Business aircraft manufacturers are optimistic that a recovery in demand is shaping up after deliveries fell in 2010, but at a slower pace than during the two previous years.
Total shipments decreased by about 11 per cent to 2,015 planes, from 2,274 in 2009, the General Aviation Manufacturers Association said Tuesday.
Aircraft shipments last year were less than half the pre-recession level of 4,270 in 2007.
Turboprops suffered the sharpest decline, falling nearly 18 per cent to 363. Shipments of business jets dropped 12.3 per cent to 763, while small piston planes were down 7.7 per cent to 889 aircraft.
“We have been through two very difficult years and fortunately we are starting to see some positive signs,” association chairman John Rosanvallon said at a news conference in Washington, D.C.
The economy, corporate profits and aircraft utilization are all growing.
Global gross domestic product increased by five per cent in 2010, while U.S. economic activity grew by 2.8 per cent, helped by a strong second half of the year, said Rosanvallon, who is also the CEO of aircraft maker Dassault Falcon.
The number of hours business aircraft flew increased 10.8 per cent in the United States and by 5.5 per cent in Europe.
Corporate profits, a key indicator of business travel, grew by 46 per cent around the world and by 26 per cent in the U.S.
The industry traditionally lags the economic recovery by 18 months, but Rosanvallon said he believes the interval will be longer this time.
GAMA president Peter Bunce said he looks at 2011 with both optimism and caution as the industry faces growing orders and shortages of U.S. certification inspectors to sanction its technological offerings.
“We know that the world is waking up to the utility of business aviation. This is not a finite pie, this is an expanding pie and all manufacturers are in this for the long haul with new product development.”
The value of shipments grew 1.2 per cent to US$19.7 billion, the third-best year on record, driven by deliveries of long-range, large-cabin aircraft manufactured by companies like Bombardier (TSX:BBD.B).
The segment was stable, with delivery rates increasing in 2010.
Montreal-based Bombardier delivered 150 business planes last year, including 49 large Global aircraft. That was down from 173 in 2009. The total value of the sales was up 0.7 per cent to US$4.9 billion or one quarter of all industry sales.
“We had a fantastic year in terms of both revenues and unit deliveries and once again Bombardier is the leader in all categories in which we compete,” said spokeswoman Danielle Boudreau.
Several analysts increased their 12-month share target price for Bombardier largely as a result of the strengthening business jet sector.
Tasneem Azim of UBS increased his target price for Bombardier by 75 cents to C$7 as he forecast business aircraft deliveries will grow by nearly 15 per cent in fiscal 2012 to 165 planes.
Bombardier shares were down 25 cents, or 3.81 per cent, at C$6.32 in afternoon trading on the Toronto Stock Exchange.
Bombardier rival Gulfstream, a division of General Dynamics (NYSE:GD), delivered 99 plans worth US$3.98 billion, compared with 94 in 2009, while France’s Dassault shipped 95 aircraft with a value of US$3.94 billion, compared with 77 in 2009.
Rosanvallon said two areas of concern are the used-plane market and the lack of third-party financing.
The association was also concerned that deliveries of piston aircraft were at their lowest level since 1994. The number of licenced pilots also shrank to 200,000 in 2010, the lowest number since 1965.
Recent political turmoil in the Middle East is also a challenge as it could push fuel prices higher.