BOMBARDIER EXPECTS LUXURY JET DEMAND TO SOAR

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Bombardier Aerospace says it expects demand for its luxury jets to continue to grow over the next decade, unabated by fears of a looming U.S. recession.

The Montreal manufacturer said on Wednesday in its annual aircraft market forecast it now expects 13,200 new business jet deliveries worldwide by 2017, for a combined book value of US$300-billion.

The new estimate is a 33% increase over last year's forecast, and a sizable gain on the 620 that the industry delivered annually on average over the past decade.

While Bombardier is certainly riding the tailwinds of a general upswing in the aerospace sector, the key to the business jet division's success in recent years has been its reduced dependence on corporate America to turn a profit.

Just four years ago, 70% of its business jet orders came from the United States.

Last year, only about a third did.

The strategy appears to be working as well, with 2007 producing a record 452 executive jet orders worldwide for Bombardier, up 64% year over year.

Bombardier said Wednesday it expects demand to continue to grow annually until at least 2017, driven by the "sustained vigor" of the European market, and in particular, demand in Russia and the other former Eastern Bloc countries.

"As we transition to a more international customer base that features less emphasis on the U.S., as well as a structural shift towards larger and more cost-effective aircraft, Bombardier's key product families - business jets and regional aircraft - are expected to continue to generate strong interest across all markets," said Mairead Lavery, Bombardier Aerospace vice-president of strategy and business development, in a statement Wednesday.

But while Bombardier is the industry leader in business jet sales by revenue, it shouldn't expect that its market share will continue to grow as rapidly with increased competition - including two new Embraer executive jets - hitting the market in the coming years, according to Jacques Kavafian, Research Capital analyst.

Bombardier is also facing similar competition in its commercial aircraft division, with Japan's Mitsubishi Aircraft Corp. launching a new 70-to-90 seat regional jet, joining other new entrants from China and in Russia.

Still, like its business jet division, Bombardier said it expects demand for commercial aircraft to continue to grow over the next two decades, leading to the delivery of 12,900 20-to-149 seat aircraft worldwide over the same time period - a 15% increase over last year's forecast.

With fuel prices high, Bombardier said it expects the trend to continue to skew towards larger planes.It is considering stretching its popular 70-seat Q400 turboprop to a 90-seat version, and potentially launching its largest plane yet, the 110-to-130 seat CSeries, later this year.