It's a sobering reality for a sector that was soaring just a few years ago, fuelled by new-found wealth in emerging markets such as Russia and the rise of so-called air taxi services and fractional ownership. Yesterday, Montreal-based Bombardier Inc. announced it has terminated an order for 110 business jets, valued at ab
out $1.5 billion. The Learjet 60 XRs were destined for a European private jet service called Jet Republic, which said yesterday that it had grounded its operations based in Lisbon. With production of business jets expected to be down by 40 per cent this year, according to J.P. Morgan, the number of orders being cancelled now exceeds new orders being taken at many manufacturers. Many of those same operators, some of which sell hourly use of corporate jets, have had the rug pulled out from under them as companies slash travel budgets. "I think the market got overextended," said Jacques Kavafian, an analyst at Research Capital. "A lot of these guys are finding themselves in a bind right now." Bombardier, which also makes passenger trains and commercial aircraft, said only 25 of the 110 business jets ordered by Jet Republic had been classified as firm orders, with a value of about $340 million. The order termination comes on the heels of another for 15 regional jets earlier this month by Italian airline MyAir.com. Analysts and investors are concerned that more cancellations could be on the way. Benoit Poirier, an analyst at Desjardins Securities, said in a note to clients yesterday that two other large Bombardier orders may be at risk: a firm order for 20 jets by California-based XOJET and a firm order for 35 by Europe's VistaJet.
out $1.5 billion. The Learjet 60 XRs were destined for a European private jet service called Jet Republic, which said yesterday that it had grounded its operations based in Lisbon. With production of business jets expected to be down by 40 per cent this year, according to J.P. Morgan, the number of orders being cancelled now exceeds new orders being taken at many manufacturers. Many of those same operators, some of which sell hourly use of corporate jets, have had the rug pulled out from under them as companies slash travel budgets. "I think the market got overextended," said Jacques Kavafian, an analyst at Research Capital. "A lot of these guys are finding themselves in a bind right now." Bombardier, which also makes passenger trains and commercial aircraft, said only 25 of the 110 business jets ordered by Jet Republic had been classified as firm orders, with a value of about $340 million. The order termination comes on the heels of another for 15 regional jets earlier this month by Italian airline MyAir.com. Analysts and investors are concerned that more cancellations could be on the way. Benoit Poirier, an analyst at Desjardins Securities, said in a note to clients yesterday that two other large Bombardier orders may be at risk: a firm order for 20 jets by California-based XOJET and a firm order for 35 by Europe's VistaJet.For further details visit as : http://www.thestar.com/Business/article/684293
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