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GAMA Second Quarter 2008 Shipment Analysis

Pistons pick-up as golden age continues to shine.

The second quarter sales numbers from the General Aviation Manufacturers Association (GAMA) are out. The good news- in the words of conservative commentator Ben Stein- is that the bad news is wrong! The big-time collapse of the piston market we saw last quarter appears now to be just an aberration – and that’s very good news for the long term prospects of the turboprop and jet aircraft for sale markets.

Yes- the piston numbers are still down from a year ago – by 15.7 percent for the first half of the year- but they are only down about 5.8 percent in the second quarter compared with last year. That’s nothing like the 27 percent drop we saw in the first quarter of this year. We’ll still have to see how the remainder of the year unfolds- but for now it appears that the big downturn in the piston market – which some observers (including myself) believe could signal upcoming trouble in the turbine markets – is not nearly as serious as it looked three months ago. Stay tuned for more developments.

Elsewhere in the latest GAMA shipment report- the news is still sensational. Jet sales are up by 39.3 percent. Turboprop sales are up by 19.4 percent. Billings are up 24.1 percent- for a total of $12.1 billion. Everything is at record levels. How much better can it get?

Projecting the second half numbers forward to an annual total- based on market performance last year- we are looking at hitting $27.2 billion in sales for 2008. GAMA’s take on all this continues to be cautiously optimistic. President and CEO Pete Bunce said that 'Shipments in the business jet and business turboprop aircraft for sale segments continue to rise steadily. Expanding worldwide markets are having a very positive affect on the turbine segments of our industry.”

GAMA is still clearly concerned about the piston market- though. “Although total shipments in the piston segment are down for the first half of 2008-” Bunce said- “we believe recent success of the world’s premier general aviation show in Oshkosh- Wisconsin- is a good indicator of sustained enthusiasm for the light end of the market.”

Bunce noted “despite uncertainty with fuel prices and strength of the North American economy- the energy surrounding the entire spectrum of general aviation remains robust. Our piston manufacturers continue to generate excitement through new product introductions that incorporate innovative technologies and are paying increased attention to growth opportunities in the international market-” he said.

Looking closely at the piston market- there are plenty of reasons to be optimistic. Of 11 piston aircraft manufacturers reporting to GAMA- nine had a better quarter in terms of unit deliveries during the second three months of 2008 than they did in the first. Two of the nine actually exceeded last year’s results. And- interestingly- of the two that didn’t match their first quarter unit delivery numbers- one actually had a significant gain in dollar sales volume despite the fact that their unit deliveries were down. That’s good news.

Of course- based on historical performance you’d expect second quarter sales to exceed first quarter numbers- but the strength of the second quarter gains this year are encouraging. For example- Cessna was up almost 87 percent from the first quarter. Cirrus showed up even better- up 114 percent. Mooney meanwhile was up 53 percent; Piper was up almost 47 percent for its single-engine products- and 142 percent for its twins - and those numbers have to make you smile!

Single Engine Airplanes for Sale 
Cessna continues to lead the single-engine piston market by a wide margin- with 324 total deliveries for the first half of the year- although that is still well short of its 2007 pace. Exactly how short depends on how you choose to calculate the numbers. Comparing Cessna’s results with last year can be a little confusing- because this year’s total includes the airplanes formerly built by Columbia Aircraft- and last year’s does not.

Columbia went out of business in mid-2007 and was acquired by Cessna at the end of the year. Ironically- Columbia was having a pretty good year from a delivery standpoint before financial disaster struck- and GAMA lists Columbia deliveries as 47 units in the first quarter and 54 in the second- for a total of 101 airplanes.

In GAMA’s 2007 report- Cessna had 352 deliveries for the first half of the year- including 133 in the first quarter and 219 in the second. This year’s report shows Cessna with 113 airplanes in the first quarter and 211 for the past three months- totaling 324 for the half- or about eight percent below last year. Not too bad!

Cessna’s 324 total- however- includes 46 of the airplanes formerly built by Columbia- so it could be argued that this year’s Cessna result should be compared against the combined Cessna and Columbia total from 2007- which would be 453 units (352 + 101). By this method Cessna is more than 28 percent behind last year. Not so good!

Still another way to look at Cessna’s results is to back the 46 former Columbia airplanes out of this year’s total. By this method- which compares Cessna’s traditional high wing product sales (278 units) with last year’s (352)- sales are down 21 percent for the half. Looking just at the second quarter by this method- Cessna’s results are better – off about 17 percent- with 219 deliveries in 2007 and 181 this year. It all depends how you figure!

