Prowned Market Sluggish But New Jets Are Selling

The preowned business jet market deteriorated a bit in October but orders for new aircraft increased, according to the latest monthly business jet report from JPMorgan North American Equity Research. As a percentage of in-service aircraft, preowned inventory inched up 0.2 points, to 11.9 percent. Average asking prices decreased 3.8 percent, meanwhile, to $10.9 million, falling below $11 million for the first time since August 1997. "We continue to expect the [overall] trend in inventories to be a downward one, with prices stabilizing and then rising," JPMorgan said, "but this may unfold even more slowly than earlier anticipated."

As for new aircraft, Gulfstream, Embraer and Cessna are reporting increased order activity, JPMorgan said, but not yet enough to keep backlogs from declining. "We remain cautious on new bizjet demand, and the next quarter or two should determine whether we see further downward pressure on rates," the company added. A bright spot is the fact that business jet flight activity climbed 12.1 percent year-over-year. "We expect bizjet flight ops to continue improving in the coming months," JPMorgan said.