DUBAI AIR SHOW, U.A.E., Nov. 15, 2009 - In its 18th annual Business Aviation Outlook, Honeywell’s (NYSE: HON) operator survey found that up to 41 percent of all new jet purchase plans in the world could come from Europe, the Middle East and Africa regions over the next five years, reflecting strong share growth rate over Honeywell’s 2008 survey findings. In the Middle East and Africa, five-year new-jet buying plans rose to 55 percent, an increase of more than 10 points from 2008 and setting a new record high.
The Middle East, Asia and Africa regions still rank as the areas with the highest purchase expectations despite the effects of the global recession.
International demand now accounts for more than 50 percent of the new aircraft purchase plans projected over the next five years. Honeywell forecasts that the regional mix of deliveries will continue to reflect this global shift in share.
“Emerging markets, like the Middle East, are expected to lead the global recovery after 2010,” said Rob Wilson, President of Business and General Aviation, Honeywell Aerospace.
For 2009, Honeywell Aerospace forecasts deliveries of 750-800 new business jets, down from 1,139 in 2008. Deliveries in 2010 are expected to drop below 700. Based on operator survey responses, long-term buyer interest has increased, however new purchase plans are currently timed later in the five-year planning window, which suggests that by 2011-2012 there will be significant pent-up demand that will improve the outlook for order intake and new jet deliveries.
Aggregating all regions, five-year purchase expectations exceeded the 30-plus percent levels reported in Honeywell’s 2008 survey. Purchase expectations trended down in North America and Latin America, but rose markedly in Europe and moderately in the Middle East and Asia.
“Offsetting the near-term contraction, Honeywell’s surveyed operators said their new purchase plans were less affected during the five-year horizon in key international markets within the Middle East, Europe, Asia and Africa,” said Wilson.
“The relatively stronger levels and timing of international purchase plans suggests that pent-up demand will improve both order intake and new jet delivery rates by 2011-2012, similar to what the industry experienced in the last cycle,” Wilson said. “Despite some program cancellations and delays, there is still a solid pipeline of new high-value models supporting long-term growth and our survey indicates that international demand will remain significant.”
2008 marks the end of an unprecedented five-year industry expansion that began in 2003. After peaking in 2008, new jet deliveries are projected to decline roughly 30 percent in 2009 followed by a 10- to-15 percent decline in 2010 before starting a recovery in 2011.
Middle East, Asia and Africa Expectations Remain High
All the increase in the Middle East, Asia and Africa purchase plans came from the fleet replacement category. Fleet expansion demand fell by about three points compared to last year. The Middle East and selected African economies continue to benefit from improved oil prices and burgeoning trade with China and Asia, and operators in these regions expect to be active buyers. Operator plans to buy are timed sooner than in Latin America, North America and Europe. But fleets in these areas are relatively small so even high planned purchase rates yield smaller absolute numbers of new jet purchases until the fleets expand at a future time.
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