Financial analysts seem cautiously optimistic for business aviation market

In its latest report  analysts say recovery is taking hold and notes particularly the 74 net orders Bombardier has booked in the last quarter of 2010. Orders for the recently launched Global 7000/8000 boosted the number, but the financial services firm believes demand is at least starting to improve more broadly.

Fly-corporate reports that the financial services compant remains cautiously optimistic, mainly because 11.0% of used in-production aircraft are for sale at prices not seen since the late 1990s. The 15-year average is ~8%. Nevertheless, used inventory is down 330 bps from the 2009 peak, including 30 bps in Feb, and prices are up 3% YTD.

The used jet inventory of in-production models declined by 30 bps to 11.0% in Feb. By category, Medium and Light jet inventories both declined by 40 bps, while Heavy jet inventories decreased by 10 bps. All six OEMs—Embraer (-110 bps), Cessna (-40 bps), Hawker Beechcraft (-40 bps), Dassault (-30 bps), Bombardier (-20 bps), and Gulfstream (-10 bps)—saw inventories decline.

Average price increased 0.9% to $11.15 mln in Feb, recovering 3.1% from the low of $10.8 mln in Dec. By category, Heavy (+1.2%) and Medium jets (+1.1%) witnessed price expansion, while Light jet (-1.1%) prices declined.

Flight ops increased only 4% in Jan after rising 13% in 2010. On a seasonally adjusted basis, flight ops decreased 8% sequentially. Despite rising ~20% off the 2009 low, they remain ~20% below the 2007 peak.

The six major OEMs plus Boeing and Airbus delivered 272 business jets in 4Q10, the first y/y increase since 4Q08. By manufacturer, Bombardier, Cessna, Dassault, Hawker, and Boeing deliveries increased, while Embraer and Airbus delivered fewer aircraft and Gulfstream was flat. For full year 2010, deliveries fell 12% to 763. By volume Cessna (-1,000 bps), Hawker (-170 bps), and Bombardier (-30 bps) lost share in 2010, while Embraer (+500 bps), Dassault (+360 bps), Gulfstream (220 bps), Boeing (80 bps), and Airbus (+40 bps) gained. By value, Cessna, Bombardier, and Hawker lost market share at the expense of other OEMs.