Business jet sales start to soften

Washington DC
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This story is sourced from Flight International
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Third quarter reviews from Cessna and Gulfstream point to a slowdown in orders, but both companies are confident backlogs will hold up enough for them to ride through the current downturn.

Lewis Campbell, chief executive of Cessna parent Textron, says the airframer is contacting all its customers, but so far has not run across many looking to postpone or cancel orders: "We've had a few customers who have come and asked for different financing in terms of the fourth quarter, but basically we just haven't seen as much movement as you might have expected."

Nick Chabraja, chief executive of Gulfstream parent General Dynamics, says: "We've taken a good look at the 2009 backlog. We think [there are] pretty solid credits across the board. We're not getting much in the way of discussion from our customer base."

gulfstream g550
 © Gulfstream

Campbell says new order intake has slowed, but given Cessna's 1,500 jet backlog he remains bullish about maintaining plans to increase production to 535 jets next year. "With our backlog we don't need a lot of net orders to sustain our production in 2010 and 2011."

Chabraja says orders for large aircraft continue to come in faster than Gulfstream can produce them and its backlog stands at a record $3.3 billion. But he acknowledges Gulfstream is now delivering midsize aircraft, particularly its 150 models, at a faster rate than it is selling them and in response could cut production this quarter.

He says midsize aircraft only account for a little over 10% of Gulfstream's earnings and any drop in this business can be easily mitigated by accelerating production of large aircraft.

One area of concern is the aftermarket, where Cessna acknowledges that a drop in the utilisation of business jets is already starting to eat into the growth rate of its business.