While shares of Bombardier Inc. (OTCQX:BDRAF) are flying high on gains of 25% this year, the aircraft industry continues to face sharply lower levels of business jet flight activity as it is impacted by elevated oil prices and the slowing global economy. The industry saw year-over-year declines of 11% in July and the Canadian aerospace giant is among the names getting hit most.
Along with Paris-based Dassault Aviation SA, Bombardier leads the way with declines of 10% so far in 2008. It has also experienced a 7% dip in its cycles during the past 12 months. These include both takeoffs and landings.
UBS analyst David Strauss said flight activity is a leading indicator of the business jet aftermarket and a gauge of general market conditions. The declines have been driven primarily by reduced charter activity, he told clients in a note that detailed the domestic and international flight activity results as reported by the Federal Aviation Administration and ATO En Route and Oceanic Services.
The good news is that estimates show Bombardier aircraft flew 23% of all business jet flights in the past year, second to only Cessna Aircraft Co. at 39%. Cessna also led the way with 33% of the installed fleet in July, followed by Bombardier at 22%.