Biz Jets

As many of you know, the business jet market is a pretty exciting space.  At the end of 2009, the number of in-service business jet aircraft was 60% higher than at the end of 2000 (according to Airclaims, there were more than 16,000 business jet aircraft in-service at the end of 2009 compared to about 10,000 in 2000).  Contrast those figures with commercial jet airliners which had an increase of about 30% (for in-service aircraft) over that same period (19,600 aircraft in 2009 vs. 14,800 in 2000).   Thus, it is an important segment to watch and with this post, I will--from time to time--comment on the business jet sector.

GAMA (General Aviation Manufacturers Association) 1st quarter 2010 shipment report was published recently.  The report indicated 164 business jet deliveries for the March quarter, which was down 14% from the first quarter of last year.  Business jet shipments can be quite volatile as they tend to track changes in stock market indices like the Wilshire 5000 and the S&P 500 (I will produce that relationship in a subsequent post).  There are six sizable competitors in the business jet sector--Bombardier, Cessna, Dassault, Embraer, Gulfstream, and Hawker/Beechcraft.  Also, Boeing and Airbus are players in this sector but generally deliver a small amount of business aircraft which are based on their narrow body commercial aircraft products.

Of note in the recent GAMA shipment report was the great disparity by manufacturer in shipments from 2010 compared to the same period in 2009.  For example, Cessna had a whopping decline of 55% between the two quarters, while Gulfstream went down only 10%, Bombardier down 13%, and Dassault was actually up by 6 aircraft units (a 55% increase overall). Cessna is the largest business jet producer (in terms of units) with about 30% of the total for all biz jet manufacturers. Thus, it's performance has a heavy weight on industry totals and percentage changes.  The Cessna jet airplane models that showed the largest declines (1Q10 vs. 1Q09) were the Mustang with eight less units being shipped, the CJ3 also declined by eight units, and the XLS model(s) had a reduction of 12 units.

Also of note, were the deliveries of large aircraft vs. smaller aircraft.  Large aircraft like the Gulfstream 350/450/500/550, the Bombardier Global 5000/Express, and the Falcon 7X all did fairly well despite a down quarter.  All together, there were about 60 large aircraft shipments for the quarter which was a 26% increase over the 2009 1st quarter.  Generally, large aircraft shipments tend to be around 25% of total shipments, but in the 1Q2010, large aircraft were about 35% of the total.  This buoyed the results for Dassault and Gulfstream (plus to a lesser extent Boeing and Airbus).  The large aircraft shipments may be a result of an 'overhang' that existed after the larger aircraft were ordered when economic times were better and are just now being shipped.  Nevertheless, it is a trend worth watching.

Finally, very light jets, i.e., the Cessna Mustang and Embraer's Phenom 100 have had a pretty good run over the last year.  Please note that some in the industry may not consider the Mustang and Phenom 100 as very light jets, but I do (and it's my blog).  In any event, these two aircraft have now shipped over 200 units in the year ending with 1Q2010.  Not bad for a newly formed sector within general aviation and more specifically, business jets.  So, both ends of the business jet landscape, i.e., the very small and the very large appear to be doing well.  Keep watching.