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MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Bombardier Inc.    BBD.B   CA0977512007

BOMBARDIER INC.

(BBD.B)
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Long-haul, fuel efficient jets underpin demand at Las Vegas air show

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10/20/2019 | 08:38pm EST
Prototypes of chaise lounge for Bombardier's Global 7500, the first business jet to have a queen-sized bed and hot shower, is shown during a media tour in Montreal

LAS VEGAS (Reuters) - New large corporate planes that can fly farther and an industry push towards sustainable aviation fuels are seen as bright spots as the world's biggest business jet makers assemble in Las Vegas to showcase their offerings at the sector's largest gathering.

The National Business Aviation Association (NBAA) annual corporate aircraft show kicks off on Tuesday against a backdrop of slowing global economic growth, trade tensions between the United States and China and Brexit uncertainties, factors seen softening demand for corporate jets in the next two years, industry executives and analysts say.

"We're optimistic but at the same time, in the short and medium term we have to be cautious,” said Gaetan Handfield, senior manager of marketing analysis for Honeywell Aerospace.

Honeywell’s 2019 business aviation outlook sees 7,600 new business jet deliveries worth $248 billion from 2020 to 2029, down 1 to 2 percentage points from the company’s 2018 forecast.

Deliveries were up this year almost 13% during the first half of 2019, according to data from the General Aviation Manufacturers Association (GAMA).

Deliveries, expected to rise 7% in 2020 according to Honeywell, are being fuelled by the ramp up of new models that offer longer-ranges and amenities such as beds and hot showers at 40,000 feet.

General Dynamics' Gulfstream, Bombardier, Textron's Cessna, Dassault Aviation and Embraer SA saw their order backlogs grow 7% during the first half of 2019, the first rise since the 2008 financial crisis, said aviation analyst Rolland Vincent.

An NBAA highlight this year could be the widely-expected launch of a new long-range jet by Gulfstream, which declined comment.

Buyers eager to make non-stop trips between far-flung cities like New York and Tokyo are looking for long-range jets.

'CYCLICAL DECLINE'

Others are also prioritising fuel efficiency, and encouraging the use of sustainable fuels and carbon-offsets at a time when the aviation industry faces "flight shame" protests by climate change activists.

Jetmakers will fly their aircraft into Las Vegas using a blend of biojetfuels, although industry usage of alternatives to kerosene remains limited.

In an industry where sales are usually aligned with economic growth, analysts remains cautious given uncertainty in Europe with Brexit, and in the United States, the world's largest market for business jets, where President Donald Trump faces an impeachment probe.

"New deliveries will ramp up (this year) due to a number of new products being introduced, only to begin a cyclical decline as world economic weakness further manifests itself," said aviation analyst Brian Foley.

U.S. economic growth is slowing in 2019, with economists forecasting growth this year of around 2.5%, below the Trump administration's 3% target.

Foley expects new sales to remain roughly flat next year, but sees softer demand in 2021 which will lead to planemakers delivering fewer planes a year later in 2022.

Brian Proctor, president of Dallas-based private jet consultancy Mente Group said sales of pre-owned planes are picking up after a slow start to the year, with some buyers looking to purchase by year's end to take advantage of favourable tax rules introduced last year by the Trump administration.

He said buyers want to purchase ahead of next year's U.S. presidential election under existing rules.

"Because of the uncertainty they are speeding up decisions because they want to know what the rules are," said Proctor, also chairman of the International Aircraft Dealers Association.

Sales of pre-owned business jets are down 19% in volume for the first 8 months of 2019, on an annual basis, but the planes for sale are spending less time on the market, Vincent said.

"Buyers appear to be moving more quickly when they find the asset they are seeking," he said.

(Reporting By Allison Lampert; Editing by Denny Thomas, Daniel Wallis and Muralikumar Anantharaman)

By Allison Lampert

Stocks mentioned in the article
ChangeLast1st jan.
BOMBARDIER INC. 2.48% 2.07 Delayed Quote.-0.49%
DASSAULT AVIATION 0.24% 1277 Real-time Quote.5.54%
EMBRAER S.A. -1.55% 17.8 End-of-day quote.-17.25%
GENERAL DYNAMICS CORPORATION -0.39% 184.35 Delayed Quote.17.73%
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Financials (USD)
Sales 2019 16 607 M
EBIT 2019 784 M
Net income 2019 -74,1 M
Debt 2019 6 147 M
Yield 2019 0,16%
P/E ratio 2019 -49,8x
P/E ratio 2020 25,2x
EV / Sales2019 0,58x
EV / Sales2020 0,49x
Capitalization 3 481 M
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Mean consensus BUY
Number of Analysts 19
Average target price 2,20  $
Last Close Price 1,46  $
Spread / Highest target 108%
Spread / Average Target 50,2%
Spread / Lowest Target -6,48%
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Managers
NameTitle
Alain M. Bellemare President, Chief Executive Officer & Director
Pierre Beaudoin Chairman
John Di Bert Chief Financial Officer & Senior Vice President
François Caza Chief Technology Officer
Ernest Jeffrey Hutchinson Chief Information Officer
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