Bizjet Backlogs Evaporating: Analyst

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Last week, analyst Richard Aboulafia predicted Boeing and Airbus's production backlogs would largely evaporate as airlines grapple with the various crises before them, and now another industry-watcher is predicting the same in the business jet market. Brian Foley, who runs his own consultancy firm in New Jersey, said in a news release that much of the backlog reported by most of the major manufacturers is made up of large orders from start-up companies that will undoubtedly have challenges getting going in the current economy. "Whereas previous backlogs were speckled with fleet orders from a handful of fractional providers, current order books sport a cadre of unproven, start-up fleet purchasers launching unproven businesses into a deep worldwide recession," Foley said. "These types of entities have literally placed hundreds of business jet orders."

Foley says Embraer appears particularly vulnerable to the phenomenon, with deliveries of its Phenom 100 just beginning. Bombardier, Cessna and Hawker Beechcraft are, to varying degrees, in the same boat. "We're talking about a couple of hundred firm orders and another couple of hundred options, representing billions of dollars in backlog bookings." But it's not just start-ups that will chip away the backlogs. Foley expects blue-chip fractionals and clubs to defer purchases, too.