Gulfstream plans to boost production of green midsize business jets by nearly one-third this year, says Phebe Novakovic, chairman and chief executive of parent General Dynamics.
The Savannah, Georgia-based airframer delivered 29 super-midsize G280s and midsize G150s in 2014, she said during an earnings call on 28 January. Output will rise by 10 aircraft in 2015.
At the same time, production of large cabin jets – the G650, G550 and G450 – will remain stable with 115 green aircraft deliveries, Novakovic says.
The mix shift adds pressure on Gulfstream’s operating margins, as the midsize twin-engined jets are less profitable than large cabin types, Novakovic says. Operating profit is also under pressure with rising spending on research and development of two new aircraft launched last October – the G500 and G600. Another drag on operating margin is an internal forecast showing more pre-owned aircraft in Gulfstream’s inventory in 2015.
Although large cabin jet production is not growing in 2015, Novakovic says, Gulfstream still sees strong demand for the three types still in production.
“We really haven’t seen much impact on the emerging market, certainly not this year,” Novakovic says. “North America remains very strong, [as well as] Asia-Pacific. We are also seeing some increased demand in the Middle East.”
Production backlogs are also in healthy shape for Gulfstream. The first availability of a new-built G650ER remains the first quarter of 2017. The G550 and G150 production lines are sold out until early next year. The G450 and G280 assembly lines are sold out until the end of this year.