Business-jet deliveries still flying high

 - September 14, 2006, 11:03 AM

After coming off an all-time record for billings and a four-year high in new turbine airplane deliveries last year, the industry continued flying high in
the first quarter of this year. “Manufacturers recorded the highest first-quarter billings in history”: $4 billion, an increase of 39.7 percent over the first quarter of 2005.

According to General Aviation Manufacturers Association figures released last month, OEMs delivered 189 business jets and 47 business turboprops, a 36- and 34-percent increase, respectively, over the 139 jets and 35 turboprops shipped in the first quarter of last year.

Boeing made a big turnaround in deliveries, going from zero BBJs shipped in the first quarter of last year to four this year. BBJ deliveries for this year are expected to easily surpass the five aircraft delivered last year. Boeing said last month that it averaged one BBJ order in each of the past six months, bringing the total order book to 108.

At press time there were 86 BBJs in operation worldwide and at least five more in various stages of completion.

Airbus, with ACJ deliveries close behind Boeing’s numbers, has clarified what qualifies as an ACJ rather than an executive single-aisle airliner. The ACJ line includes not only the original A319-based Airbus Corporate Jetliner, but now also the A318-based Elite and the A320-based Prestige. There is as yet no A321-based ACJ.

Cessna delivered 66 civil Citations in the first quarter compared with 53 in the same period last year. “We are going to be stepping up [deliveries] each quarter in small amounts to reach the projection of shipping 295 to 300 Citations this year,” said Lewis Campbell, chairman, president and CEO of Cessna parent Textron. Expect deliveries to increase next year, Campbell noted, including 40 to 50 Citation Mustangs and the start of Citation Encore+ shipments.

Despite lack of near-term availability, Cessna received orders for 111 Citations in the first quarter compared with 73 in the first quarter of last year. The quarter’s numbers included orders for 41 aircraft from two fleet operators. “Nonetheless, the remaining orders for 70 aircraft were more than we had expected,” Campbell said. Textron reported that total orders for delivery next year are closing in on
335 Citations, including nearly 50 Mustangs. “The next Mustang, if ordered today, [will be available for delivery] in the third quarter of 2009.”

Expect Cessna to introduce “one more variant of an existing model that we are going to do pretty quickly,” Campbell said, but he wouldn’t elaborate. He did say, “There is a re-modernization plan for the entire fleet. Over a five- to 10-year product development plan, new and variant models are included. [The company is] looking at everything from smaller to bigger.”

Dassault nearly doubled deliveries–from five in the first quarter a year ago to nine in the first quarter of this year. The French manufacturer said early last month it had an order backlog of “more than 200” Falcons and expected to deliver “more than 60 aircraft” this year, exceeding the 51 delivered last year and perhaps–based on record orders in 2005 for 123 aircraft–surpassing the 63 shipped in 2004.

“A year ago at this same event [the European Business Aviation Convention & Exhibition last month], I was telling you that the market was strong and Dassault was seeing a robust rate of sales,” said Dassault chairman and CEO Charles Edelstenne. “I must admit, I didn’t expect 2005 to break our previous sales record by 25 percent.” Last year marked the first time the company sold more than 100 Falcons in one year, “and this without the benefit of multiple sales to fractional providers.”

Orders Climb at Gulfstream
Gulfstream appears to be off to a good start in meeting its projection of delivering 72 or 73 “large aircraft” (G350s, G450s, G500s and G550s) this year. According to Nicholas Chabraja, chairman and CEO of parent company General Dynamics, “We had [first quarter] orders for more aircraft, both in units and dollars,” than in the same quarter last year.

Gulfstream delivered 18 large aircraft in the first quarter of this year compared with 14 in the same period last year. This year’s production of large aircraft (built in Savannah, Ga.) is fully sold, as it is through the third quarter of next year, Chabraja said. General Dynamics projects Gulfstream will deliver 80 large aircraft next year.
The company delivered seven midsize aircraft (G150s and G200s built in Israel) in the first quarter, one more than in the same period a year ago. In total, the Savannah-based OEM expects to deliver a record 111 business jets this year and 127 next year.

International orders for Gulfstreams are increasing at a more rapid rate than orders in North America, but the North American segment is still the larger slice of business. “It’s roughly two-thirds of our orders, but that’s gone from what used to be 80 percent down to 75 percent to 70 percent and now two-thirds,” Chabraja explained.
“Our biggest problem is not absence of demand; it’s absence of product,” Chabraja said. “People have to wait an awfully long time–several years in some cases–to get an airplane.” He also said the new facilities the company announced recently won’t drive production until 2011 and beyond.

As for new models, Chabraja said, “We intend to bring out either a new aircraft or evolved aircraft every seven to eight years.” What will they be? “I can say they will go farther, faster and in greater cabin comfort than their predecessors. But we won’t talk about them a lot.”

There is “significant work apace,” he added. “We are funding it. And it involves several products, not just one.”

“Overall, Raytheon Aircraft had the best quarter” in its history in terms of financial performance, said William Swanson, chairman and CEO of parent Raytheon Co. Raytheon Aircraft in the first quarter delivered 43 business jets and turboprops compared with 27 in the same period a year ago, an increase of 63 percent.

In the quarter, the company booked orders for 45 turbine airplanes versus 34 last year. No orders were shown in the first quarter for the Hawker 4000, which had yet to receive full certification (see sidebar below). Nevertheless, this was the “best first quarter for bookings in six years,” said Raytheon Aircraft chairman and CEO James Schuster. “Turbine aircraft are about 70-percent sold out for the year, well ahead of where we were at this time last year,” he added.

“The clearest evidence of how we are dealing with new programs now is to note that quietly in the first quarter we certified the Hawker 850 and delivered our first five right on plan,” Schuster noted. “That makes seven new derivative models that we have certified and delivered over the last 15 months.”

Raytheon Aircraft maintained that deliveries of the Premier light jet have not slipped below expectations. Shipments are “right on track,” Schuster said, adding that he is not concerned about the number of Premiers in the pre-owned market. “The three or four Premiers on the used aircraft market is a very reasonable level for the number of airplanes delivered. It’s not something we are worried about or seeing any problems with.”

Schuster pointed to the current pre-owned market as a good sign overall. The leading indicators for the continuing growth of the business market “are all pointed in the right direction.” Pre-owned aircraft inventory, particularly late-model aircraft, is at “very low levels, which may be the most important indicator.”

“These positive figures, if sustained, are an indication that the year will be a solid one for general aviation,” said GAMA president and CEO Pete Bunce. “All segments of the general aviation manufacturing industry are continuing to increase at strong levels. Based on the encouraging market activity throughout the industry in this first quarter, and the exciting new technologies and products on the horizon, it is hard not to get excited about the future of general aviation,” said Bunce.