Read without ads and support Scribd by becoming a Scribd Premium Reader.
See Premium Plans
 
 
UBS Investment Research
 
Business Jet Monthly
Back to Stable
 
Index at 50
Our January Business Jet Index came in at 50, 10% higher from our prior survey inNovember and now indicative of a stable market after two years of deterioration.Our straight up measure of absolute business conditions continues to movemodestly higher, reflecting a steadily improving, albeit still depressed, market.
 
Used inventories continue downtrend
Available for sale business jet inventories moved 2% lower in January and are now6% lower from the prior year. While available inventories have declined sixstraight months, they still represent 15% of the installed base, above the historicalaverage at 12-13%. Young available for sale aircraft (0-10 years old) have alsodeclined in each of the past six months and are now 17% below the April peak.
 
Cycles strong in December
We estimate business jet cycles (takeoffs & landings) in December were 5% higherfrom the prior year, the first y/y increase since mid-2007. On a seasonally adjustedbasis, cycles were roughly 3% higher from the prior month and are now 22%above their March low, although still 21% below the 2007 peak.
 
Prefer BBD/GD/COL
Our Buy rating on GD reflects an improved defenserisk profile and stabilization inour bizjet survey, with particular strength at the high end. We maintain our Buyrating on BBD on strength at its Transportation business. Our Neutral rating onTXT reflects concerns over the shape of the recovery at Cessna, given significantoversupply, fractional weakness, and increased competition at the low-mid end.Among the suppliers, Buy rated COL is our preferred play on business jets.
Global Equity Research
Americas
 
Aerospace
 
Sector Comment
 
12 February 2010
 
www.ubs.com/investmentresearch
 
David E. Strauss
Analystdavid.strauss@ubs.com+1-212-713 6185
Cristina Fernandez
Analystcristina.fernandez@ubs.com+1-212-713 3321
Darryl Genovesi
Associate Analystdarryl.genovesi@ubs.com+1-212-713 4016
Fadi Chamoun, CFA
Analystf adi.chamoun@ubs.com+1-416-350 4855
Tasneem Azim
Associate Analysttasneem.azim@ubs.com+1-416-814 3678
 
Chart 1: UBS Business Jet Market Index Chart 2: Overall Business Conditions Score
050100
   S  e  p  -   0   3   J  a  n  -   0   4   M  a  y  -   0   4   S  e  p  -   0   4   J  a  n  -   0   5   M  a  y  -   0   5   S  e  p  -   0   5   J  a  n  -   0   6   M  a  y  -   0   6   N  o  v  -   0   6   M  a  r  -   0   7   J  u  n  -   0   7   N  o  v  -   0   7   F  e   b  -   0   8   J  u  n  -   0   8   N  o  v  -   0   8   J  a  n  -   0   9   M  a  y  -   0   9   S  e  p  -   0   9   J  a  n  -   1   0   S  u  r  v  e  y   I  n   d  e  x
50100150200250
   R  e   l   P  e  r   f
UBS Business Jet Market Index* Rel Perf (RHS)
 
0510
   S  e  p  -   0   3   J  a  n  -   0   4   M  a  y  -   0   4   S  e  p  -   0   4   J  a  n  -   0   5   M  a  y  -   0   5   S  e  p  -   0   5   J  a  n  -   0   6   M  a  y  -   0   6   N  o  v  -   0   6   M  a  r  -   0   7   J  u  n  -   0   7   N  o  v  -   0   7   F  e   b  -   0   8   J  u  n  -   0   8   N  o  v  -   0   8   J  a  n  -   0   9   M  a  y  -   0   9   S  e  p  -   0   9   J  a  n  -   1   0   B  u  s   i  n  e  s  s   C  o  n   d   i   t   i  o  n  s   S  c  o  r  e
* Simple average stock price performance index includes GD/TXT.Source: UBS Business Jet Surveys #1-43Source: UBS Business Jet Surveys #1-43
This report has been prepared by UBS Securities LLC ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 64.
UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm mayhave a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in makingtheir investment decision.
 
ab 
 
 
Business Jet Monthly
12 February 2010UBS
2
 
Contents
page
 
Overview and Investment Case 3
 
—
 
Investment Conclusion.........................................................................................3
 
UBS Business Jet Market Index 6
 
—
 
UBS Business Jet Market Index...........................................................................6
 
—
 
Survey Participant Profile.....................................................................................6
 
—
 
Survey Results.....................................................................................................8
 
—
 
Commentary......................................................................................................18
 
