Mixed Delivery Results Tempers Near Record Billings

 - February 11, 2015, 12:31 PM
General aviation aircraft deliveries climbed 4.3 percent last year and billings reaching their second highest total in history at $24.5 billion, according to the GAMA 2014 shipment and billings report. Business jets rose 6.5 percent, with 722 delivered last year.

The general aviation manufacturing industry showed its strongest signs of growth since the downturn began in 2008, with deliveries in 2014 climbing 4.3 percent overall and billings reaching their second highest total in history at $24.5 billion, according to the General Aviation Manufacturers Association year-end shipment and billings report released February 11. But industry leaders were tempered in their optimism, noting the results are uneven with some sectors faring better than others and some manufacturers within the sectors enjoying more of a rebound.

“The results were mixed,” said GAMA president and CEO Pete Bunce. “Overall the industry trajectory is positive. But we are not nearly where we need to be.”

General aviation manufacturers shipped 2,454 aircraft last year, up from the 2,353 delivered a year earlier. The billings, second only to the $24.76 billion logged in 2008, were up 4.5 percent from $23.48 billion in 2013.

The number of aircraft shipped is the highest total since 2008 but is still more than 38 percent below the 3,970 aircraft delivered in that year.

The largest growth area in 2014 was the piston market, where the number of new aircraft shipped jumped 9.6 percent, to 1,129. Analysts have long followed the piston market, believing it to be a leading indicator for the rest of the industry. In this case, the training market has been a key catalyst behind the growth as manufacturers followed through on large fleet orders placed in recent years, said Jens Hennig, vice president of operations for GAMA.

Jet Deliveries on the Rise

Following the piston market in growth were business jets, up 6.5 percent with 722 delivered. Business jet deliveries in 2013 turned positive for the first time since 2008 but did not even reach the 1-percent growth mark. Not only was 2014the first year for significant growth but it marked a turnaround for the divide in the business jet market.

In past years, improvements in the large-cabin business jet class were unable to offset the prolonged declines in the midsize and small aircraft segments. Last year, improvements cut across all classes.

Bombardier delivered 34 Learjets in 2014, compared with 29 a year earlier. Cessna Citation deliveries were up 12 percent, to 159. Industry analysts and company leaders, however, will say new product is continuing to drive this growth. Of the Learjets delivered, 33 involved Bombardier’s refreshed 70/75 series in 2014. A year earlier the 70/75 series accounted for 18 of the deliveries. Cessna delivered 46 of its new M2s, compared with eight Mustangs.

Embraer, which entered the downturn with one of the newest product lines, has been one the few light-aircraft manufacturers to enjoy growth in recent years. It maintained that growth in 2014, up two.

But the smallest jets still struggled. Cessna delivered 12 fewer Mustangs last year than it did in 2013, and Embraer’s Phenom 100 deliveries fell to 19 last year from 30 in 2013. Eclipse, which re-entered the market in March with the 550, faced sluggish sales, reining in original shipment plans. The company, forced to lay off workers last summer, had delivered 10 aircraft by August. Eclipsed ended the year with 12 deliveries.

As for midsize and super-midsize aircraft, Embraer entered the midsize market with the first three Legacy 500s delivered, and Gulfstream’s G280 provided a bounce in that company’s “mid-cabin” category with 33 deliveries, up from 23 in 2013.

However, others feel the effects of a changing product line. Dassault, planning to add new Falcons to its product line in 2016 and 2017, reported an 11-aircraft drop in its deliveries last year, to 66. At the same time, the manufacturer reported orders were up 11 percent. This pattern held true for derivative models as well, Hennig noted. “There were a couple of timing issues with models in transition,” he said.

The largest classes remain stable. Bombardier’s Challenger and Global deliveries reached 170 last year, compared with 151 in 2013, while Gulfstream notched 117 G450s, G550s and G650s, close to the 121 delivered in 2013. Like Dassault, however, Gulfstream recorded rising orders, exceeding all other prior years. The strength of the large cabins played into to the near-record billings for 2014.

Decline Among Turboprops and Rotorcraft

While business jet shipments improved, turboprop deliveries declined by as much, at least from a percentage rate. Turboprop deliveries in 2014 fell 6.5 percent, to 603. Bunce pointed to a number of factors playing into this, including the fact that Avanti builder Piaggio continues to struggle with available inventory in the aftermath of the collapse of Avantair. Piaggio delivered just two new aircraft in the year, the same as in 2013.

Other manufacturers, particularly in the agriculture market, reported particularly strong years in 2013, making a repeat in 2014 difficult, Bunce added.

But a number of turboprop manufacturers reported growth, including Quest Aircraft, which delivered a record 30 Kodiaks. Pilatus also had a strong year with 76 deliveries, 66 of them PC-12s.

While fixed-wing deliveries showed rebound, rotorcraft deliveries plummeted by 24.7 percent. The drops affected both piston helicopters (down 31.3 percent) and turbine helicopters (down 22.4 percent). As expected, rotorcraft billings fell too, but not as precipitously. Billings dropped 7.5 percent, to $4.9 billion in 2014. (Rotorcraft data does not include AgustaWestland, which is reporting in March.)

Like turboprops, rotorcraft deliveries made a strong showing in 2013, Bunce pointed out. But he cites other factors playing into the slowing in 2014, including the uncertainty of the oil market and the fact that a number of new models are still in the offing.

“The mixed results among segments indicate that the general aviation manufacturing industry is facing headwinds given the tepid U.S. economic recovery and the political and economic uncertainties in Europe,” said Bunce. He added that the results underscore the importance of ensuring key obstacles to the industry, such as inconsistent regulatory interpretations and a cumbersome certification process are addressed.

Bunce also expressed concerns about the continued opposition by some lawmakers to extending the Export-Import Bank reauthorization. U.S. exports in 2014 totaled 696 units, 42.7 percent of the aircraft shipped by the GAMA manufacturers. The exports were valued at $5.4 billion. The bank’s financial backing of industry shipments had grown from less than $100 million per year a decade ago to $740 million in the first five months of 2014.

He noted the issue is so important to his members that Ex-Im Bank chairman and president Fred Hochberg was scheduled to speak to his board on February 11. The issue is also a key topic of discussion during GAMA members’ visits to Capitol Hill, he said. “It should be a no-brainer,” he said of the Ex-Im Bank reauthorization. “All we are asking for is the ability to compete on a level playing field.”

Bunce could not predict the future of the market, but he did note the industry is “seeing good indicators.” Asking prices of young pre-owned aircraft and available inventory have stabilized and the North American market has improved, he noted. At the same time, the results of the fourth quarter were not as robust as originally hoped and the unrest in Russia continues to create uncertainty. All this is keeping the industry cautious about the future, he said.

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AIN GAMA numbers March 2015 (59K)

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