The manufacturer says it is planning to deliver between 125 and 135 jets in 2024. This would be up by 10 or 20 aircraft on 2023.

The company delivered one Phenom 100 and 10 Phenom 300s in the first quarter of 2024. In the same quarter of 2023 it delivered two Phenom 100s and four Phenom 300s.

READ: Embraer Executive Jet deliveries jump 13% in 2023 

In the first three months of 2024 it delivered three Praetor 500s and four Praetor 600s. The company only delivered two Praetor 600s in the same period of 2023.

This is the most aircraft it has delivered in the first quarter for eight years.

Embraer has traditionally delivered a large proportion of aircraft in the fourth quarter. In the first quarter of 2023 it shipped eight business jets, in the second 30 and the third 28 aircraft. In the last three months of the year it delivered 40% of the year’s total with 49 jets. The manufacturer says it is now working on a Production Levelling Plan to have a stable production pace throughout the year.

The manufacturer shipped 115 executive jets in 2023 – up 13 from 102. This consisted of 63 Phenom 300s, 11 Phenom 100s, 20 Praetor 500s and 21 Praetor 600s.

The post Embraer grows first quarter deliveries and backlog appeared first on Corporate Jet Investor.

Summarising comments from IADA’s 47 dealer members, Starling said: “If you’re looking in the US, it’s like a carcass after vultures have picked over it. What remains out there are aircraft that need so much maintenance or have so many problems they will probably never sell.”

Putting metrics to historically low levels of pre-owned US aircraft sales, Andrew Young, Amstat general manager said just 4.9% of the fleet of business jets and turbo props is available for sale. (This is the lowest percentage since Amstat started in business in 1984). A market in equilibrium usually has about 10% of the fleet for sale compared with as much as 18% in the depths of the Great Financial Depression, said Young. Also there had been a 44% contraction in aircraft available for purchase year-on-year. “With preferred aircraft selling very fast – some before they are listed on the market – the days on the market for the remaining aircraft has risen by 22%,” he added.

Pre-owned aircraft are available, but you have to look further afield, which brings challenges, said Hamish Harding, Action Aviation chairman. “We are looking all around the world for aircraft all of the time and generally finding them.” People could be “made to sell”, with the high level of prices available now, he added.

Two productive locations for sourcing pre-owned business jets were China and Russia. Sellers in China who were previously very flexible about contracts were now proving highly inflexible. “But if you want a high-end aircraft, China is one of the places to look, as is Russia and certain other countries.” But 21-day quarantine restrictions in China continued to frustrate some transactions.

Commenting on how transactions had changed during the Covid-19 pandemic, Harding said: “We never thought we could cut this many corners.” Pre-purchase inspections (PPIs) “in their full glory” were now a thing of the past. Also, contracts must be very simple to ensure a swift transaction. While conducting an engine borescope is still important, this is generally confined to the front-of-engine searches for foreign object damage (FOD). Also, it was becoming much harder to find slots for aircraft PPIs at MROs. Next week is the cut-off for arranging aircraft finance, after that, it’s all about cash purchases, he added.

Jeremy Stumpf, Freestream Aircraft vice president, also urged buyers to be prepared to act quickly and to compromise. “The perfect aircraft will likely not be available, so my advice to clients is to go with the one that ticks most of the boxes,” he said. “Make changes to the aircraft after you close the deal. The most important thing is to secure the aircraft.” Harding agreed on the need for compromise, with sellers having to pay full retail prices (with Bluebook listings well behind the market).

Explaining the shortage of pre-owned aircraft, IADA’s Starling said: “All the fractionals and charterers are trying to buy aircraft, so they are taking out of the market and not giving anything back – that’s part of the problem now.”

The boom in charter and jet card sales were hot topics in presentations and networking sessions during the two days of the conference. Anthony Tivnan, Magellan Jets, founder and president considered surging demand and sales reflected more than a short-term adjustment to the lack of commercial airline availability and Covid-19 concerns. “I don’t see it slowing down anytime in the near future,” he said during the panel ‘Managing charter and jet cards during a boom’.

