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Private jet manufacturers could see more cancellations than new orders in 2009

Private jet manufacturers are forecasted to book more cancellations than new orders in 2009 as corporate and private customers are looking to reduce their budgets due to the recession.

“Some companies will buck that trend, but taken as a whole the industry could see net negative orders for the year,” comments Brian Foley, a business aviation consultant from New Jersey.

Last week, Cessna announced that it had 243 cancellations during the second quarter, leading to a 42 percent drop in revenues for the period. Dassault Aviation, a Paris-based manufacturer, said that the value of its order book dropped more than $1.6 million during the first half due to cancellations. And Canada’s Bombardier also had cancellations that are overtaking new orders.

Adding to the woes brought by the recession, company execs say that the numbers went even further down when President Barack Obama criticized corporate executives who “disappear on a private jet” during the State of the Union address.

In an optimistic note, some experts say that the pace of cancellations may be slowing down. Recently, Gulfstream Aerospace retained 2,000 furloughed employees after orders over took cancellations during the second quarter.

However, more challenges await the private jet industry this year.

“Whereas some buyers had the financial wherewithal to pay for their jets back when they ordered them, they’re now scrambling to find financing to make their next progress payment as their airplane nears final delivery,” mentions Foley. “They’ll find credit markets stubbornly tight and more restrictive.” 

Source: BusinessWeek