Bombardier Bets All On Private Jets Riding Out Storm
The profit margins are higher for top-end aircraft, and buyers are less likely to haggle over price
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March 17, 2020 - by Jason Kirby for ft.com
Manufacturer slims down to focus on corporate aviation just as coronavirus hits air travel
But not all business jet segments respond to downturns the same way. While light-sized aircraft such as Bombardier's LearJet brand and to a lesser extent its medium-sized Challenger family of aircraft are more exposed to a slowdown, the company has steadily geared itself to the more resilient top end of the market.
Its Global family of luxury jets target customers who "tend to buy their jets out of the company balance sheet or a Samsonite full of cash", according to Richard Aboulafia, an aerospace analyst at Virginia-based Teal Group, a consulting firm.
The profit margins are higher for top-end aircraft, and buyers are less likely to haggle over price.
Mr Aboulafia said that more than 80-90 per cent of Bombardier's business jet sales came from the top half of the market — which he defines as aircraft that cost more than $26m and that avoided a sales decline in the Great Recession.
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