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Wrapup sluggish economies weaken business jet sales


Nov 18 Weakening or sluggish economies around the globe are taking a toll on business aircraft sales and prices, forestalling an incipient recovery that had raised the hopes of plane makers and suppliers. Manufacturers attending the industry's largest jamboree this week predicted flat or lower sales next year, and possibly in 2017, before the arrival of new models stirs interest and buying later in the decade to restart industry growth. Prices also are falling. When buying last peaked in 2008, a new Bombardier Global 5000 aircraft, a so-called "super large" jet, cost about $52 million. "Now you can get the same aircraft with a better cockpit for $43 million, almost $10 million less," said Chad Anderson, president of Jetcraft, a major aircraft broker. Such discounts are distorting the market and even affecting used aircraft prices, said Richard Aboulafia, an analyst at the Teal Group.

Amid the weakness, Bombardier scaled back production of Global 5000 and long-range Global 6000 planes. Buyers are more cautions about big plane purchases and more used planes are on the market, industry experts said. Anderson said he expects Gulfstream will have to slow production of some of its G450 and G550 planes, also considered "super large" jets. Gulfstream said it is "evaluating 2016 production rates right now" and will announce them in late January. Even companies positioned with better-selling light and mid-sized jets have concerns. "2016 will be a challenge," said Marco Tulio Pellegrini, chief executive of Embraer Executive Jets, which has seven models mostly in the small and mid-size categories. "It will be as tough as 2015."

The shifts suggest a continued slow recovery from a 2011 nadir. But the activity at the National Business Aviation Association convention shows aircraft makers are not betting on weakness for long, and that a strong recovery is due by the end of the decade."Some countries, where we have good hopes in terms of selling our (Falcon) 7x and 8x long-range planes, like Brazil, like India like China, are getting slow a little bit," said Dassault Aviation Chief Executive Eric Trappier.

He and others see stronger sales in the United States and northern Europe. "So we cannot imagine China staying at this level of growth. It will be back to a better growth. They need to travel because they need to meet their customers," he said. Similarly, Anderson and others said corporations are renewing their jet fleets after the downturn in recent years, and are also taking advantage of lower prices. But there are fewer emotional buyers and more focus on value, he said. Manufacturers also are investing in new models in anticipation. Textron announced plans for a new large business jet, the Cessna Citation Hemisphere, due out in 2019. Fractional aircraft firm Flexjet placed a $2.4 billion order for 20 sleek supersonic AS2 jets from Aerion, with deliveries starting in 2023."Deals will be hard," said Anderson, whose business jet sales forecast predicts 7.4 percent annual growth over the next 10 years. "But with the North American demand that exists, deals can be had. They have to be done at the right price."

Your money shop your closets before hitting back to school sales


When Leticia Barr is ready to start back-to-school shopping, her first stop is going to be her own closets. A former teacher turned blogger, Barr knows that her family probably has on hand much of what they need already - from last year's binders that are still good to stashes of pencil-top erasers. With her daughter about to start seventh grade and a son going into fifth in Washington, DC, Barr's goal is to keep a lid on spending by focusing only on what they do not already have. The average family with kids in grades K-12 is forecast to spend an average of $673.57 this year, according to the National Retail Federation, much of that going toward clothing and electronics. Reuters spoke with Barr, also known as Tech Savvy Mama, to get her back-to-school shopping tips. Q: With free, expedited shipping available from so many retailers, do you find that this has changed shopping patterns because families don't need to stock up so much?A: It does take some of the pressure off. Some like to start the school year with their kids having everything they need. My kids are not growing quite as fast anymore, so they will get a couple of new t-shirts that are cute. But if things fit, they are fine with them. It's really important to assess what you already have. You can teach them that you don't need new things every year and that it's wasteful to throw things away. Then you can alleviate the financial stress and make kids great consumers too. 

Q: How can social media help with the process?A: Shop sites that cater to gently used clothes or use apps. In our community, it happens through the parent network, it's this informal thing we have going on. We also have a community organization close to our house that accepts clothes and household items. Q: What about the bigger ticket items, like computers?A: I encourage parents to look at what the kids are using at school. If it's Mac, get Mac; if it's Chromebook, get that.

I also tell parents: Don't buy the machine that's just right for now. Get the best you can because you want it to last a couple of years. And I do recommended extended warranties, if you can afford to do that. Q: Does the advice change as kids get closer to college?A: You want to look at machines you can upgrade. Buying memory is not all that expensive. 

Q: With one kid in middle school and one close, where do you come in on the great cell phone debate?A: Every family situation is different. Some get phones at much younger ages. They feel they need that lifeline, if they are carpooling or going on the bus. In terms of what to get, it depends on your mobile carrier, and how much you are willing to spend. My daughter was joking with her friends about getting grandpa's flip phone. You could text, but you had to press the number button three times to get the letter you wanted. I think most families pay from $30 to $80, and then the cost of the device. We ended up getting my daughter an unlocked phone and a cheap SIM card plan for under $20 a month. She gets a lot of texts and some data. She knows she can't watch videos on the bus - and she knows what the consequences are if she goes over her plan. When she's home, she has an old iPhone that's connected to wi-fi only and she texts through that. Q: Does getting a cell phone for an older child lead parents to get one sooner for a younger child?A: My son is 10 and we're not ready. Maybe next year it will be a possibility.