Index returns to positive territory on election optimism

Indicator at 52: Our Barclays Business Jet Indicator (BBJI) increased 27% with our index at 52, with above 50 indicative of an improving market. Our straight-up measure of overall business conditions came in at 6.4 (0-10 scale), 6% higher, indicative of better-than-normal market conditions.

View on market/stocks: Our survey index has historically been well correlated with manufacturers’ book-to-bill, with current index levels in the low 50s aligning with a ~1.2x bookto-bill (Fig 8). We expect extended backlogs (two-to-three years) with higher pricing will allow for manufacturer delivery growth and improved margins over the next few years, with current manufacturer supply at only ~4% of the installed base. We have Overweight ratings on GD/TXT. GD currently trades at a ~20% discount to the market while TXT trades at a ~40% discount.

Index components: The increase in our index reflects a 62% improvement in outlook, a 44% increase in dealers’ willingness to increase inventory, a 32% increase in pricing and a 27% increase in customer interest. All of our index components, other than pricing, are now in positive territory (>50).

Election: When asked about the impact of the election on the market, a large majority of respondents see it as positive for the bizjet market. Specifically, 70% see it as slightly positive (53%) to significantly positive (17%) as compared to only 6% that see it as slightly negative.

G700: When asked about timing of G700 deliveries, 81% don't see deliveries accelerating until mid-to-late 2025. A much smaller 19% see deliveries accelerating in early 2025. We estimate only two G700 deliveries so far in Q4 as compared to GD guidance for 27 in Q4 (14 in Oct/Nov).