the state of the business jet market 2014
DESCRIPTION
A brief look at why we are still in a business jet downturn.TRANSCRIPT
THE STATE OF THE BUSINESS JET MARKET
Alasdair Whyte
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THE STATE OF THE BUSINESS JET MARKETThe state of the market
What drives business jet and VIP helicopter sales?
Why are we still in a downturn?
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FIVE YEARS OF FALLING DELIVERIES
2008 2009 2010 2011 2012 20130
200
400
600
800
1000
1200
1400
Source: GAMA and Corporate Jet Investor forecast
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DELIVERIES FALLEN BACK BY 10 YEARS
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
200
400
600
800
1000
1200
1400
Source: GAMA and Corporate Jet Investor forecast
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NET BUSINESS JET ORDERS
Source: Bombardier estimates
WHAT DRIVES THE MARKET?
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
Economy
THE GOOD
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
GlobalEconomy
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BILLIONAIRES
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
200
400
600
800
1000
1200
1400
1600
Source: Forbes Rich List
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WEALTH 2013: 199,235 ultra high net worth individuals (UHNWI) with a net worth of
$30 million - combined wealth of $27.8 trillion
2012: 187,380 UHNWI with a combined wealth of $25.7 trillion
There are 2,170 billionaires in the world with a total net worth of $6.5 trillion.
Source: Wealth X
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AVERAGE UHNWI Net worth of $138 million
58 years old
Male (88%)
Married (95%)
Self made (70%)
Most likely to have worked in finance, banking, investment or insurance (20%), industry (6.3%), manufacturing conglomerate (5.5%)
Has a degree (87%)
Source: Wealth X
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
Global economy
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NEW AIRCRAFT PROGRAMMES 2013: Falcon 2000S, Learjet 70, Learjet 75, New Citation X, Eclipse 550
2014: Challenger 350, Falcon 2000LXS, Honda Jet, Learjet 85, Legacy 500, New Citation Sovereign
2015: Citation Latitude, Legacy 450
2016: Global 7000
2017: Citation Longitude, Global 8000, PC-24
Source: Corporate Jet Investor
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
Global economy
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BACKLOG – CESSNA
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-130
2
4
6
8
10
12
14
16
18
$ b
illio
n
Source: Textron
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BACKLOG - GULFSTREAM
2007 2008 2009 2010 2011 2012 20130
5
10
15
20
25
$ b
illio
n
Source: General Dynamics
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
Global economy
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FINANCE - AVAILABLE
Source: Corporate Jet Investor
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
Global economy
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2012 AIRCRAFT SALES
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FLEET AND GDP
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CHINESE BUSINESS JET FLEET
2007 2008 2009 2010 2011 20120
50
100
150
200
250
300
Hong Kong China
Source: Embraer
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THERE ARE MORE BUSINESS AVIATION AIRPORTS IN TEXAS THAN:
• China
• India
• Thailand
• Malaysia
• Indonesia
• And the Philippines
Source: 2011 UVTripPlanner
Combined
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
Economy
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GLOBAL ECONOMY
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US CORPORATE PROFITS
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
THE BAD
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
Global economy
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AGEING FLEET
2008 to 2013 2003 to 2007 1998 to 2002 1997 & Older
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
Global economy
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UTILISATION
Source: Wing-X
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CHARTER - TOUGH
THE UGLY
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
Global economy
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BUYER’S MARKET
2,565 business jets for sale
Average time to sell a jet: 509 daysSource: Amstat, September 2013
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PRE-OWNED TRANSACTIONS UP
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AIRCRAFT FLEET VS AIRCRAFT FOR SALE
September 2013
As % of Total For Sale / Lease
As % of Active Fleet
2008 to 2013 2003 to 2007 1998 to 2002 1997 & Older
Source: AMSTAT www.amstatcorp.com; Asset Insight research www.assetinsightinc.com
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MAINTENANCE EXPOSURE TO PRICE
Model ETP Ratio Model ETP Ratio Model ETP RatioFalcon 2000LX 4.0% Citation X 9.6% Citation CJ1+ 10.0%Boeing BBJ 8.7% Challenger 300 14.2% Phenom 100 12.7%Global XRS 12.6% G-200 16.1% Citation CJ2 20.2%GV 37.8% Hawker 800XP 25.5% Premier 1 35.2%GIV-SP (MSG3) 44.9% Hawker Beechjet 400A 58.7% Learjet 31 44.4%CL-601-3R 46.9% Learjet 60 69.4% Citation II 76.6%Challenger 601-1A 152.6% Learjet 55 73.3% Citation VI 86.0%G-III 253.1% Hawker Beechjet 400 87.4% Learjet 35A 100.2%
Large Jets Medium Jets Small Jets
Aircraft with ETP Ratio >40% carry excessive Maintenance Financial Exposure vs. Ask Price
Source: Asset Insight research ww.assetinsightinc.com
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Global economy
Wealth creation
New aircraft
Aircraft retirement
s
Utilisation
Pre-ownedEmerging markets
Finance
Charter/fractional
Backlogs Confidence
Global economy
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DELIVERIES TRACK S&P 500
Analysis: Dean Roberts, Rolls-Royce
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BUT THIS STOPPED WORKING
Analysis: Dean Roberts, Rolls-Royce
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CORPORATE PROFITS V JET DELIVERIES
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CASH
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CONSTANT RISKS TO RECOVERY
Brazil riots
Libya
Attacks in Egypt
North Korea/South Korea
Fukishima Nuclear Plant
Terrorism in Kenya
Golden Dawn in Greece
US government shutdown
US debt ceiling
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CONFIDENCE
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US CONSUMER CONFIDENCE
1. ‘Take this job and stuff it’ indicator (aka DoL job quits data)2. Conference Board
Analysis: Dean Roberts, Rolls-Royce
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Global economy
Wealth creation
New aircraft types
Aircraft retirement
s
Utilisation
Pre-owned
Emerging market
penetration
Finance
Charter/fractional
Backlogs Confidence
Global economy
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FUTURE IS BRIGHT
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FUTURE IS BRIGHT UNKNOWN
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Global economy
Wealth creation
New aircraft types
Aircraft retirement
s
Utilisation
Pre-owned
Emerging market
penetration
Finance
Charter/fractional
Backlogs
Confidence
Global economy
