GAMA chief cautiously optimistic about future

Washington DC
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This story is sourced from Flight International
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The General Aviation Manufacturers Association is not yet ready to predict a recovery, but believes most indications point to an improving industry.

"Overall, I don't have a better crystal ball than anyone else, but we're hopeful we have found the bottom and things will start picking up," says GAMA chief executive Pete Bunce.

He says used aircraft inventories have started shrinking, monthly flight activity levels have begun to stabilise and the availability of credit is improving. But Bunce warns that "the biggest driver is the overall economy" and "the jury is still out" on whether it has bottomed out.

GAMA is hoping things improve quickly to avoid more members joining Adam Aircraft and Eclipse in bankruptcy. "There's tremendous concern out there," says Bunce. "We're just hopeful the economy gets going soon so we don't have to lose more companies."

 Pete-Bunce
 © GAMA
"Everyone is looking for that ray of hope. I'm encouraged by what I've heard."

GAMA is also concerned about the industry's suppliers, especially those that are not diversified. "We're seeing great impact on suppliers," says Bunce. "Some can't just turn the spigot off and on."

GAMA is monitoring the availability of credit, which it says must improve for the industry to recover.

Bunce says the credit crisis led almost instantly to holes in the production line starting in the fourth quarter of last year as customers could no longer finance new aircraft.

With other customers unable to accelerate deliveries because of the credit squeeze and new orders drying up, GAMA's members had gaps in the production line, forcing them to slow production and axe workers.

"It's gut-wrenching for these companies. You try to stretch out production so you don't produce too much and fall off the cliff. It's something no company wants to do, but it's the reality of the situation. And it has a whiplash effect on the supply chain. It's tough."

Bunce says GAMA has started to see "signs of greater availability of credit", but so far it has been mainly for business-jet rather than piston customers. "I'd like to see it open up more broadly. We're not there yet. We're pretty dependent on people getting credit for their aircraft. This is very important for us."

Bunce says the industry is now in "wait-and-see mode" as manufacturers await further improvements in availability of capital and the overall economy. "The signs are possibly out there. Everyone is looking for that ray of hope. I'm encouraged by what I've heard, but I don't want to make any predictions.

In the first quarter of 2009 GAMA members delivered 179 pistons, 92 turboprops and 191 business jets.

Deliveries were down significantly from the fourth quarter of 2008, when GAMA members delivered 473 pistons, 195 turboprops and 325 business jets.

Most concerning for small aircraft manufacturers, the first quarter piston figure was by far the smallest quarterly showing this decade.

Bunce says in most recessions the piston market is the first to slump but is also the first to recover.

But Bunce warns this recession could be different because it is deeper than others and the credit crunch is a new issue facing the industry.

"We don't know how much credit availability has suppressed demand," he says, adding that in some cases individuals buying pistons have had more difficulty securing financing than companies buying jets.

He says the US/international mix also has changed since the last recession. "We never had such high international demand," Bunce says, adding demand in growth markets such as Asia remains relatively strong.