There will be a reduction in business from a small segment of customers when the commercial airlines return to full scale operations, he predicted. But that could be offset by the return of business travel which has always been the backbone of Magellan Jets’ business. “It remains to be seen. However, what we lose from the new segment of customers – but I think a large portion of them are here to stay – may balance out as some of the corporations get back on the road.”

During the same session Vincent Kavanagh, Air Partner senior vice president of Sales said the obvious growth in jet card sales reflecting the company exploring and finding a new audience. “There are a lot of clients who could always afford it but never justify it. Now they are justifying it more than ever – whether they are corporates of individuals.” But it was also vital to retain existing clients and communicating effectively was vital, he said. Ideally, this should be face-to-face or by phone but not a spam-type email communication.

It’s not just new customers flocking to private aviation; the maturing sector is also attracting a new generation of investors. The reason was a fundamental shift in revenue growth, according to Vivek Kaushal, Global Jet Capital CEO. During the past 10 years the industry has grown mainly through new aircraft deliveries and aircraft utilisation rates have remained broadly flat, he said. But now utilisation rates are climbing significantly. “Instead of all revenue coming into the industry from new aircraft deliveries, now we are seeing new users come in and providing cash flow and revenue. So, it seems rational to attract all this investment.”

Nick Sandler, Stonebriar Commercial Finance’s new president noted that most aircraft operators were operating at 60%-70% of their full infrastructural capacity before the global pandemic. But, over the past 18 months, that has grown to 120% of capacity. “Some can absorb that because of economies of scale, purchase power and leverage on recruitment,” said Sandler. “To others that will represent a challenge. Everyone is under stress about best to bring in new business.” Plus, the growing pilot shortage is likely to prove a key brake on growth for some businesses.

Securing corporate finance in future will be dependent on producing a sustainability plan, warned Ford von Weise, Citi Private Bank, director, head Global Aircraft Finance Group & Advisory Services. “Within 10 years, if you don’t have a sustainability plan, you won’t be able to borrow money from a major bank,” von Weise told delegates. “This is happening regardless of what you think should happen.” While business aviation accounted for only 0.4% of carbon dioxide emissions, the sector remains a ripe target for climate activists to attack. “We are a huge, monstrous target because the carbon footprint of our clients is hugely outsized.” Sustainable aviation fuel (SAF) – “the success story of business aviation” – offered a long-term solution to mitigate climate change. And to help avoid punitive legislative sanctions and continued criticism from environmentalists and, increasingly, stakeholders including clients, shareholders and employees. Although carbon offsetting and book-and-claim systems offered short-term benefits, he considered them “window dressing”.

Tackling the pressing problem of pilot shortages, René Banglesdorf, co-founder of the new mentoring consultancy The Aviation Collective, said action was needed now to attract new pilots from diverse backgrounds into the industry. Acknowledging how commercial airlines often looked to business aviation to plug its pilot shortage, Banglesdorf’s presentation answered the topic: How business aviation can trounce airline hiring power. Part of the answer lay in broadening the industry’s gender diversity by showcasing female role models in aviation. Lack of role models and perceived (or actual) harassment or discrimination also proved barriers to some potential recruits.

Regardless of gender or background, young people wanted to enjoy a good quality of life (including family life) and a well-defined and rewarding career path. Swift action was needed now to secure the next generation of recruits before other potential employers out-competed business aviation for young talent. “Business aviation is very nimble. It can react quickly. It can make changes without the need for an act of Congress or lengthy union discussions,” said Banglesdorf, who recently qualified for her Private Pilot’s Licence.

Banking on sustainability: Ford von Weise, Citi Private Bank. 

The post CJI Miami 2021: Day two – Lack of inventory sparks ‘feeding frenzy’ appeared first on Corporate Jet Investor.

The influx of new clients to card and fractional plans together with new aircraft purchases is a tribute to the industry’s success in promoting the benefits of private aviation. “Last year we all became evangelists for why private aviation matters – how you can avoid crowds and [Covid] exposure,” he said. “We created this surge and built pent up demand.”

A measure of Sentient’s success is that for every new card sale, the company noted 2.5 referrals. Neither is the surge in private jet travel confined to leisure travel by High-Net Worth Individuals (HNWIs). While the Fortune 500 companies are not talking about travel policies, Sentient is detecting a resurgence in business flights from merger and acquisition specialists, deal flow experts and consulting teams. Plus, many clients opted to buy rather than the more traditional routes into the industry. “A lot of people lunged – skipping charter and fractions – going right into buying an aircraft,” said Collins.

