Luxury-Jet Duel Creates ‘Blingy’ Choice for Billionaire Buyers

Jet-business people re-el magazine

9 August 2015

Tags:business, business news  financial news, business finance, small business websites


Billionaires will have their pick of business jets as Embraer and Cessna roll out shiny new models in a bid to woo buyers to a market that’s struggling to recover from the 2008 slump.

Brazil’s Embraer SA is unveiling the Legacy 450, a brand new variant of last year’s Legacy 500 while Textron Inc.’s Cessna has refreshed its Citation with the Latitude upgrade. The companies are hoping the new mid-size planes, on display next week at the Latin American Business Aviation Conference and Exhibition in Sao Paulo, are enticing enough to captivate those who may have held back over the past seven years.

“Business jets, it’s kind of like cars – people like the latest and greatest,” said Cai Von Rumohr, a Cowen & Co. analyst.

 Competition is stiff in an industry that saw total business jet shipments fall 4.1 percent in the first half of this year as weaker demand from oil-dependent countries in the Middle East, as well as Russia and Latin America, compounds tepid orders from U.S. and Europe.

As the economy gains steam in the U.S. it should prompt executives and wealthy individuals to go jet shopping again, said Jens Hennig, vice president of operations at the Washington-based General Aviation Manufacturers Association.

“With the U.S. doing better, that’s where we’re going to see the light- and mid-size segment have an opportunity to come back,” said Hennig in a telephone interview ahead of the conference. “When our manufacturers bring new products to the market, there’s a natural stimulation for customers to buy.”

Jet Rivalry

This year should see about the same number of business jets delivered as last year, when 722 aircraft were sold, according to GAMA. That’s down from a peak in 2008 of 1,317 jets.

The rivalry between the Latitude and the Legacy, combined with few customers from emerging markets, could put pressure on margins, according to George Ferguson, a senior analyst with Bloomberg Intelligence.

Textron is seeing “opportunities” in Brazil and Latin America, said Bob Gibbs, vice president Latin America and Caribbean for Textron. The Citation Latitude is making its Latin American debut at the show.

Embraer is well-positioned to gain market share because it’s introducing a brand-new model, said Brian Foley, a Sparta, New Jersey-based aerospace consultant. Textron rushed to come up with the Latitude to thwart competition from the Legacy 450 and the 500, which came out last year, Foley said.

Embraer is “brand new out there, so that should cause some more market excitement,” Foley said. The Latitude “can’t really be called a brand-new airplane like the 450/500 can, so that’ll be a competitive strength for the 450/500 going forward.”

Marco Tulio Pellegrini, head of the executive jets division at Embraer, said he is counting on the Legacy having the same impact on the mid-size market as Embraer’s Phenom has in the light segment. The Phenom 300 has a 57 percent market share after being introduced five years ago, he said.

“You have to enter the heart and the brain of the customer,” Pellegrini said in an interview. You have to give people something “that has no remote comparison on the market.”

Both the $17 million Legacy 450 and the $16 million Latitude claim six-foot (1.8 meter) high cabins. The Legacy 450 has two club seats that recline to create flat beds and optional belted-toilets, while the Latitude has a double, side-facing couch and seat-mounted Internet and entertainment units.

Business jet customers are demanding, and they want it all, Bloomberg Intelligence’s Ferguson said.

“This is a blingy business — who’s got the latest model?”

Tags:business, business news  financial news, business finance, small business websites

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