Industry-wide business-jet deliveries are expected to peak two years earlier than initially forecast, as plane-maker backlogs risk being eroded by the credit crunch, UBS analysts wrote yesterday.
In separate reports, analysts Fadi Chamoun and David Strauss wrote they expect business-jet deliveries - excluding very-light jets - would peak in 2008 at 1,080 planes, instead of in 2010.
For Bombardier Inc., business-jet deliveries are expected to crest in 2008 at 264 aircraft, followed by a 30-per-cent decline through 2011, Chamoun wrote.
The UBS forecast is based on a survey of business-jet professionals conducted in early November and an increase in used business-jet inventories, which are running 57 per cent above year-earlier levels, nearing the 2002 peak after the 9/11 crisis.
While business-jet makers have long said they couldn´t sustain record business-jet sales, companies like Bombardier could count on the availability of financing to protect their ample backlog of orders.
But a third of UBS´s survey participants now complain of a lack of access to financing.
There were virtually no such complaints voiced during a similar survey conducted before the National Business Aviation Show in October.
"While our survey has indicated slowing end-market demand for some time, financing appeared to be available to deliver the backlog," Strauss wrote.
"However, over the last several weeks since NBAA, business-jet financing looks to have dried up considerably as indicated by our survey, which we believe is likely to result in a meaningful portion of the backlog being deferred."
On Friday, Bombardier chairman Laurent Beaudoin acknowledged that some customers want to defer business-jet deliveries because they can´t raise enough cash. But he said Bombardier can switch production slots to other customers wanting earlier deliveries.
Despite the weaker outlook for business jets, Chamoun remains bullish on Bombardier based on positive trends for the company´s transportation business, a large aerospace backlog and a strong balance sheet.
He left his "buy" rating and a 12-month price target of $9 unchanged on Bombardier stock yesterday. Bombardier shares dropped just over five per cent yesterday to close at $4.32 in Toronto trading.