Key Takeaway
Our eighth semi-annual business jet survey indicates some optimism, though the sales growth outlook among brokers is for a 3.5% decline y-o-y in 2020. From last November to January 2020, we received detailed responses from >70 business jet brokers globally. The sentiment index moved down by 1 point to 5.7 on a 10-point scale vs a 6.7 rating in our July 2019 survey and a 5.6 rating in our Jan 2019 survey.

Brokers Assume Unit Sales Decline in 2020. The average expected decrease for 2020 is 2.5% for new deliveries, according to our respondents. This compares to 2019E deliveries for the major OEMs up 12% y-o-y, which is the first up year since 2014. Our survey found only 20% of respondents expected an increase in unit sales volume for 2020 versus 2019, while about half had flat expectations and 33% have accounted for a 2020 volume decline. As we consider the reasons for the lack of an upturn in aggregate demand for business jets, we note that respondents cited global macro uncertainty (26%), excess used inventory (26%), and decline in residual values (23%) as shown in Ex. 6.

Cessna Generates Highest Customer Interest. 41% of respondents selected Cessna as the product line with the most customer interest, vs 21% in the July 2019 survey (Ex.16). Gulfstream and Bombardier followed with 28% and 14% of respondents this survey (vs
42% and 16%, respectively, in our last survey). This is a sizable change from our last several surveys.

Heavyweight Competition. Respondents were mixed on the Longitude w/ comments on pg. 11. In terms of the heavyweight competition, brokers respondents were equally divided on the Global 7500 while others believe the Gulfstream brand and performance will allow the G650 to continue to prosper. The initial reception on the G700 suggest cannibalization. The Global 5500/6500 appear lackluster.

New Model Interest. 27% of respondents believe the G600 is best positioned for success. The second most popular new model was the G500, according to 23% of respondents. The G500 offers new technology vs the Global 5500 and is in the market several years
earlier than the Dassault 6X. New market opportunities include Gulfstream's potential to have a jet between the G280 and G500, in the $30MM range.

Steeper Discounting on Used Aircraft. The average weighted discount of responses was 14%, this is in line with our July survey. Approximately 46% of brokers stated that the avg discount between a new and used jet is 11-15%. In terms of new models experiencing
price weakness, the Legacy 500, Legacy 450, and Global 7500 were cited by 33%, 19%, and 15% of respondents, respectively.

Jefferies Biz Jet Delivery Forecast: Flat in 2020. We forecast business jet unit deliveries of 658 units in 2020, up from the 651 we expect to be delivered in 2019 (Ex. 31), driven by growth from Embraer and Gulfstream