The General Aviation Manufacturers Association (GAMA) issued its second quarter delivery report at the Oshkosh AirVenture on July 29 and the numbers were… well… interesting. GAMA's report was optimistic and deservedly so - billings were up 16.6 percent over a year ago for the comparable six-month period.
Ed Bolen noted that- 'Production schedules and healthy airplanes for sale volume across the board make us increasingly confident that 2004 will be an 'up' year for all segments of the GA market.' So- what makes the numbers interesting? A number of things- actually.
A Hiccup for Piston Airplanes?
For openers- while the billings were up nicely and both business turboprop aircraft for sale and business jet for sales made good gains- the piston segment of the industry suffered a hiccup in the second quarter. Piston aircraft for sale were down by 36 units- from 809 deliveries in the first half of 2003 to 773 in the first six months of 2004. That was enough of a drop to offset gains in the delivery of both turboprops and fanjets- leaving the total shipment number off 1.7 percent from a year ago.
Should we care? It's too early to tell- but the trend bears watching. If this is just a hiccup- piston aircraft sales numbers should rebound in the third and fourth quarters of this year. If that happens- this quarter's single-engine aircraft for sale results can be considered just an anomaly in an otherwise nicely developing recovery. If- however- softness continues in the piston airplane for sale market- that would cast doubt about the solidity of the recovery in our overall industry.
It seems way too early to be concerned about a recovery that has only just begun- but trends in the piston market should not be ignored. Throughout most of the past 50 years the piston market has foretold the aircraft sales trends in the rest of the industry- so we'll watch the piston deliveries carefully in the months ahead.
A little later in this column- we'll look more carefully at the details of the piston airplane sales market in the past quarter. First- though- we'll examine interesting aircraft sales trends in the turboprop and business jet segments.
There is an old saying that a rising tide lifts all boats- but in this recovery that's not quite what's happening… at least not yet.
Aircraft sales in both the business jet aircraft for sale and turboprop categories were up for the first six months of this year compared with 2003 - that is what accounts for the 16.6 percent increase in billings. Most of the gain- however- actually occurred in the first quarter- when total turbine deliveries were up almost 13 percent- from 132 units to 149.
In the second quarter total turbine deliveries were exactly the same as a year ago- with both quarters scoring 201 units. Looking at just the second quarter- business jet sales actually lost ground- down from 133 units in 2003 to 125 this year.
Whether the second quarter of this year was good or not will likely depend on which business jet manufacturer you ask.
At Raytheon they'll probably tell you the second quarter of 2004 was great. Raytheon's jet aircraft sales more than doubled over their first quarter totals- from 13 units up to 28. Less enthusiastic- but probably still smiling would be the folks at Gulfstream- Dassault and Cessna- all of whom had incremental increases in business jet sales from the first quarter to the second.
Gulfstream second quarter deliveries exceeded first quarter numbers by 17.6 percent - up from 17 units to 20. At Dassault- sales grew from 11 units to 12 in the same period.
Cessna's increase in business jet units was modest - up from 33 business jet aircraft deliveries in the first quarter to 35 in the second- but much of the gain for Cessna came at the highest end of the market. Seven top-of-the-line Citation X business jets for sale were delivered in the second quarter. By contrast- there were no Citation X deliveries in the first quarter.
Cessna officials must be dismayed- however- by continuing softness in the personal jet market- where airplane sales continue to lag behind the 2003 totals. Citation CJ1 business jet aircraft for sale this year are in a dead heat with 2003 totals at 10 units- while Citation CJ2 aircraft sales for the first half (14 units) have yet to surpass the 17 units delivered in the just first quarter of 2003 and are far off last year's six-month total of 32 aircraft.
Truly deserving to be unhappy about the second quarter of 2004 would be officials at Boeing and AvCraft- both of whom did not report any deliveries for the April-May-June period. By contrast- Boeing delivered two BBJs in the first quarter and AvCraft delivered four 328s.
Also probably not smiling would be Bombardier officials who saw their second quarter business jet deliveries drop to 27 compared with 35 in the first quarter. Much of the decrease was in Global Express deliveries- which were down from nine to three in the second quarter.
