The state of the business jet market 2014

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A brief look at why we are still in a business jet downturn.

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  • HiGuarantee you will learn something that will help you in your career even if that is
  • In May, Dassault celebrated 50 years since the first flight of the Mystère 20. Since then 2,250 Falcons have been built. And 85% of these are still flying.It is not just Dassault that builds aircraft that last. Bombardier estimates that only 7% of the total business jet fleet has retired since the first jets in the late 1950s. Light jets have the oldest average age (20.6 years) followed by mid-size jets (17.6 years) and small-mid-size jets (16.6 years).New analysis from Hawker Beechcraft Corporation has revealed that the average age of the European business aircraft fleet is 13-years-old and that more than one in six (17% or 788) of all business aircraft in Europe are at least 30 years old.Hawker Beechcraft estimates that some 296 aircraft in the European business aviation segment could be retired over the next five years.  This equates to around 7% of the total European fleet and could lead to a significant increase in demand for new business aircraft as companies and individuals look to replace their ageing aircraft.Sweden has the oldest business aircraft of any fleet in Europe with an average age of 20 years and nearly one-third (32%) which are over 30-years-old.  The youngest fleet by comparison is the Isle of Man with an average age of just six years and 7% over 30 years old. Portugal is the next youngest with an average age of just eight years and just 5% which are over 30 years old.The largest fleet is in Germany which is the base for 753 aircraft – 17% of the European total – with an average age of 14.  Around 15% (114) of these are at least 30 years old.
  • 12.7% of the fleet is for sale – which is actually the historical average18% in April 2009
  • The state of the business jet market 2014

