Business jet makers look to tap surging travel demand at Las Vegas air show

imageStock Markets45 minutes ago (Oct 11, 2021 06:51PM ET)

(C) Reuters. FILE PHOTO: A privet jet comes in for a landing at the Van Nuys airport in the high desert area of Los Angeles County, California July 30, 2015. REUTERS/Gene Blevins

By Allison Lampert

LAS VEGAS (Reuters) -Planemakers will be unveiling new orders at the world’s largest business jet show this week as they aim to cash in on a boom in private travel, but executives warn of headwinds due to a capacity crunch.

The National Business Aviation Association (NBAA) show returns to an in-person format starting in Las Vegas on Tuesday, testing the strength of demand for jets following the emergence of COVID-19. The show will also shed light on the resilience of the aerospace supply chain given strained logistics worldwide.

Brazil’s Embraer said on Monday it signed a deal to sell 100 Phenom 300E planes for more than $1.2 billion at list prices to NetJets, with deliveries starting in 2023.

Easing travel restrictions and the lure of private flights have led to an unexpected surge in business aviation, with traffic rising from 2019 levels. That is filling seats for private operators and expanding order backlogs for planemakers, straining the supply of jets, parts and pilots.

Craig Ross, head of California-based Aviation Portfolio, an adviser to business jet clients, said he is seeing cases of flights getting canceled due to a lack of pilots and delays due to a shortage of plane parts for maintenance.

It has led to flight cancellations and delays in an industry that charges top price for reliability, with some private operators turning down business to protect service.

“Everyone will be talking about the same thing: ‘How do we deal with this demand,'” said Ian Moore, chief commercial officer of private jet company VistaJet.

“I’m sure that’s going to be a topic at every booth and every cocktail party in Vegas this year.”

One top supplier, Honeywell (NASDAQ:HON), is predicting a 50% rise in business jet flight hours in 2021 over last year.

General Dynamics (NYSE:GD)’ Gulfstream Aerospace, one of the largest business jet makers, is not participating due to COVID-19. The U.S. planemaker recently announced two new jets, with its larger G800 set to clash with Bombardier (OTC:BDRBF) Inc’s Global 7500 and Dassault Aviation SA’s 10X in a battle of flying penthouses.

It is a boon for private aviation, which has yet to recover to the 1,300 aircraft delivered in 2008 before the financial crash, said aviation analyst Brian Foley in a recent note.

Foley said he expects around 700 business aircraft deliveries in 2021 with a ramp-up in production expected to begin in 2022 as planemakers gain confidence the surge is sustainable.

While Cessna business jet maker Textron (NYSE:TXT) Aviation is raising production to meet demand despite supply chain challenges, Canada’s Bombardier is waiting to see how orders evolve.

“We’ve rebuilt backlog and I like that price is re-firming. But it’s a question of supply and demand,” said Bombardier Chief Executive Eric Martel in a recent interview.

Some planemakers are watching for signs of a bubble similar to the demand ahead of the 2009 economic crash, which left them on the hook with unsellable jets, said an executive at one corporate jet manufacturer who spoke on condition of anonymity.

“Some are wondering is it real or is it 2007 over again?”

Business jet makers look to tap surging corporate travel demand at Las Vegas air show

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Articles

Explainer-Americans wonder: Which COVID-19 booster is best?

(C) Reuters. FILE PHOTO: Vials labelled "Moderna, Johnson & Johnson, Pfizer-BioNTech...

Subscribe

Categories

Same Category

Explainer-Americans wonder: Which COVID-19 booster is best?

(C) Reuters. FILE PHOTO: Vials labelled "Moderna, Johnson &...

BMW to phase out fossil-fuel burning engines from main plant by 2024

Stock Markets25 minutes ago (Oct 22, 2021 01:11PM ET) (C)...

In corporate crackdown, U.S. SEC takes aim at executive pay

(C) Reuters. FILE PHOTO: Signage is seen at the...