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GAMA First Quarter 2009 Shipment Analysis

The party’s over and the hangover begins...

After the party of the last five years- this must be the morning after! Big-time pain! The General Aviation Manufacturers Association (GAMA) released its First Quarter Delivery Report on May 5th and the news was grim: Total shipments down 41.1 percent and total billings off 18.2 percent from a year ago.

For the first time since 2003- sales of turbine airplanes are down from the previous year – and not just by a small amount. Business jet for sale are off 35.7 percent from 2008. The industry delivered just 191 jets in the first quarter of 2009- down from 297 last year. The piston market was hit even harder- with unit deliveries off 55.1 percent from a year ago. Piston deliveries dropped from 399 units last year to just 179 this year.

Nearly lost in this sea of bad news is one amazing statistic- however; one so incredible that it could almost qualify for inclusion in Ripley’s Believe It Or Not: For the first time ever in the history of GAMA delivery reports- there were more business jets delivered (191) than piston-powered airplanes (179). That’s unbelievable!

And while the piston aircraft for sale and business jet markets fell on hard times- turboprops actually gained a little ground over last year – up 3.4 percent. Turboprop deliveries totaled 92 units in the first quarter- up from 89 last year.

This Quarter’s report is the first strong evidence we’ve seen in the GAMA report that there’s a recession going on in our industry. Up till now- in spite of more than 15-000 layoffs among the industry’s biggest and most prestigious manufacturers and reports of collapsing backlogs everywhere- there hasn’t been much statistical evidence of trouble. Now we have it – positive proof that there’s a problem.

All this- of course- reflects the fact that the GAMA numbers are something of a trailing indicator. This has become truer in recent years as a growing percentage of GAMA sales are concentrated in high-end turbine products with long lead times between order and delivery.

Nonetheless- a careful look at the numbers reveals a more complex situation than simply a falling market in response to a worldwide recession. In some markets- things may not be quite as bleak as the raw numbers initially make them appear. Let’s look a little closer…

THE BIZJET MARKET
In the corporate business jets for sale market- for example- none of the manufacturers reporting results in 2009 lost as much ground as the overall market suggests. This seemingly impossible statistic results from the collapse of Eclipse late last year.

Eclipse was still going strong in the first quarter of 2008- when it delivered 52 units. This year Eclipse isn’t even listed on the GAMA report. Without the Eclipse sales last year- the market would only be off 21 percent. Make no mistake - that’s still a heavy hit- but it is far different than the 35.7 percent drop reported in GAMA’s raw data.

Of the eight jet manufacturers reporting deliveries to GAMA this quarter- one (Embraer) actually had an increase in unit deliveries over last year; while two (Airbus and Boeing) matched last year’s total for this stage of the year. Five jet makers had reduced totals- including Bombardier- Cessna- Dassault- Gulfstream and Hawker Beechcraft. The ninth jet manufacturer listed on GAMA’s report- Emivest (formerly Sino Swearingen)- had no deliveries in the first quarter of either 2008 or 2009.

Bombardier recorded the highest jet billings total with $1.37 billion- down from $1.636 billion last year- but deliveries were down 13 units or 24-percent- from 67 a year ago to 54 this year.

Cessna- as usual- had the highest delivery total at 69 units- although it also experienced the biggest percentage of loss. Cessna’s unit deliveries were down 28.1 percent- recording 27 fewer deliveries than the 96 it made this time last year.

Gulfstream had the second highest delivery total- at 31 units- down 17.3 percent from the 37 sales the company reported last year. Interestingly- all of Gulfstream’s reduction came from the lower-end models- the G150 and G200 series. The larger models- including the G350- G450- G500 and G550 recorded 22 deliveries- matching last year’s first quarter total. Gulfstream also had the second highest billings in the jet segment- at $1.17 billion- down from $1.28 billion last year.

Elsewhere in the jet market- Hawker Beechcraft delivered 15 units in the first quarter of 2009- down 25 percent from the 20 it recorded last year in the same period- and Dassault reported 11 deliveries- down 26.67 percent from 15 units a year ago.

As we mentioned above- Embraer’s unit deliveries were actually up 14 percent- from seven units to eight- although like many of the other statistics emerging from this quarter’s GAMA report- this was something of an anomaly. Last year’s Embraer first quarter total included seven Legacy/Shuttle models.

Between last year and this one- Embraer introduced its new Phenom 100 model- which accounted for six of Embraer’s eight deliveries this year.

