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Outlook gloomy for sales of business jets

Record production backlogs for airliners are buoying the global aviation industry, but the mood is bound to be more sombre among business jet manufacturers attending the year’s biggest international air show this week.

Orders for corporate aircraft have been depressed for years and veteran industry officials are girding for what could be a further downturn, leading big suppliers, such as equipment maker Rockwell Collins, to prepare for tough times that could stretch into the next decade. For some of these companies, the fallout could even alter their traditional balance between working on programs for jetliners versus corporate aircraft.

With stagnant demand and global business jet deliveries projected to slip by 3 to 4 per cent in 2016, the market seems headed for “a new normal” at what could end up as a lower plateau, said Kent Statler, chief operating officer of Rockwell’s commercial businesses.

“We have to find a bottom here” before the industry can return to growth mode, Mr Statler said, ahead of the start today of the Farnborough International Airshow, the aerospace world’s splashy gathering outside London. Rockwell, which provides flight control systems, said customers had “changed behaviour” and he expected delivery rates could stay the same or decrease slightly to the end of the decade.

Just over 700 corporate jets were delivered last year, down from more than 1,100 in 2008, before the global financial crisis. Economic downturns in China, Russia, Latin America and other regions that used to be mainstays for fast and spacious models designed to whisk VIPs between continents have cut orders for business aircraft in recent years.

Orders from the Middle East have been hurt by depressed oil prices, though relatively brisk sales of larger, pricier models in the US have compensated for part of that drop. Part-ownership arrangements also have been gaining market share.

When Honeywell, another major industry supplier, released its annual global outlook late last year, it projected $US270bn of deliveries through to 2025, less than 5 per cent below its year-earlier total.

Brian Sill, president of Honeywell’s business and general aviation businesses, said “sluggish economic growth and political tensions are driving a more reserved approach to purchasing”.

Still, plenty of business jets — decked out in fancy livery and surrounded by red carpets — are expected to jam the flight line at the Farnborough air show, which attracts tens of thousands of industry participants and plane aficionados.

Bombardier — which builds everything from classic Learjets to some of the largest, longest-range models, such as its family of Global variants — has forecast a slump of about 10 per cent in 2016 deliveries. But the company’s 10-year forecast maintains “significant growth is expected in the long term.”


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