produces JetNet IQ in conjunction with JetNet researcher. About 70 percent of the new aircraft deliveries have gone to the US, which is home to about 60 percent of the world's private-jet fleet.
In the U.S. the reduction of corporate-tax rates – to 21 percent from 35 percent – has given companies more cash. Vincent said, "The tax rate is also included in the rate of capital gains in the first year, which has increased the incentive to buy private aircraft, Vincent said.
The interior of an Embraer SA Legacy 500 jet is seen at the Singapore Airshow held at the Changi Exhibition Center in Singapore, on Tuesday, Feb. 6, 2018. Boeing Co. is wooing Embraer with a plan to form a commercial-jet venture instead of an outright acquisition, people familiar with the talks said. Photographer: SeongJoon Cho / Bloomberg
Aircraft Debut
New models always attract buyers, he said, and a lot of planes are making their debut:
Bombardier is awaiting certification from the US and Europe to begin deliveries of the Global 7500, the largest purpose-built corporate jet. Gulfstream, whose G650 is the current holder of the biggest-jet crown, delivered a somewhat smaller plane, the G500, in September. It expects another model, the G600 to begin service early next year. Cessna, a unit of Textron, is awaiting certification of its Longitude. The midsize jet is bigger than the company's existing Latitude plane. Not to be outdone, Embraer is increasing the range of badpit controls of its similarly-sized Legacy planes and giving them a new moniker: Praetor. Switzerland's Pilatus Aircraft is delivered this year of its first jet aircraft, the PC-24.
Demand is also picking up for factory-fresh planes based on older designs. Anadarko, an oil driller, took delivery last month of a 2018 Gulfstream G550, according to the Federal Aviation Administration registration records. That was a precursor of the G650 and is still prized for size and range. Anadarko did not respond to a request for comment.
Corporate Buyers
Synovus Financial Corp., a regional bank in Columbus, Georgia, went to 2018 with Embraer Legacy 500. NextEra Energy Inc., the owner of Florida Power & Light, acquired the same model. NextEra and Synovus declined to comment.
Emerson, a maker of air-conditioner compressors and automation equipment, bought a pre-owned 2013 Falcon 7X in September.
"Emerson is retiring an aging corporate aircraft," the company said in an email. "The 30-plus-year-old plan is much more efficient than the 2013 plan, which will offer better fuel efficiency and a much better range to access global facilities."
Stepped-up demand for used planes is important for the market after several years of declines. That feeds into the market for new aircraft as well.
Tighter Market
"Inventory is getting picked over," said Barry Justice, president of Corporate Aviation Asset Professionals, a consultant near Dallas. "Good airplanes with high-quality avionics and interiors in good condition are getting harder to come by."
The increase in sales of new planes, in turn, help restore pre-owned inventories.
There are still risks. Last week's stock selloff served as a reminder that the market will not rise forever. Moreover, the U.S. business cycle will eventually turn. The U.S. economy has not been in a recession since the big one that ended in 2009, which threw the jet market into a downward spiral.
"There's a lot going on, and that's how long this expansion can go," said Brian Foley, a business-aircraft consultant who spent 20 years as marketing director for Dbadault's North American jet unit.
But Janine Iannarelli, founder of Par Avion, has a flat brokerage in Houston. They have to wait for the plane they want to become available.
"There are plenty of airplanes out there that are projects," she said. "Now, you have to help your customer rethink. Let's go buy that airplane that requires upgrades. '
A Gulfstream G550 aircraft manufactured by Gulfstream Aerospace Corp., a unit of General Dynamics Corp., stands on display during the Singapore Airshow held at the Changi Exhibition Center in Singapore, on Sunday, Feb. 4, 2018. The air show runs through Feb. 11. Photographer: SeongJoon Cho / Bloomberg
Honeywell Survey
August Gaetan Handfield, senior manager for market research for Honeywell International Inc.'s aerospace unit. For jets that are more than 10 years old, inventory has decreased by 30 percent.
The decline bodes well for new sales. Honeywell estimates deliveries of 7,700 plans over the next decade, based on an annual company survey of more than 1,500 aircraft operators. More than 60 percent will be large.
Planemakers pared production in recent years to avoid oversupplying the market while demand was weak. Now that sales are turning around, manufacturers should be careful not too much, Handfield said.
"Down the road, the manufacturers will be careful to overproduce," he said, "so they do not end up in the same situation as they do in the pre-owned market."
BLOOMBERG
[ad_2]
Source link
