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Certification of Bombardier Global 7500 Puts Pressure on G650ER Values

November 26, 2018

With a two year delay to certification the Global 7500 has finally been certificated allowing for deliveries to commence but as with the service entry of any new dedicated business jet, there exists a risk that operators will trade-in existing aircraft thereby causing a problem for values.

The size and capability of the Bombardier Global 7500 – previously called the Global 7000 – needs to be placed into context. The Global 7500 is longer than the BBJ with a not too dissimilar price tag – if the BBJ was still being produced. The cost of the Global 7500 is approximately $72 million which is some $3 million more than the Gulfstream G650ER with which it competes. Both have similar ranges of more than 7,000 nautical miles but the Global 75000 is powered the new GE Passport engine. The Global 75000 has a four zones and features sufficient capacity for a double bed while offering a 20 percent large galley and 80 percent large windows compared to the existing Global 6000. With the Global 7500 and 8000 effectively replacing the Global 6000 there is a risk to values of the outgoing Global 6000. The values of the Global 6000 have already suffered in the last few years. In 2016 a new Global 6000 would have cost approximately $62 million but the combination of competitive products in the form of the Gulfstream G650ER and discounting means that current pricing of the aircraft is fortunate to equate to $40 million representing a 30 percent fall or more in only two years.

Initially, in 2014, prices of the G650ER actually rose from some $71 million to $73 million by the year end such was the demand for the aircraft. But after the initial enthusiasm for the aircraft dissipated pricing fall to $60 million as of 2016 and to the $50 million of today. More recently, there has been some stability in G650ER values as the market has appreciated that pricing is realistic and because Gulfstream as well as Bombardier have preferred to offer a disciplined approach to pricing at the expense of maintaining production rates. Some 20 Global 6500s could be delivered during 2019 including a unit to Nicki Lauda.

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