Honeywell: Turnaround in 2012
Honeywell Aerospace’s twentieth annual forecast of business aviation activity projected the delivery of 10,000 new business jets between 2011 and 2021, worth $230 billion. While that may be a sanguine prognosis, Honeywell was more cautious about short-term activity. For example, Honeywell estimates 600 to 650 bizjet deliveries in 2011—a figure that’s down 15 percent from 2010’s 732 deliveries.
As for 2012, Honeywell said it foresees deliveries of “less than 700 airframes.” That number represents a modest increase over Honeywell’s 2011 estimate but Rob Wilson, president of Honeywell’s Business and General Aviation Division, noted that 2011 will go down as a “trough” in business jet deliveries. “The delivery down cycle will end in 2011 and then we’ll experience modest growth in 2012,” he said. “Based on the reduced economic growth outlook and this year’s survey responses, the industry appears to be positioned to begin another period of expansion in 2012, which is consistent with Honeywell’s current industry outlook.”
Purchase expectations among bizjet operators varied according to region. Five-year purchase plans were the highest in the so-called BRIC nations (Brazil, Russia, India, and China), with 49 percent of operators reporting that they planned to buy new jets within five years. Lower demand was detected within the European market (down five percent) and the Latin American market (down three percent). In North America, purchase plans rose by 10 points over 2010’s figures.
This year’s forecast continued to highlight the ongoing shift in sales volume to international operators. Honeywell said that between 2012 and 2016, 45 percent of purchases will be made by international customers. Another trend also continues: The increasing interest in large-cabin business jets. Of the business jet deliveries over the next five years, 31 percent should be of large-cabin jets—and they’ll claim 60 percent of the dollar value of all deliveries.
What will prompt sales of new jets? Increased corporate profits are primary reasons. Apart from this, Honeywell said the No. 1 reason is the desire to simply buy new. But the second most-cited reason was new to the survey: need for increased range. This was mentioned by operators in all regions of the world.
This year’s Honeywell outlook repeated the company’s traditional optimism. For Honeywell, things may be bad now but next year will always be better. That sunny propensity has gotten them in trouble once before. In 2007’s outlook, the company forecast record growth. The onset of a recession a few short weeks later made a mockery of that prognosis, so Honeywell came out with a revision. Today, many economic experts are reluctantly coming to the conclusion that a second, more critical recessionary dip may well be in the offing—complete with the sort of overwhelming sovereign debt that may threaten the eurozone’s economic stability—and have deep worldwide implications.
Honeywell conducted its outlook survey between May and August 2011. It surveyed aircraft manufacturers as well as 1,500 corporate flight departments. Not surveyed were individual turbine aircraft owners and prospective customers who have never owned business jets.
October 9, 2011