    1. 1. Alasdair Whyte
    2. 2. The state of the market What drives business jet and VIP helicopter sales? Why are we still in a downturn? 2 of 60
    3. 3. 1400 1200 1000 800 600 400 200 0 2008 2009 2010 2011 3 of 60 Source: GAMA and Corporate Jet Investor forecast 2012 2013
    4. 4. 1400 1200 1000 800 600 400 200 0 4 of 60 Source: GAMA and Corporate Jet Investor forecast
    5. 5. 5 of 60 Source: Bombardier estimates
    6. 6. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Economy Backlogs 7 of 60 Confidence Finance
    7. 7. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Global Economy Backlogs 9 of 60 Confidence Finance
    8. 8. 1600 1400 1200 1000 800 600 400 200 0 2001 2002 2003 2004 10 of 60 Source: Forbes Rich List 2005 2006 2007 2008 2009 2010 2011 2012 2013
    9. 9.  2013: 199,235 ultra high net worth individuals (UHNWI) with a net worth of $30 million - combined wealth of $27.8 trillion  2012: 187,380 UHNWI with a combined wealth of $25.7 trillion There are 2,170 billionaires in the world with a total net worth of $6.5 trillion. Source: Wealth X 11 of 60
    10. 10.  Net worth of $138 million  58 years old  Male (88%)  Married (95%)  Self made (70%)  Most likely to have worked in finance, banking, investment or insurance (20%), industry (6.3%), manufacturing conglomerate (5.5%)  Has a degree (87%) Source: Wealth X 12 of 60
    11. 11. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Global economy Backlogs 13 of 60 Confidence Finance
    12. 12.  2013: Falcon 2000S, Learjet 70, Learjet 75, New Citation X, Eclipse 550  2014: Challenger 350, Falcon 2000LXS, Honda Jet, Learjet 85, Legacy 500, New Citation Sovereign  2015: Citation Latitude, Legacy 450  2016: Global 7000  2017: Citation Longitude, Global 8000, PC-24 14 of 60 Source: Corporate Jet Investor
    13. 13. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Global economy Backlogs 15 of 60 Confidence Finance
    14. 14. 18 16 14 12 $ billion 10 8 6 4 2 0 Jan-07 Jan-08 16 Source: Textron of 60 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
    15. 15. 25 $ billion 20 15 10 5 0 2007 2008 2009 17 of 60 Source: General Dynamics 2010 2011 2012 2013
    16. 16. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Global economy Backlogs 18 of 60 Confidence Finance
    17. 17. 19 of 60 Source: Corporate Jet Investor
    18. 18. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Global economy Backlogs 20 of 60 Confidence Finance
    19. 19. 21 of 60
    20. 20. 22 of 60
    21. 21. 300 250 200 150 100 50 0 2007 2008 2009 2010 Hong Kong 23 Source: Embraer of 60 China 2011 2012
    22. 22. • China • India • Thailand • Malaysia • Indonesia • And the Philippines 24 of 60 Source: 2011 UVTripPlanner
    23. 23. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Economy Backlogs 25 of 60 Confidence Finance
    24. 24. 26 of 60
    25. 25. 2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 27 of 60
    26. 26. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Global economy Backlogs 29 of 60 Confidence Finance
    27. 27. 2008 to 2013 30 of 60 2003 to 2007 1998 to 2002 1997 & Older
    28. 28. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Global economy Backlogs 31 of 60 Confidence Finance
    29. 29. 32 of 60 Source: Wing-X
    30. 30. 33 of 60
    31. 31. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Global economy Backlogs 35 of 60 Confidence Finance
    32. 32. 2,565  Average time to sell a jet: business jets for sale 509 days 36 of 60 Source: Amstat, September 2013
    33. 33. 37 of 60
    34. 34. As % of Total For Sale / Lease 38 2008 to 2013 2003 to 2007 1998 to 2002 As % of Active Fleet 1997 & Older Source: AMSTAT www.amstatcorp.com; Asset Insight research www.assetinsightinc.com of 60 September 2013
    35. 35. Large Jets Model Falcon 2000LX Boeing BBJ Global XRS GV GIV-SP (MSG3) CL-601-3R Challenger 601-1A G-III ETP Ratio 4.0% 8.7% 12.6% 37.8% 44.9% 46.9% 152.6% 253.1% Medium Jets Model ETP Ratio Citation X 9.6% Challenger 300 14.2% G-200 16.1% Hawker 800XP 25.5% Hawker Beechjet 400A 58.7% Learjet 60 69.4% Learjet 55 73.3% Hawker Beechjet 400 87.4% Small Jets Model Citation CJ1+ Phenom 100 Citation CJ2 Premier 1 Learjet 31 Citation II Citation VI Learjet 35A Aircraft with ETP Ratio >40% carry excessive Maintenance Financial Exposure vs. Ask Price 39 of 60 Source: Asset Insight research ww.assetinsightinc.com ETP Ratio 10.0% 12.7% 20.2% 35.2% 44.4% 76.6% 86.0% 100.2%
    36. 36. Charter/ fractional Utilisation Aircraft retirements New aircraft Wealth creation Emerging Global markets economy Pre-owned Global economy Backlogs 40 of 60 Confidence Finance
    37. 37. 41 Analysis: Dean Roberts, Rolls-Royce of 60
    38. 38. 42 of 60 Analysis: Dean Roberts, Rolls-Royce
    39. 39. 43 of 60
    40. 40. 44 of 60
    41. 41.  Brazil riots  Libya  Attacks in Egypt  North Korea/South Korea  Fukishima Nuclear Plant  Terrorism in Kenya  Golden Dawn in Greece  US government shutdown  US debt ceiling 45 of 60
    42. 42. 46 of 60
    43. 43. Analysis: Dean Roberts, Rolls-Royce 1. 47 ‘Take this job and stuff it’ indicator (aka DoL job quits data) 2. Conference Board of 60
    44. 44. Charter/ fractional Utilisation New aircraft types Aircraft retirements Wealth creation Emerging Global market economy penetration Pre-owned Global economy Backlogs 48 of 60 Confidence Finance
    45. 45. 49 of 60
    46. 46. 50 of 60
    47. 47. Charter/ fractional Utilisation New aircraft types Aircraft retirements Wealth creation Emerging Global market economy penetration Pre-owned Global economy Backlogs Confidence 51 of 60 Finance
    48. 48. Alasdair Whyte Corporate Jet Investor +44 1737 844 383 awhyte@corpjetinvestor.com 52 of 60

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