Honeywell sees '09 bizjet sales up, but peak looms

October 05 12:05:03 PM, Yahoo News

Reuters - Worldwide business jet deliveries will rise 8 to 17 percent next year to what may be a peak as high fuel costs and global economic worries depress demand, according to a forecast by Honeywell International Inc released on Saturday.

The world's largest maker of cockpit electronics said a survey of 1,866 corporate jet users showed early signs of slackening demand in the form of fewer flying hours and more used jets going on the market, said T.K. Kallenbach, vice president of marketing and product management at Honeywell.

Honeywell estimated worldwide business jet deliveries hitting 1,200 this year, up 15 percent from 1,020 last year. It forecast deliveries of 1,300 and 1,400 next year, with demand possibly peaking in 2009 or 2010.

Honeywell polled corporate flight departments from May through mid-August, before the most recent tightening of the credit crunch, which has hammered global stock markets and raised fears of a sharp economic downturn.

Textron Inc (TXT.N), Gulfstream International Group (GIA.A) and Bombardier (BBDb.TO) produce corporate jets. General Electric Co (GE.N), United Technologies Corp (UTX.N) and Rolls-Royce Group PLC (RR.L) make engines for them.

Deliveries of new business jets tend to lag economic activity because they are bought and paid for over 3- to 4-year cycles, Kallenbach said. But there are other signs that demand for business jets is starting to be hit by high fuel costs and global economic worries.

"If you have a shift in the economy, business aviation doesn't really see the effects for 12 to 18 months on new aircraft purchases," Kallenbach said. "We're seeing a drop in flight hours, especially in small aircraft, small business jets and we are seeing a very rapid increase in used aircraft availability."

The eventual fall-off in deliveries of new aircraft will likely be "moderate" due to the long backlog of orders, he said.

Business-jet sales tend to be less dependent on financing than sales of big commercial jets, he said.

"A lot of these are paid for by cash," he said. "It's not like the airlines where you have a huge number of aircraft leased and leased back into the airline system."

Honeywell planned to release the forecast this weekend at the National Business Aviation Association trade show in Orlando, Florida.

The Morris Township, New Jersey-based company, which also makes thermostats and other systems to automate large buildings, said its forecast assumes the U.S. economy will grow at less than 2 percent this year and in 2009.

(Editing by Richard Chang)

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