October 31, 2016 / 6:44 PM / 3 years ago

Business jet makers focus on upgrades, services amid slump

ORLANDO, Fla. (Reuters) - Companies that make business jets and engines said on Monday they are trying to sell services and upgrades to offset a sustained downturn in demand for new globe-hopping planes.

FILE PHOTO -- Shareholders line up to view Bombardier's CS300 aircraft following their annual general meeting in Mirabel, Quebec, Canada April 29, 2016. REUTERS/Christinne Muschi/File Photo

The slowdown in deliveries of new business jets, now in its eighth year, is not forecast to improve significantly until new models come into service in 2018 and 2019. In the interim, manufacturers are positioning to capture more sales of products and services after planes are sold.

Canadian plane and train maker Bombardier Inc (BBDb.TO) said on Monday it is expanding support operations on three continents, while high-end jet maker Gulfstream (GD.N) said it also sees services as a key to growth.

Engine maker Pratt & Whitney (UTX.N) said it is revamping its service programme to give customers the option of buying an engine upgrade instead of overhauling existing engines.

Bombardier said it is hiring 200 technicians and expanding service centres in Europe, the United States and Asia. It declined to specify how much it is investing and what sales growth it expects from the expansion.

“We are focused on growing our aftermarket business,” Jean-Christophe Gallagher, vice president of strategy and marketing at Bombardier Business Aircraft, said in an interview at the National Business Aviation Association conference here.

Bombardier will open service facilities in Tianjin, China, and Biggin Hill Airport, outside London, early next year. The company also will triple the size of its service centre in Fort Lauderdale, Florida. All perform maintenance, modifications, equipment upgrades and avionics installations.

Gulfstream said on Monday its two newest jets, the G500 and G600, are ahead of schedule to enter service in late 2017 and 2018, respectively. But it too is selling services and upgrades.

“I see it as a growth engine for us,” Mark Burns, president of Gulfstream, said in an interview. He sees sales of broadband internet systems offsetting a reluctance by some plane owners to invest in upgrades. Low demand for planes has depressed used plane prices, making investments harder to justify.

The more than 4,500 Bombardier business jets now flying represent “a great opportunity for us” to increase aftermarket sales to make up for fewer plane deliveries, Gallagher added.

Gulfstream has delivered more than 2,500 jets to customers, and offers a new system by Honeywell International (HON.N) that can let two users stream Netflix while a third uses video chat.

“I think connectivity is going to be huge” for plane owners, Burns said.

Reporting by Alwyn Scott; Editing by Bill Trott, Cynthia Osterman and Bernard Orr

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