General Dynamics Boss Bullish on Bizjet Market
Jay Johnson, the new president and CEO of Gulfstream parent company General Dynamics, said yesterday during an investor conference that he is “encouraged right now” about the “gradually improving” business jet market. As proof, he noted that Gulfstream fleet flying hours are increasing and new order interest is improving. “Orders handily outpaced defaults in the second quarter,” Johnson said, “and, excluding G650 orders, in this quarter we’ve had the most orders since the second quarter of 2008.” Gulfstream’s backlog eroded slightly in the quarter, but “is still healthy” at about $2 billion. A year ago, the company’s backlog stood at $1.34 billion. Second-quarter sales at General Dynamics’s aerospace division (Gulfstream and Jet Aviation) were $1.4 billion, up 6 percent from the same period last year, while year-over-year profits fell $25 million to $215 million. Sales at Gulfstream were down 16 percent year-over-year, due mainly to weaker service sales as operators defer optional maintenance. Johnson is “confident” that Gulfstream will deliver 73 large-cabin jets by year-end and predicted about the same amount of deliveries next year, though that number could rise if demand warrants. Gulfstream delivered 42 green large-cabin jets in the first half of this year. However, Johnson said the midsize segment is “struggling” due to a glut of pre-owned inventory and pricing pressure, meaning further production cuts might be in store for the G150 and G200. In March, the company more than halved its midsize production rate to 24 for this year; it delivered 15 midsize aircraft in the first half.