Five years of the business jet downturn
If you take the summer of 2007 as the start of the Global Financial Crisis, we could be celebrating its sixth birthday this week. The business jet market was late to the first party and has now been in downturn for five years.
Back in July 2008, most people expected that the business jet market would have fully emerged from the downturn by now. Sadly they were wrong.
According to Scott Donnelly, chairman and CEO of Cessna parent Textron, there are no real signs of an improvement in the light jet market. In April, Cessna took the tough decision to cut production and lay-off staff. Since then it has delivered 20 aircraft compared to 49 in the same quarter of 2012. In the second quarter of 2008, Cessna delivered 117 business jets (up from 95 in quarter two of 2007).
At the end of last month, Cessna had a $1 billion aircraft backlog. In June 2008 it was $16 billion.
Demand for larger aircraft is stronger and Gulfstream released great figures for its second quarter, delivering 35 green aircraft up from 28 in 2012. Most impressively it has worked out problems outfitting G650s, and delivered 65 completed aircraft in total versus 40 last year.
But it is too early to write off the light jet market. Historically, this market falls harder but also rebounds faster compared to larger jets. Although the number of pre-owned aircraft is hurting sales of new aircraft, light aircraft really are business tools and small companies in the US will return to the market.
Some forecasters will tell you that the market has bi-furcated (or split) and changed for ever, that the light jet market is finished and that we are in an age of larger jets. They say: “This time it is different,” and: “The business jet market has fundamentally changed.”
The funny thing is that people were saying: “This time it is different” in the summers of 2007 and 2008 too.
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