Shipments of Gulfstream business jets fell nearly 16% in the first quarter, but sales of the airframer’s large-cabin and midsize aircraft were robust during the period.
For the three months to 31 March, the General Dynamics-owned company delivered 19 large-cabin G650/G550/G450s and eight midsize G280/G150s. This compares with 25 large-cabin and seven midsize jets for the same period in 2015.
Phebe Novakovic, General Dynamics chairman and chief executive, speaking on a 28 April earnings call, played down Gulfstream’s sluggish delivery performance as “part of the normal cycle after a strong fourth quarter [2015]” – when it shipped 38 business jets – and pointed to strong sales.
“It was a quarter where the sales pipeline was replenished and strengthened,” she says. “Activity has been strong in April, so we are off to a good start.”
Demand for the G550 and G450 is in line with expectations, Novakovic says, with the backlog for these legacy models between nine and 12 months.
Gulfstream Aerospace
She admits, however, the rising pool of used G550s on the market has hit sales of the long-range type. “We did lose some G550s to the used inventory because there were a lot of late models available, and there still are to some degree,” Novakovic says, citing 29 units sold in the last 12 months.
The G450 is not affected to same degree “as it is attractively priced”, she argues.
“The bigger problem [for the G550 and G450], frankly, is that some customers are waiting for the G500 and G600,” she says, referring to Gulfstream's clean-sheet, large-cabin, long-range pair, scheduled to enter service in 2018 and 2019, respectively.
Meanwhile, demand for Gulfstream’s top-of-the-range G650/ER remains strong, with delivery slots for the ultra-long-range jet sold out for 24 months. “The G650 has a 100% market share for a market it created, and it's likely to remain in that position for the foreseeable future,” says Novakovic. “It's still a hot plane and our demand is solid. The number of pre-owned 650s apparently on the market is higher than in the past but, to the best of our knowledge, we have not lost a single sale to pre-owned aircraft,” she adds.
The overall performance of General Dynamics' aerospace division, which includes business aviation services provider Jet Aviation, was lacklustre in the first quarter but largely in line with expectations, it says.
Revenues for the three-month period fell by $121 million to just under $2 billion and earnings fell by $20 million to $411 million.
Source: Flight International
