Tuesday, September 30, 2008

Biz Jet Sales Slump Seen; More Bad News for Vegas

Two new economic indicators in a time of mounting trouble:

First, the long-booming market for business jets is softening, says Forecast International, the aerospace analysis company.

Forecast International says it expects annual business jet production to reach nearly 1,400 units in 2008, and exceed 1,600 units in 2009. But the company projects that annual production will then suffer a three-year decline, dropping to a level of 1,515 units by 2012. Growth is expected to resume in 2013, with yearly production exceeding 1,700 units by 2017, the final year of the time period covered by the study.

Overall, Forecast International projects that 15,936 business jets, worth an estimated $223 billion, will be produced from 2008 through 2017. This total includes about 5,600 Very Light Jets (VLJ). "The VLJ sector is expected to be a very dynamic portion of the market," Forecast said.

I’d exercise real caution, by the way, in very-light jet projections, given the flame-out earlier this month by DayJet, the air-taxi startup that was the biggest customer for the Eclipse 500 (with 28 deliveries and 1,400 orders representing about half of the Eclipse order book).

Eclipse, which recently announced a new manufacturing deal in Russia, has also been saddled with production problems in the U.S. affecting deliveries of the jet, whose price for available delivery in 2010 is now $2.15 million, according to the Eclipse Web site.

On his Web site, Michael Boyd, the aviation forecaster, recently said that the very-light jet “revolution” has ended, though the various models of VLJs are attractive small planes. One big problem, Mike says, has been the disappearance of the “breakthrough low-acquisition cost” for VLJs and especially the Eclipse 500, which originally was marketed at just under $1 million.


Meanwhile, more bad news in Las Vegas:

According to the AP, Morgans Hotel Group cut its capital commitment to its portion of the already sidelined $4.8 billion Echelon mega-development, creating another serious setback for the joint venture project with Boyd Gaming, the casino company.

Boyd stopped work on the Echelon project on the Strip in July, citing the credit crunch -- and in doing so, Boyd exacerbated fears in Vegas about a growing economic turndown. Boyd said that construction on the project might resume in a year or so.


No comments: