Bombardier sees 'signs of stabilisation' in business jet market

Bombardier recorded a five-unit slide in business jet deliveries during the third quarter, reflecting continued soft demand for its Learjet product line and a fragile international marketplace.

But the Canadian airframer says it is seeing "signs of stabilisation" and is confident it will hit its 2017 delivery target of 135 units as it heads into the "seasonally strongest quarter of the year".

Bombardier handed over 31 aircraft for the three months ended 30 September: four Learjet 70/75s, 13 Challenger 350s, four Challenger 650s, one Challenger 850 and nine Global 5000/6000s. This compares with 36 units delivered during the same period last year: seven Learjets, six Challengers 650s, 13 Challenger 350s and 10 Globals. For the first nine months of 2017, Bombardier shipped 95 aircraft – 14 fewer than a year ago.

Alain Bellemare, Bombardier's chief executive, speaking on a 2 November earnings call, described the business aircraft division as “solid with strong profitability”.

While the unit’s third-quarter revenues fell 17% year on year, to $1.1 billion, profits for the period soared by 11%, to $93 million. The company expects to end the year with a profit margin of roughly 8% on revenues of about $5 billion, Bellemare says.

“By improving productivity and operational efficiency, we have demonstrated that business aircraft can perform in any market environment,” he says. “[The division] is well positioned to deliver stronger earnings growth as the market recovers.”

Overall, the business jet sector is performing as expected, “with continuing signs of stabilisation, including higher aircraft utilisation and lower levels of pre-owned inventory,” Bellemare says. The USA remains a bright spot, and while international demand remains fragile, Bombardier expects its traditionally strong markets of China, the Middle East and Russia to bounce back “in the coming years”.

Service entry in the second half of 2018 of its flagship Global 7000 should help to stimulate interest at the top end of the sector. Bellemare says the ultra-long-range jet is already sold out up to 2021, and customer interest continues to grow.

So far, the four aircraft in the fight-test campaign have amassed more than 900h and the fifth and final example – which will serve as the entry-into-service validation aircraft – is currently undergoing completion and will join the fleet before year-end.

In contrast, demand for the Learjet 70/75 remains soft, thanks largely to huge competition in the light business jet sector and continued pressure on pricing. Despite lacklustre sales, Bellemare saysBombardier will continue to promote and manufacture the legacy product, and will maximise its aftermarket activities to support the global inventory, for which Flight Fleets Analyzer records nearly 2,000 units.

“We will continue to take as much value as we can with our Lear franchise,” he says.

(Evangle Luo of TTFLY shared with you)