Used Business Jet Indicators 21
 
—
 
Available Aircraft Inventories..............................................................................21
 
—
 
Available Inventory by Market Segment.............................................................23
 
—
 
A Look at the Newer Models..............................................................................26
 
—
 
Pricing Trends in the Secondary Market.............................................................27
 
—
 
Available Inventory by Manufacturer..................................................................30
 
—
 
Bombardier........................................................................................................32
 
—
 
Cessna (Textron)...............................................................................................33
 
—
 
Dassault Falcon.................................................................................................34
 
—
 
Gulfstream (General Dynamics).........................................................................35
 
—
 
Hawker Beechcraft.............................................................................................36
 
Business Jet Flight Activity 37
 
—
 
Flight Activity in December.................................................................................37
 
—
 
Flight Activity by Manufacturer...........................................................................38
 
—
 
Flight Activity by Engine and Avionics Supplier..................................................41
 
—
 
Flight Activity by Range Class............................................................................45
 
Fractional Market Indicators 48
 
—
 
Fleet Growth......................................................................................................48
 
—
 
Share Sales and Redemptions...........................................................................49
 
—
 
Fleet Utilization..................................................................................................51
 
—
 
Fractional Fleet Composition..............................................................................52
 
—
 
Flexjet Inc. (Bombardier Inc.).............................................................................54
 
—
 
Flight Options.....................................................................................................55
 
—
 
NetJets (Berkshire Hathaway)............................................................................56
 
—
 
Deliveries to Fractional Providers.......................................................................58
 
Appendix 59
 
David E. Strauss
Analystdavid.strauss@ubs.com+1-212-713 6185
Cristina Fernandez
Analystcristina.fernandez@ubs.com+1-212-713 3321
DarrylGenovesi
Associate Analystdarryl.genovesi@ubs.com+1-212-713 4016
Fadi Chamoun, CFA
Analystfadi.chamoun@ubs.com+1-416-350 4855
Tasneem Azim
Associate Analysttasneem.azim@ubs.com+1-416-814 3678
 
 
 
Business Jet Monthly
12 February 2010UBS
3
 
Overview and Investment Case
The purpose of our UBS
Business Jet Monthly
is to identify and analyze currenttrends in the business jet market to better assess the market’s outlook.
 
Our proprietary UBS Business Jet Market Survey is designed to obtaintimely data directly from business jet market professionals, who provide keeninsight into factors such as customer interest, pricing, and outlook.
 
We monitor several indicators in the used market, including inventory levels,age distribution of available for sale inventory, and pricing, as we believe theused business jet market is a leading indicator of the new market.
 
We track business jet flight activity, which we view as a leading indicator of the business jet aftermarket and overall market health.
 
We also conduct a quarterly fractional market analysis, in which we monitornew share sales, aircraft purchases, and fleet utilization.
Investment Conclusion
Our January Business Jet Index came in at 50, 10% higher from our prior surveyand now indicative of a stable market after two years of deterioration. Our Indexmeasures the change in our respondents’ views from our prior survey and is notmeant to be an absolute measure of business conditions. Our straight upmeasure of absolute business conditions continues to move modestly higher, up3% this time to 3.7, reflective of an improving, albeit still depressed market.Our survey continues to reflect improving customer interest and a strong 12-month outlook, although it is still weighed down by very high used inventorylevels. Pricing continues to fall, down 30-40% from peak levels, but at a slowerrate while financing availability continues to improve. Our respondents alsoappear more willing to add to their own inventories, speculating that the marketwill rise further. Despite incremental buyer interest, we think significantoversupply on the used market will continue to overhang new aircraft orders.While not a component of our composite index, our young inventory scoreincreased 40% this time, but still indicates an oversupply of high quality youngused aircraft. Our Financing score, also not a component of our index, reflectscontinued incremental improvement in financing availability.
Table 1: UBS Business Jet Survey Results and Comparison to Prior Survey
ComponentBetterSameWorseScoreLast TimeChange
Customer Interest55%41%4%7677-2%Pricing14%63%24%453914%12 Month Outlook67%31%3%82785%Inventory Levels1%11%88%73120%Willingness25%49%26%503733%
Composite Index29%41%30%504510%
Young Inventory9%21%70%201440%Financing25%71%4%60601%
Business Conditionsn/an/an/a3.73.53%
 
Source: UBS Business Jet Survey #42-43
Search
Search History:
Searching...
Result 00 of 00
00 results for result for
  • p.
    • Notes
    Load more