Looking at the overall business jet market- it is hard to see any definite pattern of change. The lighter end of the market may have been more heavily impacted than the medium and high ends. Cessna’s CJ series delivered at about half last year’s rate- although its Mustang total almost doubled. Hawker Beechcraft’s lower end models were similarly down. Still- it is too early to label this a trend.

In assessing the jet market- it is important to remember that this year’s totals so far are still ahead of the market’s performance as recently as 2006- when there were 188 jets delivered in the first quarter. So while this quarter’s numbers represent a definite disappointment- we’re still on pace to match the third best year in business jet history. The glass may not be full- but it’s still a whole lot better than half empty.

THE BUSINESS TURBOPROP AIRCRAFT FOR SALE MARKET
It will be interesting to see in the months ahead whether the turboprop market continues to perform at a record pace. 2008’s total of 535 turboprops was the best since 1981 and the fifth best in industry history – exceeded only by 1978 (548 deliveries)- 1979 (639)- 1980 (778)- and 1981- which was the ultimate year for turboprop deliveries with 918.

Comparing today’s turboprop market with those heady years three decades ago is a little misleading- because the business aircraft for sale industry was still in its adolescence and a great many companies that operate jets today were then using turboprops. For comparative purposes you may recall that turboprops were outselling jets by about two-to-one at the time. Today the turboprop fits into much more of a niche market.

Nonetheless- in spite of the worldwide recession that has hit the jet and piston markets so hard- the turboprops are on pace to set a record for the fourth best year in business aviation history. I can’t personally think of any good reason why the turboprop segment will continue to buck the winds of economic downturn – but maybe it will. All we can say for sure is that- so far- the turboprop market is still doing very well.

As befits a rising market- every turboprop manufacturer but one reported equal- or improved sales over their first quarter 2008 results. Hawker Beechcraft business jets for sale continues to lead the turboprop market with deliveries of 29 of its King Air models – the same number it delivered last year.

Cessna is in second place with 20 deliveries of its Caravan series- up 17.6 percent from the 17 it reported in the first quarter of 2008. Pilatus aircraft for sale was in third place with 18 units- down 18 percent from the 22 PC-12 models it delivered last year- while Socata with eight- equaled its 2008 first quarter total. Piper with six- also equaled its 2008 total- while Pacific Aerospace with three deliveries was up from two last year- and Quest with three was up from one delivery this time last year.

Piaggio Avanti business turboprops for sale- in a change of policy from recent years- has begun reporting to GAMA on a quarterly basis again. Since 2007 the company has reported only in the second and fourth quarters- but for first quarter 2009 reported five units.

Based on data provided by the company- GAMA has re-stated Piaggio’s previous deliveries. The total of 89 units that GAMA is now listing as total turboprop deliveries in the first quarter of 2008 reflects the movement of four units from Piaggio’s previous second quarter 2008 total to the first quarter. Based on the restatement- Piaggio’s sales for first quarter 2009 are 20-percent ahead of last year.

THE PISTON MARKET
Compared with the good news of the turboprops- the piston market looks like a train wreck. Not one piston manufacturer even equaled its 2008 performance. And this market was down 20 percent last year. We’ve come a long way from the peak year of 2006 when there were 2-750 piston deliveries. 

SINGLE ENGINE AIRPLANES FOR SALE
The leader in the single engine piston category continues to be Cessna- but the 46 unit total reported this past quarter was down more than 59 percent from the 113 Cessnas delivered a year ago. Cirrus was second with 39 units- down from 76 last year.

Diamond single piston aircraft for sale- which normally is a distant third- nearly overtook Cirrus for second place during this first quarter- with 36 units. Diamond was 46 percent off its 2008 first quarter total of 68.

Next came Piper with 14 units- down from 30 last year- and Hawker Beechcraft with 10- down from 15 in 2008. All the other single-engine piston makers recorded deliveries in the single-digit range.

American Champion had the best performance against last year’s sales- with eight this year compared with 11 in the first quarter- 2008. That’s a reduction of 27 percent – only about half the rate at which the rest of the market lost ground. It’s a sad statement when that’s the good news!

TWIN ENGINE AIRPLANES FOR SALE
Bluntly put - the piston twin market was even worse off than the singles- with a total of 14 units- down from 48 last year. Of the 14- Diamond had nine- Hawker Beechcraft three and Piper two. Diamond is still recovering from losing its engine manufacturer last year- but the rest is just the result of the worldwide recession.

In closing- we echo GAMA’s President and CEO Pete Bunce who observed that “this is an extremely difficult time for our industry.”


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