Wayne State University Business Jets and Covid 19 Review Article and Summary REQUIRED: Please read a current WSJ article (must not be older than 3 months)

Wayne State University Business Jets and Covid 19 Review Article and Summary REQUIRED:

Please read a current WSJ article (must not be older than 3 months) and provide the following:

1. Post the name of your WSJ Article in the Subject Line.

2. Provide a summary of the article( 300 words) and list three questions for the discussion of the article by Wednesday.

3. Provide your reference for the WSJ article.

4. Reply to two other student posts by Sunday. (I will post the discussion of two students here once i have it and then you need to reply to those discussions as well) Business Jets: Could This Time Really Be
Different? Private aviation is a notoriously
cyclical business, but the Covid-19 crisis also
makes business jets more attractive
Sindreu, Jon . Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 May 2020.
ProQuest document link
FULL TEXT
The prospect of long waits at germ-filled airports makes owning a business jet an attractive proposition now for
executives. At the same time, a sharp recession could drain the corporate treasury of funds to buy one.
The private-aviation industry is stuck in this tug of war unleashed by the Covid-19 crisis.
Short term, the pandemic has been quite damaging. This month, Ohio-based NetJets—the world’s largest privateplane operator—more than halved the number of aircraft it plans to receive this year to 25 from around 60 and
announced job cuts in the U.S. and Europe. This is in part a result of business-jet makers being forced to furlough
employees, affecting production.
Private planes occupy an infamously cyclical niche within the aviation industry. During the global financial crisis,
as corporations slashed budgets and sought to appear less opulent to the public, the number of business jets
shipped world-wide fell from over 1,300 in 2008 to under 700 in 2011, according to the General Aviation
Manufacturers Association. Demand didn’t edge up until 2018 and 2019, when new aircraft models sparked fresh
interest.
Without face-to-face negotiations, transactions have frozen. As Scott Donnelly, chief executive of Cessna-owner
Textron, put it in a recent call with analysts, developing new customers is very difficult unless “folks can do demo
rides.”
As lockdowns ease, though, this time could really be different—at least to a point.
In 2008, roughly a fifth of business aircraft were up for sale. This time, owners are hanging on to them. The latest
quarterly report by data provider Amstat shows only a small uptick in the share of business jets on the market in
March and April and only older, heavier models are affected. Younger planes are keeping their resale value.
Brokers appear optimistic about a summer comeback. MySky, a spend-management platform for private-plane
owners and operators, reports a jump in interest from corporations, especially among prospective first-time jet
users looking for secondhand models. Executives are seeking ways to avoid cumbersome temperature checks at
airports, not to mention protect their own health.
Investors are also somewhat more upbeat about business jets than they are about aviation more generally. The
shares of Textron and Dassault—the subsector’s most representative stocks—are down 40% this year. Those of
airlines, commercial-jet makers and engine manufacturers have fallen close to 60% on average.
None of this heralds a golden age for the makers of business aircraft. Many companies will inevitably be cashstrapped in the post-lockdown economy. Also, any new demand that does emerge will probably come in the form
of chartering planes or fractional ownership—benefiting the likes of NetJets and Flexjet—rather than companies
looking to buy their own jets.
Buyers may also gravitate toward cheaper, smaller planes rather than the traditionally popular long-range models
where manufacturers make big margins, such as the Dassault Falcon 7X, the Gulfstream G650 or Bombardier’s
state-of-the-art Global 7500. .. This is on top of a structural economic slowdown in China and other emerging
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markets, which was a challenge for these long-range aircraft well before Covid-19, and mounting environmental
concerns.Yet business jets may fly through a recession caused by a pandemic better than they did through one
caused by a financial crisis. If they do, it will say as much about the financial health of corporate America as the
health concerns of its executives. This is a market all investors might benefit from watching.
Write to Jon Sindreu at jon.sindreu@wsj.com
Credit: By Jon Sindreu
DETAILS
Subject:
Aircraft; Aviation; Recessions; Fractional aircraft ownership; International finance;
Economic crisis; Coronaviruses; Pandemics; Executives; COVID-19
Publication title:
Wall Street Journal (Online); New York, N.Y.
Publication year:
2020
Publication date:
May 23, 2020
column:
Heard on the Street
Section:
Markets
Publisher:
Dow Jones &Company Inc
Place of publication:
New York, N.Y.
Country of publication:
United States, New York, N.Y.
Publication subject:
Business And Economics
e-ISSN:
25749579
Source type:
Newspapers
Language of publication:
English
Document type:
Opinions, Commentary
ProQuest document ID:
2405842932
Document URL:
https://search.proquest.com/docview/2405842932?accountid=10378
Copyright:
Copyright 2020 Dow Jones &Company, Inc. All Rights Reserved.
Last updated:
2020-06-11
Database:
ABI/INFORM Global,Global Newsstream
LINKS
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