Business jet makers face battle on pricing as deliveries drop

Thu May 26, 2016 8:58am EDT
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By Cyril Altmeyer

GENEVA (Reuters) - Business jet manufacturers are locked in a price battle as deliveries of new aircraft remain weak and recently sold aircraft come back onto the market at attractive prices, delegates at an annual corporate jet convention said.

Demand for business jets reflects the health of economies and makers of corporate planes have been hard hit since the financial crisis.

Bombardier, unveiling its 10-year market forecast at the EBACE show in Geneva, projected industry deliveries to drop 10 percent this year to 540-560 jets after rising 1 percent in 2015. That compares with the peak of 811 deliveries in 2008.

"There is more offer than demand, there are too many airplanes in production," said Marco Tuilo Pellegrini, president and CEO of Embraer Executive Jets, highlighting competition from the market for used jets.

"The price war is being felt across the whole range," Eric Trappier, CEO of Dassault Aviation, told Reuters.

Pellegrini said the economic downturn in Brazil meant it was hard to sell business jets there, while the drop in oil prices had made potential purchasers in the Middle East and Russia more hesitant.

Production cuts by some manufacturers will also weigh on deliveries this year, though Bombardier sees a pick up in global growth boosting demand over its 10-year forecast horizon.

Bombardier last year decided to cut its output and expects to deliver 150 business jets this year against 200 last year. It says this strategy means its aircraft are retaining value better than rivals.   Continued...

Visitors look at Global 7000 Bombardier aircraft replica during the European Business Aviation Convention & Exhibition (EBACE) at Cointrin airport in Geneva, Switzerland, May 24, 2016.  REUTERS/Denis Balibouse