The turboprop aircraft for sale category showed renewed vitality in the second quarter of 2004- and was arguably the brightest star in this latest GAMA report. The turboprops were the only segment to show gains over 2003 totals in both the first and second quarters- and by extension- to record a net gain for the six-month period.
This was also the first quarter in several years when turboprops did not lose total aircraft sales market share to the business jet segment. Overall- it was a very good quarter for turboprops.
Again- this quarter's performance had to put smiles on the people at Raytheon Aircraft. Their King Air series recorded 22 deliveries - a much more normal performance after an abysmal first quarter that saw only five King Airs delivered. Piaggio also showed airplane sales gains in the twin-engine turboprop category- with four P.180 Avanti deliveries reported for the second quarter- up from two in the January-February-March period.
Single-engine turboprop aircraft for sales were also strong. Cessna's numbers were up sharply- with 28 Caravan models delivered in the second quarter. In the first quarter just three Caravans were reported. Pilatus also had strong gains- up from six to 15.
Less spectacular- but still ahead of their first quarter numbers were Piper and Pacific Aerospace Corporation. Piper's gain was incremental- from seven to eight. PAC deliveries rose from two to three.
The rising turboprop aircraft sales tide- however- failed to help Socata- whose TBM 700 deliveries were behind first quarter results five to nine.
In the piston aircraft sales market- results were again mixed. Some manufacturers finished the second quarter smiling. Others presumably did not.
The big winner in the single-engine piston aircraft sales segment continues to be Cirrus Design. Cirrus piston aircraft for sale deliveries were up almost 23 percent from the first quarter- from 105 to 129. The Cirrus SR22 is solidifying its claim to the title of 'best-selling single-engine airplane.'
Again- Raytheon's results were good. Beech Bonanza deliveries more than doubled- from seven in the first quarter to 15 in this three-month segment. Twin-engine Beech Baron aircraft for sale deliveries were up sharply from one in the first quarter to 10 in the second.
In fact- Raytheon business jets for sales performance in the second quarter was a marked turnaround from the first. A total of 75 Raytheon airplanes were delivered in the April-May-June timeframe- up from just 26 in the first quarter.
Piper's single-engine piston products showed gains- with a total 46 piston singles in the second quarter- and six piston twins. This was an improvement of five units over the 41 single piston Piper delivered in the first quarter- and a one-unit gain in the twin market for the same period.
Lancair also reported gains- up from 17 units in the first quarter to 20 in the second- as did Maule- up from seven units in the first three months to nine in the period just past. Pacific Aerospace made the plus column in the single-engine piston category as well- with two deliveries of its CT/4E Airtrainer model- up from zero in the first quarter.
Tiger Aircraft and Grippsland each held their ground- recording five deliveries in both the first and second quarters each.
Failing to post second quarter gains in piston singles were Cessna- Mooney- Diamond. American Champion- Socata and OMF. Cessna's aircraft sales numbers were off the most- down from 106 single-engine piston aircraft in the first quarter to 61 in the second. Mooney's were off by a similar percentage but the overall numbers were much smaller. Total Mooney deliveries were down from eight in the first quarter to five in the second. Diamond's deliveries were down from 57 to 41.
American Champion's- Socata's and OMF's shortfalls were less dramatic- with American Champion down two units from its first quarter total of 26- and Socata down from three to two and OMF down from one Symphony single to zero: And so- the numbers are 'interesting.'
The Low Down:
Some segments are down- but within those segments are companies having considerable success. Other companies are struggling. Some segments are up- but not all of the companies participating in those segments are sharing aircraft sales success equally.
Is it the economy- fuel prices- or other factors? GAMA believes the industry still needs a helping hand- and is calling on the U.S. Congress to extend the bonus depreciation provision currently in the American tax code. In fact- GAMA says this is its number one legislative priority for this year.
Bonus depreciation is scheduled to expire in January- so Congress will have to act this Fall if this tax benefit is to be preserved. In the meantime- it will be interesting to see how the aircraft sales market continues to evolve throughout the remainder of 2004. Will the recovery continue to blossom as forecast? On the other hand- will the hiccup in the singles market foretell tougher times ahead?
The GAMA aircraft sales numbers in the next two upcoming quarters should give us considerable insight into the answers to these questions. As always- the numbers will be interesting.