Month: September 2010

Pilots May Be The Next Big Employment Boom

In the business aviation industry we don;t get a chance to see often that jobs in this sector may be booming, but according to AIN, their may be a need to start thinking about gearing up for a boom in the pilot business and the maintenance business in the next 20 years.

According to Boeing, over the next 20 years there will be worldwide demand for 466,650 pilots and 596,500 maintenance personnel. A Boeing spokesman told AIN the demand for trained personnel is based on new and replacement aircraft sales projected in the company’s Current Market Outlook 2010-2029. “The world’s airlines are going to be hiring more than 23,000 pilots and 30,000 maintenance technicians annually through 2029,” he said. “Look to the Asia-Pacific area to account for the highest rate of growth: more than 180,000 pilots and 220,000 mechanics; 70,600 and 96,000+ will be by China alone.” The study listed a North American demand for 97,350 pilots and 137,000 maintenance workers, with Europe following closely at 94,800 and 122,000. Africa is projected to require 13,200 pilots and 15,000 mechanics, the Middle East 32,700 pilots and 44,500 maintenance personnel, Latin America 37,000 and 44,000, and the CIS will need 11,000 pilots and 14,000 maintenance personnel. “The challenge we face as an industry is to provide training on ever more sophisticated, technologically evolving equipment to an increasingly diverse worldwide population,” he said.

As it seems in most cases, China seems to be growing at a rapid pace and finds itself in a boom market for hiring employees.  I am not sure of the numbers and what the amounts represent as it relates to the business, but the best news is those pilots must fly aircraft and for that many pilots to be in the air, we must assume that they will need aircraft built and sold for that purpose.

European Market Sliding For Business Aviation

I was reading recently a report that talked about the summer numbers and how we have been doing here in the United States in the business aviation market and the numbers don;t look as great as we would like them, but they are stabilizing a bit in this crushing economic downturn.  The sales of some of the companies out there are non-existent and some are actually having a decent year overall considering what they are dealing with around them.  The reports point to an ever increasing strength of the US Dollar.  This does not necessarily translate into better news for the industry overall.

Part of the problem with the industry is not the fact that the dollar has been weak and that we are seeing difficulties here, the problem can also be attributed to the slide in the economy and tough market indicators in Europe.  In certain market segments, the number of European-owned aircraft available

greatly exceeds the number of American-owned available aircraft.  The slowing European economy has a bigger impact on the business jet

market than the strong dollar and this is a growing trend.  We will have to see how they react to the economic slide and how that will change how we do business here in the United States.

Layoffs At Hawker Beechcraft in Spite of Pockets of Growth

The doom and gloom of the economy and the business aviation industry seems to only get worse as we hear of other problems with Hawker Beechcraft and their latest news of layoffs as stated by AIN:

“While there are pockets of growth in the global economy, the market for new production aircraft has stagnated at a very low level,” Hawker Beechcraft chairman and CEO Bill Boisture said in a memo to employees on Friday. In the letter, he said the company plans to “reduce the size of our salaried (non-hourly) work force by approximately 350.”

The report went on to state that this does not involve possibly involving union workers it may soon include them:

Although this latest round of layoffs does not affect hourly union workers, Boisture made it clear that future reductions in force might do so. “While we do not see a large-scale layoff of hourly employees at this time, small reductions or short furloughs may be required to modulate production line output in an attempt to reduce unsold aircraft inventory.”

Hawker is currently in talks to renew its contract with union workers and they are currently negotiating that contract.  Apparently the current contract has one more year left, and union officials are expecting that Hawker is going to provide them with a contract to vote upon by October 9, next week.  This is going to be an up or down vote for the union and there will either be an acceptance or a rejection of the offer and there will not be a strike as part of the process.

Strike Avoided But Bad News Continues For Cessna

It was posted before about the possible strike for Cessna, but that seems to be averted although the news does not get better.  It is reported the production line workers were required to accept the new contract.  AIN reports that after that strike was averted, the news was not better:

[Citation] will lay off 700 more employees. Parent company Textron today reported that it is “adjusting aircraft production schedules and reducing headcount at its Cessna business unit due to continued weakness in new aircraft orders.” According to Textron chairman and CEO Scott Donnelly, “We have not yet seen a discernible improvement in business jet order activity. Therefore, we are taking further production and restructuring actions at Cessna.”

They are continuing to remain a force in the business aviation space and have taken these steps to continue that process.

In a note sent to employees today, Cessna chairman, CEO and president Jack Pelton said these production cuts will lower costs and keep the company competitive. “Our strategy is to defend and protect our current markets while investing in products and services to secure our future, but we can do this only if we succeed in restructuring our processes and reducing our costs,” he said.

They will not be providing information related to their production changes for the year but we can hope this means they will be better positioned for 2011.

A Business Jet Buyers Market But Buyer Beware

It comes with the old saw of “buy low and sell high” as we have been taught from the beginning of business 101.  In recent years the grim reaper seems to have gripped the economy and there seems to be a lot of gloom and doom in every corner of the business aviation industry.  The good news for those that are looking to purchase a business jet is that this is a buyer’s market.

The industry is seeing good prices throughout each class of jet available. The used jet marketplace is seeing great pricing for those in the market and the charter business is still pretty solid which makes owning a decent option.  This is not to say that all of the used jets on the market are a good buy. A buyers market can be a great time to purchase but when buying you must do your homework to make sure that what you are getting is truly a bargain.

Due to the increased inventory and the lower prices it can be a tough choice as to which jet may be the best to put into your asset column.  With the economy may jets are being repossessed or have sat without being used for a while and their maintenance may not be up to date, costing the potential buyer a large fee to get it up to date.  Paying attention to the jet you are buying is important.  You should have someone that is an expert in assessing value based on the needs  you have and the information provided by the seller to make your purchase the best possible it can be.

