Honda Motor Co. (7267), preparing to enter the market for business jets, said it’s won two-to-three years of orders for what it calls “flying sports cars” and signaled the business will turn profitable before the end of the decade.
The aviation business is on track to turn profitable five years after it begins delivering planes as soon as next year, Michimasa Fujino, president of Honda Aircraft, said in an interview in Tokyo yesterday. Though he declined to specify the number of orders received so far, Fujino said sales of the $4.5 million jet plane may reach 80 units to 90 units annually in a few years.
“We want to evoke new demand to make the pie bigger for all,” said Fujino, 52. “As the pie becomes bigger, we’ll all be motivated to sharpen our competitiveness, which will in turn attract more new demand.”
Honda, Japan’s third-largest carmaker, is betting that lessons drawn from its main automotive business will help the Tokyo-based company compete against Textron Inc. (TXT)’s Cessna and Brazil’s Embraer SA. (EMBR3) Advisory firm Zenith Jet estimates the business aviation market will reach $21 billion this year.
Honda rose 3.1 percent to close at 3,605 yen in Tokyo, compared with the 2.8 percent advance by the Topix Index. The stock has gained 15 percent this year.
Fujino said the location of Honda’s engines, which unlike conventional planes are lodged on top of the wings, will increase fuel efficiency by about 15 percent and allow cabin space to be 15 percent to 20 percent roomier than in comparable aircraft. With a cruise speed of 778 kilometers per hour (420 knots), the jet is also 10 percent faster than the average plane and more resistant to turbulence, he said.
While the U.S. currently accounts for most of the demand for business jets, Fujino said Brazil and India are among markets that offer the most growth potential.
Deliveries of the Honda jets, originally planned to begin this year, have been delayed because the company’s waiting approval from the U.S. Federal Aviation Administration, Fujino said. After four to five years, the company may begin fleet sales as the increase of chartered flights turn business jets into forms of “air taxis,” he said.
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