Billionaires will have their pick of business jets as Embraer and Cessna roll out shiny new models in a bid to woo buyers to a market that’s struggling to recover from the 2008 slump.
Brazil’s Embraer SA is unveiling the Legacy 450, a brand new variant of last year’s Legacy 500 while Textron Inc.’s Cessna has refreshed its Citation with the Latitude upgrade. The companies are hoping the new mid-size planes, on display next week at the Latin American Business Aviation Conference and Exhibition in Sao Paulo, are enticing enough to captivate those who may have held back over the past seven years.
“Business jets, it’s kind of like cars - people like the latest and greatest,” said Cai Von Rumohr, a Cowen & Co. analyst.
Competition is stiff in an industry that saw total business jet shipments fall 4.1 percent in the first half of this year as weaker demand from oil-dependent countries in the Middle East, as well as Russia and Latin America, compounds tepid orders from U.S. and Europe.
As the economy gains steam in the U.S. it should prompt executives and wealthy individuals to go jet shopping again, said Jens Hennig, vice president of operations at the Washington-based General Aviation Manufacturers Association.
“With the U.S. doing better, that’s where we’re going to see the light- and mid-size segment have an opportunity to come back,” said Hennig in a telephone interview ahead of the conference. “When our manufacturers bring new products to the market, there’s a natural stimulation for customers to buy.”
This year should see about the same number of business jets delivered as last year, when 722 aircraft were sold, according to GAMA. That’s down from a peak in 2008 of 1,317 jets.
The rivalry between the Latitude and the Legacy, combined with few customers from emerging markets, could put pressure on margins, according to George Ferguson, a senior analyst with Bloomberg Intelligence.
Textron is seeing “opportunities” in Brazil and Latin America, said Bob Gibbs, vice president Latin America and Caribbean for Textron. The Citation Latitude is making its Latin American debut at the show.
Embraer is well-positioned to gain market share because it’s introducing a brand-new model, said Brian Foley, a Sparta, New Jersey-based aerospace consultant. Textron rushed to come up with the Latitude to thwart competition from the Legacy 450 and the 500, which came out last year, Foley said.