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Private Jet Industry still needs more transactions

The private jet industry is still has a glut of new and used aircrafts, leading to price pressure, according to the UBS monthly survey of industry stakeholders.

“Overall, we think our survey continues to reflect increasing customer interest on the back of 30-40% price declines along with what appears to be improved financing availability,” said David Strauss, an analyst from UBS, in a note to clients. “While interest has improved, actual transactions are still scarce as buyers’ and sellers’ expectations remain misaligned.”

Strauss says that he still prefers Bombardier Inc. (BDRAF.PK) and Textron Inc. (TXT) over General Dynamics (GD).

He says that the Bombardier “buy” rating is reliable because of the company’s transport segment, which is worth C$3. The plane manufacturer’s shares closed at C$3.73 Monday on the Toronto Stock Exchange.

“We think TXT can trade higher from here on an improved liquidity profile, and we prefer it to GD although we maintain ‘neutral’ ratings on both names,” concluded Strauss.

Source: SeekingAlpha.com