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Aviation News Item: 01073
31st Jul 2009
"A Difficult but Gradually Improving Business Jet Market"
Source: fly-corporate.com
 President and CEO of General Dynamics, parent company of Gulfstream and Jet Aviation, reported Aerospace group sales of $1.4 billion, up 6% from the prior year Q2, due to the addition of Jet Aviation to the General Dynamics family.
In Q2 this year, Gulfstream sales were down 16% year over year, as unit deliveries were reduced in line with the Groups revised production plan. Sales were also impacted by continued pressure on the services business, which is off 20% year over year and 15% year to date. The decline was attributed to customers deferring optional maintenance and intensified price competition triggered by current market conditions. Johnson did report however that the company was starting to see some increased service activity this month, though he added, he wouldn't characterize that as a "trend".
The Aerospace group is therefore targeting cost reductions and anticipates making more than $60 million in savings this year. They now have six remaining pre-owned aircraft in inventory, including one under contract, and expect to receive no more than three additional aircraft by year end. "We have no white tails," Johnson added.
Jay Johnson also said that the company was seeing several encouraging signs that the business jet market is stabilising. In recent months, Gulfstream flying hours have increased and new order interest has improved. Importantly, customer defaults were down 50% on last quarter and orders were outpacing defaults. Excluding G650 orders, Gulfstream has taken in the most orders since Q2 2008. Johnson acknowledged a marginal drop in Group backlog, but added "at nearly $20 billion, we continue to have a robust pace of work."
Large cabin positions have sold out until the end of this year, and for 2010, the Group anticipates large cabin production numbers to be in the low 70s. "Midsize production may further decline as that end of the market struggles with large inventories and considerable pricing pressure," said Johnson.
As for product development, Johnson reported that the G250 and G650 were on schedule for first flights this year.
Finally Johnson warned that deliveries in sales in Q3 are expected to be low due to the summer furlough in Savannah.
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