Economic Hardships in Business Aviation Brings Possible Strike

In the tougher economic times that we have today, there is bound to be some fallout with businesses and their employees.  Cessna is apparently encountering that same problem now.  AIN reports that there may be a possible strike looming in the future over at Cessna:

Cessna Aircraft made a new contract proposal on Monday that was immediately rejected by machinist union leadership, with the recommendation that its members follow suit in a vote set for Saturday. The seven-year contract offer by Cessna was described by president, chairman and CEO Jack Pelton as “very fair, given the extraordinary challenges we are facing in our economy and in our industry.” Union District 70 president Steve Rooney disagreed in no uncertain terms. He said rather than asking for a short-term sacrifice to help the company through bad economic times, Cessna was asking for permanent cuts over seven years. Rooney alleges that the Wichita-based aircraft manufacturer used the economic downturn as an opportunity “to gut the contract and saddle employees with extreme and punitive measures.” Union members are scheduled to vote on Saturday by simple majority whether to accept or reject the contract. If a majority reject the contract, union members will then be asked to vote a second time on whether to approve a strike, which will require a two-thirds majority. If the membership does not vote to approve a strike, the contract will be accepted by default. If they vote to strike, the work stoppage would begin at 12:01 a.m. on Monday, which could bring the Citation production lines to a standstill.

With few contracts being written for new business aircraft and even many of the orders now placed being canceled, manufacturers are beginning to scale back their operations and in that case part of where cuts are made will have an impact on workers.  I hope that this can be avoided.  We will see over the weekend if the work stoppage occurs.

Used Business Jet Market Hurting New Business Jet Sales?

I had a chance to catch up on some of my reading this week on what is happening in the market and I found an interesting snippet at AINOnline:

“Elevated used inventory, attractive used pricing and macro uncertainty continue to hold down demand for new business jets,” JPMorgan Equity Research noted in its latest business jet monthly report, issued this morning. “As a result, OEMs are eating further into their backlogs, and if these don’t stabilize in the coming quarters, further [production] rate cuts seem likely.

This is obviously not good news for those that are producing new jets, but those that have inventory in used jets it means now is a good opportunity to make a push for sales with those jets they have.  The report goes on to state:

As for pre-owned jets, JPMorgan said used inventory of in-production models edged up to 11.8 percent in August versus 11.6 percent in July, with all categories showing increased inventories.

“We believe this increase is a bump in the road and expect that inventories…will continue to decline gradually,” it added. Meanwhile, average asking prices for pre-owned jets increased 1.3 percent in August, reaching $11.4 million.

It seems that used inventories will be reduced which is good news for all.  When those inventories are reduced the new jets coming into production will also increase.

Forecasts Of Business Jet Recovery Continue

We are continuing to get reports from all of the sectors in the industry that the slide has slowed and the recovery has begun.  It may be wishful thinking on the part of many of the manufacturers at this point but not for two separate business jet companies.

Business Jet Traveler reports that Bombardier CEO and President Pierre Beaudoin opines that he feels that the economic recovery is shown through the idea that less cancellations are occurring from customers.  He specifically states that Bombardier is “starting to see signs of recovery as shown by the significant reduction in business aircraft order cancellations”, and this is backed by the statistics that during the second quarter this year they only had 26 cancellations of ordered aircraft while the same time period last year showed 80 cancellations.  It appears that their orders may also be on the rise.

It is also reported that Gulfstream is seeing the market begin to get better and that it is not where it needs to be in the big picture but it is on the rise and headed in the right direction.

With these two companies showing signs of improvement and other manufacturers beginning to report the same numbers and forecasts, we can begin to see that the economic problems for companies in this industry may soon be able to recover from some of the worst conditions seem in a recent memory.

50th Anniversary of Operation Skyshield

Operation Skyshield will have its 50th anniversary tomorrow on September 10, 2010. Only the World Trade Center attacks has resulted in the entire North American continent being shut down to all aircraft since the tests that were run by the U.S. and Canadian governments in Operation Skyshield. In an attempt to test the effectiveness of air defense systems, all aircraft were first grounded on September 10, 1960.  The governments did this as merely a test and those results have never been shared.  The operation was one of the largest air drills in aviation history and has not been done but three other times in the 60’s.  Today’s air traffic is much more exponential than it was in the 60’s which would cause much more difficulties as a result.  No other drills have been conducted in modern times.

Find Corporate Jet Insider On Facebook and Twitter

As of this post, Facebook has more than 500 million users and is still climbing.  Many of you are also on Facebook and we would love to be your friend and follow along with your social stream.  If you have a business that is related to the world of business aviation and corporate jets or even if you support the industry in other ways through corporate travel or perhaps you provide jet charter services or any other type of related industry business we want to know about you.  If you are a pilot or anyone that helps support the industry, let us know.  We enjoy being on Facebook ourselves and you can find us on Facebook and perhaps “Like” our page.

In addition to finding us on Facebook at our Corporate Jet Insider page, we can also be found using Twitter.  We are sending out our 140 character messages about our posts, the industry and things we find interesting in the world do business aviation.  These bits of information are important to our readers, our customers and those looking for a little bit of Corporate Jet Insider information.  We want to follow your Twitter stream too.  Leave us some information on how we can find you or your Twitter account.  We love having new people to follow and those that can provide useful information.

We will continue to bring you the information you are searching for here related to our corporate and business aviation business, but we are also out in the networks looking for and providing useful information.  Thanks for following along with us in the online social networking world.