* Industry deliveries to drop 10 pct in 2016 - Bombardier
* Buyers in Middle East, Brazil, Russia hesitant
* Makers cut output to protect prices
By Cyril Altmeyer
GENEVA, May 26 (Reuters) - Business jet manufacturers are
locked in a price battle as deliveries of new aircraft remain
weak and recently sold aircraft come back onto the market at
attractive prices, delegates at an annual corporate jet
convention said.
Demand for business jets reflects the health of economies
and makers of corporate planes have been hard hit since the
financial crisis.
Bombardier BBDb.TO , unveiling its 10-year market forecast
at the EBACE show in Geneva, projected industry deliveries to
drop 10 percent this year to 540-560 jets after rising 1 percent
in 2015. That compares with the peak of 811 deliveries in 2008.
"There is more offer than demand, there are too many
airplanes in production," said Marco Tuilo Pellegrini, president
and CEO of Embraer Executive Jets EMBR3.SA , highlighting
competition from the market for used jets.
"The price war is being felt across the whole range," Eric
Trappier, CEO of Dassault Aviation AVMD.PA , told Reuters.
Pellegrini said the economic downturn in Brazil meant it was
hard to sell business jets there, while the drop in oil prices
had made potential purchasers in the Middle East and Russia more
hesitant.
Production cuts by some manufacturers will also weigh on
deliveries this year, though Bombardier sees a pick up in global
growth boosting demand over its 10-year forecast horizon.
Bombardier last year decided to cut its output and expects
to deliver 150 business jets this year against 200 last year. It
says this strategy means its aircraft are retaining value better
than rivals.
"Many people that come in to buy an aircraft already have an
old one, so the price that they can get for their used aircraft
is what's going to enable them to buy a new one, so we have to
protect the pricing of pre-owned aircraft," said Brad Nolen,
Director Product Strategy and Market Development of Bombardier.
However, there were some signs of optimism for business
aviation, with the North American market the most dynamic,
expected to account for almost half of the 8,300 deliveries
forecast over the next 10 years, according to Bombardier.
Manufacturer Gulfstream Aerospace, part of General Dynamics (NYSE:GD)
GD.N , said Asia had been strong in late 2015 and early 2016,
echoed by aircraft sales company Jetcraft, which said it had had
its best first quarter ever in 2016.
"Even though China is a little bit slower than it used to
be, we're actually seeing quite a bit of activity and not just
in China," Chief Operating Officer Peter Antonenko said,
pointing to deals in Japan, Indonesia and Malaysia.