Further evidence for the influx of new private aviation users and buyers came from Michael Amalfitano, Embraer Executive Jets, president and CEO. First-time users were up by more than 50% compared with historical data, he told delegates. First-time buyers were up 35%, based on this year’s data. Fuelling this growth was a significant rise US private wealth – up 12% over the past year, exceeding the growth in Asia Pacific for the first time in five years.

Newcomers were younger, likely to be under 55 years of age, compared with the more traditional buyers aged over 55. “We are seeing Millennials, Generations X, [born 1981 to 1996] Y [born: 1977-1994] and Z [born: 1995-2012] who have a completely different expectation of private aviation travel.”

He continued: “People are moving up from commercial through charter, up through the access points of democratisation, such as card and fractional, to ownership – all happening based on new priorities.”

Connectivity remained important but new trends were also emerging. New clients are looking for fewer touch points and travel from point-to-point destinations that fit their lifestyle. They want a safer, healthier, and more efficient, seamless travel experience. Amalfitano described the trend as “human-centred experiences”. The result was: “Our priorities have shifted to health and safety, as well as sustainable actions that support business aviation’s commitments to fly net-zero by 2050.” Embraer Executive Jets is focusing on digital solutions to meet these changing needs.

Kenny Dichter, Wheels Up, founder and CEO, characteristically brimmed with enthusiasm about the prospects for business aviation. “The heyday of this business – and we have a lot to figure out as an industry – is in the next five, 10, 15 and 20 years. I see all green lights.”

A key reason for optimism was the opportunity to develop “open table” technology, which is absent in business aviation today. “If someone develops technology that can support the industry and make it more efficient, there’s an unbelievable opportunity, not just for Wheels Up, but the whole space,” said Dichter.

It was an encouraging forecast too from Gus Faucher, PNC Financial Services Group, senior vice president and chief economist. He predicted strong economic growth through 2022 to 2023 – “well above the [US] economy’s long run average”. Interest rates were expected to remain at about 2% over the long run.

Next year will continue busy for business aviation, agreed David Hernandez, Vedder Price, shareholder. Unless, he added, there is some significant event, such as a large increase in taxes or interest rates “that muffle and make people scared”.

Hernandez said: “I see a lot of new people moving in, a lot of new buyers, a lot of jet cards. The question is how long can the jet cards operate without going bust, because they’re selling way more than there’s capabilities [for].”

Changing customer demands also prompted Brian Proctor, Mente Group, president and CEO to reveal the launch of a new service. Freedom by Four Corners Aviation aims to offer clients the benefits of their own scalable aviation department. It claims to offer a customised and fully integrated lift solution, including aircraft, crew, operations, and supplemental lift, but “without the hassles of ownership such as administration, accounting, and uncertainties”.

The launch marked a new segment for business aviation, termed Corporate Jet as a Service (CJaaS), said Proctor, who is CEO of the Aquila Aviation Ventures, which includes Four Corners Aviation and the Mente Group. Designed to enable corporate flight departments to redeploy capital by avoiding aircraft ownership, the service includes a monthly access fee to pay for fixed cost and an hourly usage fee plus incident or parts recalls, said Proctor. “The bill would be three-line items, which makes it easier for the owner to understand and predict what’s going on.”

The impact of new entrants was also highlighted by Megha Bhatia, Rolls-Royce, vice president Sales & Marketing said: “We are seeing a increase in first-time buyers. Traditionally they have veered towards the entry level sector rather than the sector we are powering – large cabin aircraft. We are having to educate them a lot more about engine programmes.”

Braking business aviation growth were a range of supply factors that needed attention, according to speakers. These included a growing shortage of pilots and aircraft engineers and technicians and lack of inventory for buyers in a strong sellers’ market. Scott Cutshall, Clay Lacy Aviation, senior vice president, Development and Sustainability warned: “5,000 pilots left the airlines last year and we had a problem before the pandemic.”  And when the airlines experience a shortage, they “reach down” to business aviation to find the remedy. “Costs are going up, salaries are going up, hourly rates are going up, so I would argue that even if prices increase, costs are increasing faster. And we’re just trying to play catch up,” said Cutshall. One key solution was to offer student pilots a clear and rewarding career path.

