Private Aviation: Turbulence Ahead for Textron, Bombardier, and Embraer

Our Private Aviation industry, once buoyed by pandemic-driven demand, is now encountering headwinds.

With a reduced appetite for owning a private jet, manufacturers like Textron's Cessna, Bombardier, and Embraer face significant exposure.

The market dynamics signal a worrying situation for an industry at the crossroads of change.

Pandemic Boom, Post-Pandemic Blues

During the pandemic, Private Aviation became a lifeline for business leaders and affluent travellers seeking to avoid crowded commercial flights.

This surge (reported like Private Aviation would change forever!) in demand drove record deliveries and optimistic forecasts.

Now, with demand normalising, manufacturers heavily reliant on fleet operators are feeling the pinch.

The Fleet Operator Dilemma

Embraer, Bombardier, and Textron Cessna stand out for their dependence on fleet operators, who are seeing hour usage scale back as travel habits shift.

Embraer's best-selling jets, the Phenom 300 and Praetor 500 are particularly exposed, with 33% and 47% of their fleets, respectively, controlled by operators like NetJets and Flexjet.

Similarly, Bombardier has 16% of its aircraft in fleet operator hands, notably the Challenger 300, 350, and 3500 models, which dominate charter fleets.

Textron, however, faces the sharpest blow: Wheels Up, a key operator, has announced plans to offload 76 Textron jets, a move that could disrupt both the secondary market and new sales.

Textron's reliance on Wheels Up has left it particularly vulnerable,

This highlights the growing concern over the manufacturer's dependence on financially troubled operators.

Flooding the Market with Used Jets

Wheels Up's decision to divest its Textron fleet—including Citation CJ3s and XLS models—underscores the vulnerability of manufacturers reliant on fleet operators.

This "liquidation strategy", aimed at streamlining operations around Embraer 300s and Bombardier Challengers, risks flooding the market with used aircraft even further; it is already at a tipping point.

The glut of used Textron jets hitting the secondary market could crush residual values and erode demand for new aircraft.

The implications of such a move could reverberate across the industry, putting downward pressure on pricing and order books.

The Buffer of Backlogs

Bombardier and Embraer currently have 1.7 years and 2.5 years backlogs, respectively, providing a temporary shield from immediate market pressures.

Yet these backlogs are not indefinite; sustained market oversaturation and weakened demand for new aircraft could erode this buffer.

"It's only a matter of time before backlogs shrink, and manufacturers are forced to cut production,"

Source: From an insider quoted on research docs.

This looming reality could put significant strain on manufacturers' bottom lines.

A Tale of Two Strategies

Not all players are equally exposed. Gulfstream and Dassault, with their focus on ultra-high-net-worth individuals and government contracts, are better insulated.

Gulfstream's reliance on private owners, comprising only 5.3% of its fleet in operator's hands, and Dassault's minimal exposure stand in stark contrast to Textron's and Bombardier's reliance on operators like NetJets and Wheels Up.

"Dassault's strategy of targeting corporations and governments has proven far more resilient than relying on volatile charter operators"

What Lies Ahead for Private Aviation?

The normalisation of private flying is finally casting a spotlight on the vulnerabilities of a market dependent on charter and fractional operators.

For manufacturers like Textron, Bombardier, and Embraer, the challenge lies in balancing exposure to these operators while exploring new avenues of growth.

"The golden age of pandemic-driven private flying is over, and manufacturers will need to adapt—or face the consequences," Source: an analyst quote

Conclusion: A Market at a Crossroads

Private Aviation's boom may be tapering, but its potential remains significant if manufacturers are not so reliant on charter operators as customers - especially if one or two can no longer support the fleet size with debt alone and piling losses.  

The ability to adapt to changing demand patterns and mitigate reliance on volatile operators will define the next chapter for manufacturers.

In truth, no matter how many roadshows trumpet the market’s buoyancy or panels insist it’s “perfectly balanced,” the harsh reality is undeniable: larger operators are reporting losses that simply cannot be sustained. Manufacturers may currently enjoy a fleeting reprieve thanks to backlog orders, but the industry’s temperature is dropping fast, with demand for new aircraft cooling sharply. The overheads of manufacturers are increasingly misaligned with dwindling order books, and, compounding this instability, a tsunami of aircraft is flooding the global inventory.

If this surge continues unchecked, the asset market will inevitably face a seismic correction—one that no amount of optimistic rhetoric can delay.

Warmest,

John

Data and Quote Sources: Bloomberg, Jet Net, Equity Analysts.