Analysts at last year’s Corporate Aircraft Transactions conference agreed that the business jet market was “extremely strong” at the time, but they also expressed doubt that the boom would continue indefinitely. “There are signs that concern us,” said David Strauss, executive director, U.S. aerospace and defense senior analyst for UBS Investment Research. “We’re uncertain how much higher the market can go.”
Strauss’s concerns were apparently warranted; at this year’s conference, held June 17 and 18 in New York, he said the U.S. market is “slowing significantly,” and the rate of new orders and deliveries has been declining since February. Corporate profit growth is also declining, driven by the weakening financial market, and as a result the future outlook for the industry looks “increasingly more pessimistic”–in the U.S. and the international markets. “Our best guess is that the market is deteriorating from its peak in 2006 and 2007,” Strauss said. “We think deliveries will drop, and we’re concerned about the ability of the supply chain to ramp up and meet demand.” Stock prices have also dropped, he said, due to the state of the market and the smaller number of orders.
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