First-half GA billings set industry record

 - August 28, 2006, 1:01 PM

The General Aviation Manufacturers Association (GAMA) reported record-breaking billings for the first half of this year. In the first six months of this year, shipments
totaled 1,843 general aviation airplanes (including pistons and unpressurized turboprops), a 19.1-percent increase over the same period last year and the highest first-half total since 1982. Industry billings rose 34.9 percent to $8.8 billion.

“These are the highest recorded billings for the first half of a year in general aviation’s history,” said GAMA president and CEO Pete Bunce. “With our manufacturers’ current backlog, we are confident that this trend will continue throughout the remainder of the year.”

Pressurized turboprops experienced the greatest delivery increase–34.3 percent, from 96 aircraft in the first six months of last year to 129 in the same period this year. Business jet shipments also had a healthy increase, with a 27.7-percent surge in year-over-year shipments from 325 to 415. This figure included seven BBJs in the first half of this year versus none in the same period last year. At press time, there were 86 BBJs in service and seven in completion centers.

Airbus delivered five ACJs in the first half of this year and at press time said it had received orders for 14 more. The ACJ series is composed of the A318 Elite, A320 Prestige and original A319 ACJ.

The first half of this year also saw considerably improved sales and deliveries of Cessna Citations compared with the first half of last year. Deliveries of 78 Citations in the second quarter brought first-half shipments to 144 compared with 118 in the same period last year.

“We plan to deliver about 300 Citations this year [versus 247 last year], and we expect new orders will exceed deliveries at a level consistent with last year’s order rate of about 329,” said the manufacturer. Cessna last delivered more than 300 Citations in 2002. At the end of the first half, Cessna said it had orders for 165 Citations. “Given this continued vitality in the market,” officials said, “we have established our preliminary 2007 production plan at 370 jets.”

If Cessna realizes that shipment level next year, it will set an annual delivery record for a single company. “Even at this higher production level we are about 90 percent sold out next year, with only 35 available slots,” officials said. The company is expecting a “significant increase” in deliveries in 2008 also, but declined to give a specific projection.

Lewis Campbell, president, chairman and CEO of Cessna parent Textron, said, “When this year is all said and done, we will have more orders than deliveries [for Citations]. But given the fact that we don’t have a lot of near-term slots, we need something to stimulate orders, like some new product announcements that might happen later this year.

“Jack Pelton [chairman, president and CEO of Cessna] and I have spent a lot of time on new products…a lot of time, because what we have learned since I came here in 1992 is if you are not introducing new products at a regular pace and cadence and upgrading products at a regular pace and cadence you are going to slip behind.”

EADS Socata, which delivered 17 TBM 850 turboprop singles in the first half of this year, expects to ship another 25 units by the end of the year, 35 percent more than the 31 TBM 700s it delivered annually in 2005 and 2004. To date, the French manufacturer said it has received orders for 32 aircraft for delivery in the U.S. next year. “These new orders bring the TBM backlog to more than 50 aircraft,” said EADS Socata chairman and CEO Stephane Mayer.

Embraer delivered nine Legacy 600s in the first half of this year compared with six in the same period last year and three in the first half of 2004. Last year, Embraer shipped 20 Legacy 600s versus 13 in 2004. The Brazilian manufacturer expects to deliver between 25 and 30 Legacy 600s annually this year and next.

As of June 30, a total of 70 Legacy 600s have been delivered to 18 countries.

Gulfstream delivered 54 business jets in the first half of this year versus 41 in the first half of last year. Shipments of large aircraft (G350 through G550) increased to 34 from 29 in the two six-month periods, and deliveries of midsize/super-midsize jets (G100 through G200) also jumped–to 20 in the first six months of this year versus 12 in the same period last year.

“We will deliver 72 large aircraft this year,” said Nicholas Chabraja, chairman and CEO of Gulfstream parent General Dynamics. Should Gulfstream meet that large-airplane goal, and if the other jets including the new G150 continue to sell well, the company would be looking at a record year, surpassing 2001’s 101 aircraft shipped. “We had intended to deliver 79 [large aircraft] in 2007, but we’ve upped that to 82,” Chabraja said. “In 2008 we are going to deliver 83 [large aircraft].”

Chabraja commented on the challenges of unexpected growth in the market. “Orders and the market are not the issue. The pipeline is large and growing. The biggest problem is this large backlog, which makes for quite a wait. People are buying on the basis of a 2009 green delivery for the large aircraft. It’s a tough way to satisfy your customers.”

He added that Gulfstream “had to work hard on the supply chain and we have had some fits and starts. Our bigger issue is our own facility and workforce. We are adding people but bringing them on in a measured way. We are building a new facility for production of the large aircraft that will eventually result in increased capacity.”

Gulfstream is also looking to buy pre-owned aircraft, according to Chabraja. “We have essentially no pre-owned [airplanes] available for sale. In fact, we are searching for pre-owned [airplanes] to provide to customers who need temporary lift while they wait more than two years for their new aircraft.” Then he made a comment OEM executives seldom make: “Frankly, a little slowdown in demand wouldn’t hurt us a whole lot right now.”

Raytheon Aircraft Officially on the Block–Again
Raytheon Aircraft posted net quarter sales of $745 million, up 8 percent from $687 million in the second quarter of last year, thanks to more deliveries of new aircraft. The division recorded a quarterly profit of $41 million versus $33 million in the same period last year.

The company delivered 36 business jets and 33 King Airs in the second quarter, bringing first-half deliveries to 58 jets and 54 King Airs. By year-end, it plans to deliver a total of 156 business jets (including five super-midsize Hawker 4000s in the fourth quarter) and 142 King Airs; last year it shipped 141 jets and 114 King Airs.

Sales intake during the second quarter was slightly less strong, with 28 jets and 38 King Airs sold, versus 28 jets and 42 King Airs in the same three-month period last year.

Despite the division’s strong financial performance, Raytheon announced that it “intends to explore strategic alternatives for Raytheon Aircraft, which might include, among others, a potential sale of the business, an initial public offering or spin-off to shareholders or some combination thereof,” meaning that the aircraft manufacturer is again on the block.

Raytheon said the sale of this division would not involve fractional provider Flight Options or Raytheon Airline Aviation Services. The company has retained Credit Suisse to assist in the sale of Raytheon Aircraft.

Despite the record pace of new general aviation shipments, GAMA sounded a note of concern. “We are encouraged by this continued positive trend, but we are closely monitoring the potential impact that rising fuel prices and interest rates may have on our dynamic worldwide industry,” noted Bunce.