By Kerry Lynch
A strong market for large-cabin business jets and VIP airliners led business and general aviation manufacturers to their third-highest ever annual billings in 2010, even as overall shipments fell 11.4%, as largely expected, and piston deliveries reached their lowest total since the early 1990s, according to the General Aviation Manufacturers Association (GAMA).
Business and general aviation manufacturers worldwide shipped 2,015 airplanes last year, down from 2,274 in 2009. Billings, however, actually increased 1.2% to $19.7 billion in 2010.
Announcing 2010 industry results Feb. 22 at the National Press Club in Washington, John Rosanvallon, GAMA chairman and president and CEO of Dassault Falcon, acknowledged the industry has been through two “very difficult years,” but that positive signs are emerging, albeit slowly.
“Our industry experienced another challenging year that required many manufacturers to continue to make careful decisions about production schedules, employment and product development,” Rosanvallon says. “However, despite the pain caused by the downturn, we are now seeing strong GDP growth on a global level, and corporate profits are up.”
Longer Recovery
While general aviation recovery typically lags behind global economic recovery by 18 months, he adds this recovery may take longer to materialize. “This downturn was really unique,” he says.
Turboprop deliveries took the biggest hit in 2010, down 17.7% to 363. Business jet shipments followed, with 763 delivered in 2010, a 12.3% drop from 2009. Piston deliveries were down 7.7% to 889.
While dipping the least, the piston numbers are perhaps the biggest concern for the industry, Rosanvallon notes. The 889 delivered was the lowest piston-aircraft total since the 1994 passage of the General Aviation Revitalization Act, he adds.
A relative newcomer to the business jet market, Embraer emerged as a dominant player, delivering nearly 20% of all business jets shipped in 2010. The Brazilian plane-maker delivered 145 jets, up from the 132 shipped a year earlier. The deliveries included 100 Phenom 100 very light jets.
Piper Aircraft was one of the few piston aircraft makers to grow in 2010, returning to a steady footing after economic and other setbacks caused deliveries to plummet in 2009 (see related article on Page 6).
Dassault, which specializes in large-cabin business jets, also improved upon its prior-year performance, with 95 aircraft delivered in 2010, an 18-aircraft increase over 2009. Dassault’s results were helped in part by the lengthy backlog for the 7X, which accounted for 41 of the 2010 deliveries. In the VIP airliner market, both Boeing and Airbus delivered more aircraft than in 2009, helping contribute to the boost in billings.
But Cessna and Hawker Beechcraft, which each have a more diversified product line, continued to suffer from the so-called “Great Recession,” reporting fewer deliveries. In Cessna’s case, deliveries fell from 1,300 in 2008 to 534 last year. Cessna’s deliveries last year also were down from the 741 delivered in 2009. Hawker Beechcraft shipments have been halved from the 435 in 2008 to 214 last year. The 2010 deliveries, however, were closer to the 273 delivered in 2009.
International Growth
On the positive side, the industry experienced growth in the Latin America, Middle East, Africa and Asia-Pacific regions. U.S. exports continued to increase, rising 62%, and the international market accounted for more than 50% of all deliveries, confirming a trend that has surfaced in recent years (see chart on international deliveries below).
Manufacturers are encouraged that global corporate profits are up 46%, and the fourth quarter was solid, Rosanvallon says, noting this is a key factor for recovery. He also points to the increases in flight activity, both in the U.S. and in Europe, up 10.8% and 5.5%, respectively. Further helping to spur the industry is the recent extension Ð and expansion Ð of bonus depreciation to cover 100% of the aircraft, with benefits running through 2012. He notes the “strong consensus” among manufacturers is that this is helping the business.
The used market, while improving, remains a major concern, says Rosanvallon, as does the availability of credit. In 2010, some 78% of used aircraft sales involved cash transactions, up 13% from a year earlier. Financing for midsize, light and small aircraft is limited, he notes, adding, “Credit scarcity is impacting the market.”
See Business/Personal Regional Aircraft Ð Fourth Quarter Unit Shipments chart on Pages 11 and 12.