Honeywell International Inc.
) recently offered a sneak peek into its forecasts for the
commercial aviation industry from 2013 to 2022. Honeywell's
forecasts, outlined in its 22nd annual Business Aviation Outlook,
is based on macroeconomic analyses, information gathered from
interviews with over 1,500 non-fractional global business jet
operators, and key inputs from industry experts and OEMs
(original equipment manufacturers).
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According to the excerpts from the outlook, 9,250 new business
jets, worth over $250 billion, are expected to be delivered
during this period. This includes the delivery of about 600 to
625 new business jets in 2013, with the pace of production
expected to pick up significantly in 2014.
Honeywell's survey further revealed that operators intend to
purchase new jets to the tune of about 28% of their fleets over
the next five years, either as a replacement or as a capacity
extension. Most of these purchases are likely to be focused on
larger cabin aircraft classes ranging from super midsize to the
ultra-long range and business liners, accounting for over 80% of
all expenditures on new business jets.
Geographically, these purchases are likely to be centered on key
emerging markets, although reflecting a slight tempering compared
with the year-ago period. Asia Pacific operators expect to have
new jet acquisitions of about 24% of their fleet, down from 34%
reported last year despite a solid Chinese performance. About 26%
of the total fleet in the Middle East and Africa are projected to
be replaced or added with a new jet, down from 32% last year.
Latin America is likely to replace or add about 39% of the total
fleet with new jet purchases, which remains unchanged versus last
year's result. New jet purchase plan for North America has
improved to the world average of 28% from 25% reported last year.
However, Europe's purchase expectations declined this year to 25%
from 30%-33% reported in the previous three surveys.
The key takeaways in this year's survey include two common themes
that emerged from operator responses around the world. Although
demand from developing markets are expected to remain
significantly high compared to mature markets, it would continue
to be affected by short-term economic conditions and regional
turmoil. On the other hand, government's budgetary constraints,
debt, and aircraft-related legislation and regulations are the
factors that may influence near-term purchase plans.
Based in Morris Township, NJ, Honeywell manufactures a wide range
of aerospace products and services, control, sensing and security
technologies for buildings, homes and industry, turbochargers,
automotive products, specialty chemicals, electronic and advanced
materials, process technology for refining and petrochemicals and
energy efficient products and solutions for homes, business and
Honeywell organizes its business into four operating segments -
Aerospace, Automation and Control Solutions, Performance
Materials and Technologies, and Transportation Systems.
Honeywell's diversified business portfolio mitigates operating
risks and enables it to earn consistent above-average returns.
Honeywell has a Zacks Rank #2 (Buy). Other companies in the
industry worth mentioning include
Hutchison Whampoa Ltd.
), each carrying a Zacks Rank #2 (Buy).