Rough air will precede OEMs’ smoother skies

 - October 2, 2007, 11:53 AM

Most of the major business airplane manufacturers believe that the growing inconvenience for business travelers on the airlines as a result of increased security after September 11 bodes well for the health of the industry in the mid- and far term. Fractional-ownership programs will benefit particularly, according to most manufacturers, but not before the weakening economy recovers and the aftermath takes its toll, including layoffs, declining orders for some models and production adjustments by most manufacturers.

While all the companies said they are optimistic about the future, the one-two blast of an economic downturn coupled with the September 11 aftermath is being weathered better by some companies than others. For example, the nationwide grounding of general aviation VFR operations prevented Piper, among other manufacturers, from conducting production flight test on finished airplanes. But the company kept manufacturing them, apparently assuming the restrictions would be lifted quickly. Soon, Piper had more than 20 finished airplanes on its ramp, according to marketing manager Mark Miller.

Piper consequently closed its plant for two weeks, from September 24 to October 8, to allow flight testing to catch up with production. Over the past several months the Vero Beach, Fla. company has also dismissed about 250 workers, one-sixth of its 1,500 total.

At the beginning of the year Piper projected it would deliver 538 airplanes (143 more than last year), but as the economy lost steam, so did Piper’s estimates. The company now expects to deliver 400 airplanes this year and another 400 next year–barely just five airplanes more than last year. “But this is a fluid situation,” added Miller. At press time, Piper said it couldn’t single out its only turbine airplane, Meridian, but it estimated the turboprop single will comprise more than 25 percent of total deliveries. Piper started delivering the airplane in the fourth quarter of last year, shipping 18 units. Through the third quarter of this year, 81 Meridians have been delivered.

Dassault Falcon Jet (DFJ) of Teterboro, N.J., had a strong start this year, but has seen a slowdown in orders for the second and third quarters. Nevertheless, “Production and employment levels remain unchanged because of a strong backlog and a limited number of cancellations,” according to DFJ president John Rosanvallon. “I think it’s fair to say that for next year, because we have a good backlog, we do not anticipate any production cuts, but we are obviously monitoring very closely the situation for 2003 and beyond.” This year through the third quarter, Dassault delivered 58 Falcons, compared with 51 during the same nine-month period last year.

Since the events of September 11, Rosanvallon said DFJ has not seen a strong positive or negative effect on the number of potential prospects discussing orders for new airplanes. He said DFJ is in “no way” slowing down product R&D. The new Falcon 2000EX is still on schedule to fly later this year, and development of the new Falcon FNX continues.