Private-Plane Purchases Drop 3.1% as Commodities Market Tumbles

  • Businesses, the wealthy spent $18.7 billion on jets last year
  • Decline stems from large-cabin aircraft, trade group says

Spending on business aircraft fell 3.1 percent last year as a commodities downturn crimped demand for long-range jets in emerging markets.

Companies and wealthy individuals spent $18.7 billion on private jets, according to the General Aviation Manufacturers Association. The report is adjusted because Bombardier Inc. hasn’t reported fourth-quarter results yet.

Sales of large-cabin planes, such as Bombardier’s Global 5000, were pinched by Brazil’s recession, sanctions against Russia and a stronger U.S. dollar that made aircraft more expensive for foreigners, said Peter Arment, an analyst at Sterne Agee CRT. Some non-U.S. manufacturers price aircraft in dollars.

“There’s pressure in emerging markets,” Arment said. “There are impacts from much weaker currencies and the hit from the commodity side on some of these countries.”

Large Aircraft

Deliveries of the largest business jets declined by 12 planes to 202, while total shipments rose to 654 from 644. Deliveries of midsize jets rose 11 percent to 382, buoyed by introductions of new models, including Textron Inc.’s Cessna Latitude and Embraer SA’s Legacy 450. Light-jet shipments fell by 17 aircraft to 70.

Bombardier’s fourth-quarter deliveries are expected to show a drop to 67 planes from 78 a year earlier, Arment said, dragging on total industry spending. The Canadian planemaker’s business-jet unit is estimated to post sales of about $1.6 billion, Arment said, down from $2 billion a year earlier. Bombardier is due to report earnings on Feb. 17.

Even though competitive pressure from low-price used planes has bottomed out, business-jet demand this year will be similar to last amid tepid global growth, Arment said.

“Ultimately, when you do see a strong economy, you’re going to see a strong cycle of snap-back,” he said.

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