Lack of inventory focused minds throughout the day. While OEMS won praise for their production restraint (possibly influenced by supply chains challengers), brokers complained about the lack of quality pre-owned aircraft for sale and operators about the lack of lift. Amanda Applegate, Airlex Law Group, partner highlighted the power of vendors: “If you’re a seller, it is very much your market and you can dictate your terms,” said Applegate.

New buyers required considerable guidance before making their first purchase, said Lisa Senters, Jet Senters Aviation, CEO. “First-time buyers don’t know what to do. These people are easy to sell things to and they need guidance.” Janine Iannarelli, Par Avion founder and CEO, joined other speakers in highlighting the importance to honesty and integrity. “This is a real opportunity to bring the industry into the 21st century,” said Iannarelli. Using high standards of Environmental, Social and Corporate Governance (ESG) was critically important “when we speak to transparency, ethics, compliance, the weeding out of bad apples and nefarious actors”.

Alongside the impact of new entrants, sustainability concerns emerged as a key theme of the day. Sustainable aviation fuel (SAF), book-and-claim options and carbon offsets offered the best short-term solution to reduce business aviation’s carbon footprint while new technology such as electric and hybrid electric and hydrogen propulsion offered longer term solutions. Leo Knaapen, Bombardier, chief, Industry Affairs put the challenge of SAF supply into perspective: “Next year we will have about 3bn gallons of SAF, but we need about 35bn. That is the commitment or challenge [president] Biden has given.”

Jean-Noel Robert, Airbus Corporate Jets, head of business development, underlined all the major OEM’s commitment to SAF. Airbus was committed to ensuring its entire fleet was certified to fly using SAF, he added. (Last week, the Airbus A319neo became the first single-aisle aircraft to operate on 100% SAF in a trial near Toulouse).

At present SAF was only available at about two dozen locations in the US, acknowledged Kennedy Ricci, 4AIR president. “That’s not necessarily a bad thing. It makes sense to sell SAF close to where it’s made. But five years from now, new SAF pathways will evolve in different locations to generate different [more efficient] types of SAF.”  

Ending the day on an optimistic note, Andrew Farrant, Global Jet Capital chief marketing officer shared his company’s forecast for growth in business aviation transactions. Over the past five years the total market has averaged 3,000 transactions valued at $28bn. Over the next five years it will average 3,500 total transactions (including both pre-owned and new aircraft) valued at $32bn.

Meanwhile, the last words go to David Best, Jet Aviation, senior vice president and general manager US operations. “Here we are complaining about too much business and not enough staff. But it’s a great way to be unhappy.”

Networking by pool: CJI Miami delegates at the Poolside Reception sponsored by San Marino Aircraft Registry.

The post CJI Miami 2021: Day one – the highs and lows of up markets appeared first on Corporate Jet Investor.

IADA brokers predicted how the different sizes of pre-owned aircraft would perform on a scale of ‘significant decrease’ (from 0-0.9) to ‘significant increase’ (from 4-5).

Respondents indicate a “better than normal” market conditions both in the fourth quarter of 2020 and the first quarter of 2021.

The report also showed that IADA Accredited Dealers closed 211 pre-owned aircraft sales transactions in the first quarter of 2021. Another 246 aircraft are expected to close in the next few months.

“This IADA data clearly indicates that the aviation industry has proven its resilience through the economic fluctuations brought about by the pandemic and is now on a trajectory for continued success,” said IADA executive director Wayne Starling.

In the 12-month period from April 1st, 2020 to March 31st, 2021, IADA dealers closed 1,222 global transactions.

Since the beginning of the pandemic, the industry has seen several first-time buyers keen to fly privately. A recent report by Jetcraft showed that large jets (Bombardier Global, Dassault Falcon 7x, Gulfstream G500, etc.) account for a major share of aircraft purchased by buyers under 50 years of age.

The forecast also showed that pre-owned transaction volume and value will recover to steady growth during the forecast period, reaching 2,271 transactions worth $11.1bn annually by 2024.

