General Dynamics’s aerospace division, which includes Gulfstream Aerospace and Jet Aviation, had “a powerful quarter, with the highest revenue, operating earnings [and] operating margins reported in the last six quarters,” according to chairman and CEO Phebe Novakovic. Aerospace revenues for the first half climbed $616 million or 19.2 percent, with operating earnings up $171 million (32.4 percent), she said, “a clear manifestation of Jet Aviation’s return to profitability and the performance improvement at Gulfstream.”

Novakovic added that Gulfstream’s third quarter won’t be as stellar due to “cost increases on several G450 and G550 supply contracts, which will compress margins,” as well as plans “to produce two fewer large-cabin aircraft in the third quarter” and “delivering more green mid-cabin [airplanes] in the quarter, resulting in a mix-shift in deliveries of lower-margin airplanes.” In the second quarter, Gulfstream delivered 35 green aircraft (30 large-cabin and five midsize jets), compared with 26 aircraft (24 large cabin and two midsize) in the same period last year.

Fourth-quarter production levels should return to the second-quarter level and “improved learning on the G650 line should offset somewhat the cost increases in the G450 and G550 supply chain,” according to Novakovic. She cited Gulfstream’s improved completions performance as a key factor in the financial results. “We fixed that much faster than anticipated,” she said.