Turbine deliveries slide further in 3Q

 - November 29, 2010, 9:40 AM

Year-over-year airplane deliveries declined again in the third quarter, but revenue at the manufacturers took a much smaller dip. According to the third-quarter shipment report released last month by the General Aviation Manufacturers Association (GAMA), this marked the industry’s eighth straight quarterly slide in deliveries, with overall shipments down 14.5 percent compared with the first three quarters of last year. The total of 136 business jets delivered in the third quarter represents the airframers’ lowest tally since the 124 handed over in the second quarter of 2004.      

However, the dip in deliveries did not have a similar effect on industry total billings, which were off 2.5 percent, to $13.47 billion during the first nine months of 2009 from $13.82 billion in the same period this year. The resilience of the delivery values reflects the continued firmness in the market for larger, longer-range aircraft. “You can see that big disconnect,” said Richard Aboulafia, vice president of analysis at industry consultant Teal Group. “Units are down, revenue is holding and that just goes to show the more expensive airplanes are holding up just fine and the lighter jets are still under tremendous pressure.”

The current nine-month total of 491 business jet deliveries represents less than half the output of the OEMs in the peak period in 2008. Applying the industry’s traditional rule of thumb where fourth-quarter business jet deliveries equal approximately a third of the year’s total deliveries, the airframers would be on pace to deliver between 711 and 755 jets, down from last year’s total of 870.

In its annual forecast Honeywell predicted deliveries of between 675 and 700 bizjets for the year, the industry’s lowest total since 2004. The engine and avionics manufacturer went on to foresee another year of fewer than 700 deliveries next year before output begins to climb again.

In light of this and other prognostications, the industry remains on course for recovery, based on the number of new programs in the pipeline. “Despite another drop in total shipments and billings, we believe that the longer-term outlook for general aviation is positive,” said Pete Bunce, GAMA’s president and CEO. “I am especially encouraged by the resources general aviation manufacturers are expending on the research and development of new products,” he said. “Recovery indicators continue to fluctuate, but one positive indicator–the investment in new airplanes and technology–is solid.”

For the first three quarters of the year, business jet deliveries showed a more than 20-percent decrease from the 616 handed over in the same period last year. The largest retrenchment among the major bizjet manufacturers was by Cessna, which saw deliveries decline 54 percent from the first nine months of last year. Deliveries of the Mustang very light jet were cut nearly in half, from 94 to 48 for the January to October time frame, while the output of Citation Sovereigns declined from 24 to six. Deliveries of the CJ1+ slumped from 13 in the first nine months of last year to just one in the same period this year, while the company handed over just one Citation X in the report period, down from five the year before. The Textron subsidiary did deliver seven of its new CJ4s following FAA certification in March.

Hawker Beechcraft also saw its business jet deliveries decline by more than 42 percent year-over-year, from 64 in the first three quarters of 2009 to 37 in the same span this year, with only the flagship Hawker 4000 experiencing an increase, from eight to nine. On the smaller end of its lineup, the OEM’s production of the Premier IA and Hawker 400XP was slashed in half, while deliveries of the Hawker 750 shrank from eight to two in the first nine months. The manufacturer last month announced plans to suspend production of the Hawker 400XP until early 2013.

Bombardier also decreased its Wichita output, handing over 19 Learjets in the first nine months of this year, compared with 37 in the same period last year. The airframer’s larger offerings fared better, as deliveries of its Challenger and Global lines were down less than 15 percent year-over-year.

Gulfstream reaped the benefits of the continued popularity of larger-cabin aircraft, with its 79 aircraft deliveries representing a gain of nearly 7 percent over the previous year. Both its G150/200 and larger G350/450/500/550 groups showed increases year-over-year.

Non-U.S. Manufacturers See Progress
Beyond North America, the picture is brighter. Embraer, which began deliveries of its Phenom 300 this year, handed over 11 of the light jets, while continuing to ramp up production of the smaller Phenom 100. Last year the Brazilian manufacturer delivered 43 of its entry-level jets in the first three quarters, compared with 67 in the same span this year.

Deliveries of the company’s large-cabin Legacy 600 declined from 12 in the first nine months of last year to three for the same period this year, a decrease the airframer attributed to the anticipated introduction of its new Legacy 650. “Our strategy was to concentrate production on the Legacy 650 this year, with all those improvements, and after that we’ll introduce those improvements in the Legacy 600 for next year,” said Luis Carlos Affonso, Embraer’s v-p for executive jets. “That’s why in the first three quarters, our deliveries of the Legacy 600 [were low], but they will resume in the fourth quarter.”

Dassault also saw a sizable increase in deliveries year-over-year. The French airframer handed over 21 Falcon 2000LXs, nearly doubling the number delivered in the second and third quarters of last year (the 2000LX didn’t receive EASA certification until May 2009), and ramped up production of its Falcon 7X by 11 copies to 29 over the first nine months of the year.

In the heavy-iron category, both Airbus and Boeing saw triple-digit percentage increases in their bizliner deliveries year-over-year. Airbus delivered 11 ACJs, compared with five in the first three quarters of last year; Boeing delivered six BBJs, doubling the number it delivered in the same period last year.

For the fourth straight quarter, the pressurized turboprop segment saw more erosion than the business jet sector, with deliveries down 29 percent from last year’s first three quarters. Hawker Beechcraft saw the number of King Airs handed over decrease from 74 in the first three quarters of last year to 54 in the same time frame this year, based largely on deliveries of C90GTs being halved from 30 to 15. The airframer delivered just one fewer King Air 350 in the same period.

Piaggio experienced a severe downturn in deliveries, dipping from 17 in the first nine months of 2009 to six this year.

While Pilatus and Piper both saw deliveries of their PC-12 and Meridian, respectively, fall by more than 30 percent, Daher-Socata upped its output by one, handing over 24 TBM850 turboprop singles through the first nine months of the year.