Nigerian jet buy lifts veil on discounts

 - August 27, 2010, 4:00 AM

The Nigerian government’s announcement last month that it is buying two Falcon 7Xs and one Gulfstream G550 has yielded a rare public viewing of business aircraft discounts. The three aircraft will join the country’s eight-aircraft presidential fleet, which includes a Boeing Business Jet, Gulfstream IV-SP and GV and two Falcon 900s.

Aircraft manufacturers are loath to reveal what deals they give to individual customers, for fear that another customer who was originally willing to pay full price will find out what discount another is receiving and demand the same concession. As a public entity, the Nigerian government had to disclose the aircraft purchase prices in its Fiscal Year 2010 budget. The expenditure item for the three aircraft is listed under the “intelligence community” budget and totals $155.5 million.

The purchase price for the two Falcon 7Xs is $102.2 million–a discount of $2.9 million, according to the Nigerian statement. One of the 7Xs is slated for swift delivery in the fourth quarter, meaning it might have been an aircraft from which the original buyer walked away. Unsurprisingly, Dassault Falcon declined to comment about the Nigerian order and would not say if one or both of the 7Xs were previous cancellations.

Gulfstream, meanwhile, apparently gave the government an even heftier discount, shaving $5.4 million off the G550’s list price of $58.7 million. What’s curious about this order is that it’s scheduled for delivery in the fourth quarter of next year, reducing the likelihood that this aircraft had lost an earlier buyer.

Instead it raises the question of whether demand for the new wide-cabin $64.5 million G650 is eroding sales of the G550, causing Gulfstream to cut bigger deals for its current flagship large-cabin jet. The G650, which is now undergoing certification, is expected to start shipping to customers in the middle of next year, meaning that G550s being ordered now will be delivered at just about the same time the first G650s will be handed over to customers.

If G650 sales are eating into those for the G550, this could be an early warning sign that the G550 will be discontinued in 2013 or 2014. Gulfstream also would not comment on the ­Nigerian aircraft order, and it has previously said it will “let the market decide” if the G550 will survive once G650 production ramps up.