Jahid Fazal-Karim, board chairman, Jetcraft said: “Aviation is one of the most dynamic and resilient industries in the world and I’m confident in its post-Covid-19 recovery, particularly with more first-time buyers realising the value of business aviation.”

Meanwhile, the latest Asset Insight AI² Market Report identified a 7% rise in the sales of pre-owned business aircraft during the first quarter of 2021. But ask prices were down by nearly 6% over the period.

IADA report – at a glance:

-Light and midsize jets will show the strongest growth over the next six months

-Assessment of the current business aircraft sales market is “better than normal”

-Demand for light jet market in the next six months will see “slight increase”

-Dealers closed 1,222 global deals from April 2020 to March 2021

-211 pre-owned aircraft sales completed in Q1 2021, with 246 expected in coming months

The post IADA report: ‘Strongest areas of increase in light and midsize jet’ sales appeared first on Corporate Jet Investor.

A new breed of High Net Worth Individuals and Ultra High Net Worth Individuals is emerging to re-energise business jet sales, Michael Amalfitano, President and CEO, Embraer Executive Jets, told more than 500 delegates in his keynote address.

“This is leading to much stronger than usual first-time buyer activity,” he said. “Before [Covid-19] first-time buyers used to represent 10% to 15% of business jet deliveries. Now it’s approaching 50% in some classes – especially entry level jet categories.” A clear trend was buyers’ interest in smaller aircraft. “We have also seen the pre-owned customers active and this market is heating up, particularly for smaller class aircraft – at least for now.”

Hamish Harding, Action Aviation chairman, also highlighted the trend towards new customers. “Most of our buyers are new buyers – the corporates aren’t buying at the moment – but there are exceptions. Only 10% of the people who could buy private jets have private jets,” he said. Harding confirmed buyers’ interest in smaller jets worldwide, if not in the Middle East. “People do want a private jet, so they don’t have to travel with other people. The concept of buying a smaller jet, just to be on your own, becomes possible and that trend is driving the current light jet market.”

‘People do want a private jet’

Garett Jerde, founder and MD, JetHQ, was equally upbeat about the prospects for new entrants revitalising private aviation. “I don’t think we have even scratched the surface. There’s so many people that can afford private aviation and now they’re coming out,” said Jerde. He also detected interest in smaller-sized aircraft. “Everybody thinks of G550 or a G650 or a Global 5000, but you can start a lot smaller to serve your purposes.” New entrants could buy a 400XP for $1.5m, he added.

Joseph Carfagna Jr, President and CEO, Leading Edge Aviation Solutions, agreed buyers were focusing on small aircraft. “This upturn [in 2020] is different because it’s driven by smaller aircraft,” said Carfagna. “The first-time buyers back when the market was hot in 2007 were buying big airplanes, as their first airplanes. This is a different segment that seems to be stepping in because of necessity because they don’t want to fly on airlines. It’s not wretched excess, which is what we had in 2007.”

‘It’s not wretched excess’

Brian Proctor, founder, President and CEO, Mente Group, guides his customers towards considering price rather than aircraft size. “Instead of looking at a segment we should be looking at a price point. The market will continue to be strong at $20m and below for the foreseeable future. At that price point you can buy everything except for a Sovereign, a 650, a 7500. There are a lot of airplanes that you can buy at $20m and below.”

Retaining new clients was the focus of interest for Andrew Collins, Sentient Jet President and CEO and lead executive, OneSky. “The first wave of new entrants has somewhat subsided,” he said. “So in order for us to breakout further into this addressable market space, we are going to have to retain those clients.” He noted a trend towards lower level executives now flying privately.

Concern about the fate of 100% bonus depreciation on aircraft sales also focused speakers’ attention. Clay Healey, AIC Title Service CEO, worried a new administration in the White House was likely to change the structure of taxation and probably remove the 100% depreciation from aircraft buyers, which was “very beneficial” for buyers, OEMs and used aircraft dealers.

Carfagna thought 100% bonus depreciation would survive next year if the Republicans held the Senate. “If Republicans keep the Senate on January 5th, there will be no change and people will keep buying aircraft into 2021.”

The post CJI Americas Day One: New entrants and recovery prospects set the theme appeared first on Corporate Jet Investor.