Gulfstream Weathering Stormy Skies
Class warfare is much in the headlines of late, and there’s a sort of parallel in business aviation. While the wealthiest citizens and corporations are sitting on mounds of cash for fear of investing it in the wrong place in troubled times, the middle class, the poor and many small businesses are feeling the financial deprivation of this downturn day-to-day. So goes it in the hierarchy of business-jet manufacturers.
Between them, GAMA goliaths Bombardier and Gulfstream account for $4.25 billion of the 21 GAMA OEM members’ $7.3 billion in first-half billings this year. Gulfstream (with first-half billings of $2.1 billion) is doing relatively well selling in the top stratum of dedicated business jets–those with the most cabin volume, the highest performance and the loftiest prices–while OEMs (including Gulfstream) catering to potential buyers of lesser airplanes are for the most part struggling to sell them. Both Bombardier and Gulfstream are developing new flagships to be ready for duty in better economic times; Gulfstream’s Mach 0.925 G650 will be first in service when deliveries of green aircraft begin, possibly before year-end.
Gulfstream saw total deliveries in the first half of this year drop by 16 percent, attributable to eroded demand for its smaller jets, but the large-cabin aircraft (G350 through G550) duplicated last year’s first half exactly, with 20 aircraft shipped in each quarter for the first half of both this year and last year. However, Jay Johnson, CEO of parent company General Dynamics (GD), noted in his first-half earnings announcements that Gulfstream’s second-quarter orders were the healthiest the company has seen since the start of the downturn in 2008, leading to an increase in its backlog for the third consecutive quarter.
Between April and June, Gulfstream’s backlog climbed $428 million to $18 billion, representing an 18- to 24-month supply for in-production large-cabin jets. Seventy percent of first-half orders were from customers outside North America and 50 percent were from the Asia Pacific region. Notably, however, orders from North America doubled from the first quarter to the second quarter.
Among recent deals is the signing of an MOU with China’s Minsheng Financial Leasing for the purchase of up to 50 large-cabin and midsize aircraft with a potential value of $2.6 billion. Johnson said during the first-half earnings call that Gulfstream is on track to deliver 80 large-cabin and up to 20 midsize jets this year, compared with 75 and 24, respectively, last year.
The Savannah, Ga.-based OEM suffered a tragic setback on April 2 this year when G650 S/N 6002, one of four program test aircraft, crashed beside the runway in Roswell, N.M., while performing a single-engine takeoff as part of the type’s certification program; the accident killed pilots Kent Crenshaw and Vivan Ragusa and flight-test engineers David McCollum and Reece Ollenburg. After a hiatus of nearly two months, G650 flight-testing resumed on May 28 and Gulfstream still expects to receive FAA certification this year. The company holds orders for more than 200 G650s, and it expects that up to a dozen of the 80 large-cabin jets shipped this year will be G650s.
Among business jet manufacturers, Gulfstream and its large-cabin jets continue to reign in AIN’s annual product support survey, in which readers rate manufacturers for their after-sale service, and a prime architect of that consistently strong support structure is now leading the company.
GD named 59-year-old Larry Flynn president in August, and he took the reins on September 1. His predecessor, Joe Lombardo, retains his GD title of executive v-p of the aerospace group, enabling him to “spend additional time ensuring that both Jet Aviation and Gulfstream Aerospace are focused on meeting their customers’ requirements,” according to a GD spokesman. Jet Aviation president Peter Edwards resigned in June, having held the position since 2007, and Lombardo assumed temporary leadership of Jet Aviation until the July appointment of former Gulfstream CFO and senior v-p Daniel Clare as president of the international aviation services provider.
Flynn had been senior v-p of marketing and sales at Gulfstream since 2008, and before that he had a successful seven-year stint as president of Gulfstream product support. At the time of the announcement of Flynn’s appointment as president, Lombardo said, “Larry Flynn has a broad base of operational and customer-focused experience that will serve him well as he leads Gulfstream into the future. His direction of Gulfstream’s marketing and sales organization has given Larry exceptional insight into the needs of our increasingly international customer base.”
Gulfstream’s decision to change the name of the G250 to G280 this year is not the first time a manufacturer has had second thoughts based on connotations in international markets–in the 1970s the Sikorsky S-76 was originally known as the S-76 Spirit until negative connotations in South America prompted the helicopter manufacturer to drop the name and go with just the number. In Mandarin Chinese, the number 250 is a slang term for “stupid person,” although the closest Gulfstream would come to confirming this was vague: “As demand for Gulfstream business jets grows around the world, the move was prompted by the company’s sensitivity to the varied cultures of its international customer base.”
The first production G280 was delivered from Israel Aerospace Industries to Gulfstream’s completion center in Dallas in early August for interior outfitting and paint, and the companies expect the airplane to enter service later this year once it has achieved certification by the Civil Aviation Authority of Israel (CAAI), then EASA and the FAA.