The manner in which the Columbia story unfolded in 2007 is having a significant effect on how the overall piston market is looking this year. After its strong first half- Columbia production scaled back to almost nothing by the end of last year. Statistically- this is causing the first half of 2008 to look worse than it really is. It will also cause the second half to look better. Now that Cessna is in charge- production of the former Columbia airplanes appears to be headed back toward previous levels. If Cessna can bring production of its 350 and 400 somewhere close to the 50-units-per-quarter range (where they were before Columbia failed)- it will go a long way toward erasing the downturn in the piston market we’ve seen in the last several months.

Elsewhere in the piston market Cirrus is solidly in second place with 239 deliveries. Until last year- Cirrus appeared to be moving into a position to challenge Cessna’s longstanding market leadership in the single-engine piston category- but with the addition of Columbia’s products- Cessna’s number one position seems quite secure for the time being.

Cirrus had its own production issues last year as it completed re-tooling its wing design. Its production had been averaging close to 180 units a quarter in 2006- but its early 2007 rates were more modest due to production changes. The low point for Cirrus production came in the second quarter of 2007- when the company delivered 124 units. By the fourth quarter Cirrus was back to delivering 249 airplanes for the quarter. It was a surprise- therefore- when Cirrus reported just 76 deliveries in the first quarter of this year. For the second quarter- however- Cirrus had 163 deliveries – a 31 percent gain over its 2007 second-quarter performance and 114 percent ahead of last quarter. Things are getting better.

Third place in the single-engine piston category for the first half of 2008 is once again held by Diamond. The company’s 81-unit total for the second quarter exactly matched the 81-unit total it had in the second quarter a year ago- and represented a 19 percent improvement over the 68 units it delivered in the first quarter of this year.

Piper is in fourth place in single-engine piston sales- and its numbers are actually ahead of last year’s. Piper delivered 44 airplanes in this category during the past quarter- compared with 39 a year ago. Piper’s first quarter numbers this year were equal with last year’s- so its half-year total is also ahead of 2007- by slightly more than seven percent. In raw numbers- that’s 74 this year compared with 69 last year. No piston downturn here.

Mooney is in fifth place in single-engine deliveries with 33 units for the first six months of 2008. The company had a nice recovery from its disappointing first quarter- delivering 20 airplanes in the second quarter. This is up 53 percent from the 13 Mooneys recorded in the first three months of the year- although it didn’t quite match the 22 it delivered in the second quarter of 2007.

Next in single-engine piston sales was Hawker Beechcraft- with 31 units for the half. Second quarter results were 16 units- one ahead of the first quarter- although still trailing the 2007 second quarter total of 21. American Champion had 17 deliveries in the second quarter- up 54 percent from the 11 airplanes it reported for the first three months of 2008- but about 12 percent behind its 2007 first half total of 32. Liberty- with 10 units in the second quarter- matched both its first quarter result as well as its second quarter 2007 total. The 20 units it has delivered so far in 2008 are behind the 26 it had for the same period last year- however.

Maule was one of the two companies whose single-engine piston sales for the second quarter did not exceed their first quarter totals. Maule delivered 16 units for the first half of 2008- with nine coming in the first quarter and seven in the second. In spite of the reduced number of deliveries- Maule’s billings were actually higher in the second quarter than in the first by more than 16 percent - $1.55 million- compared with $1.33 million. That’s because- in addition to delivering its seven piston airplanes- Maule also delivered its first turboprop – designated the M7-420AC. Good show- Maule!

Gippsland defied all odds by having better numbers in every category this year than it did in 2007. The company delivered 12 airplanes in the first half- up more than 71 percent from last year’s total of seven. The company’s second quarter total- also seven units- was up 75 percent from the four it recorded in the second quarter of 2007- and also up 40 percent over the five it delivered in the first quarter of this year – which itself was up more than 66 percent over the three deliveries it had in the first quarter of 2007. Downturn? For Gippsland- these are boom times.

Sadly- Alpha isn’t doing very well in 2008. It has had only one delivery this year- coming in the first quarter- down from six in the first half of 2007.

Twin Engine Airplanes for Sale - better than singles
The piston twin market is doing better than the singles. Second quarter piston twin numbers matched last year’s total for the same period- at 59 units. That is amazing considering what is happening in the piston market. Diamond- the leading builder of piston twins- has just seen its engine builder go out of business. In spite of this significant setback- Diamond’s sales are only off 20 units for the year to date- down from 82 units a year ago to 62 this year.

Sales at the two other piston twin manufacturers are up sharply this year- though- so the overall market is holding solid- with 107 total units for the first half of 2008 compared with 110 in the same period in 2007.

Hawker Beechcraft twin sales are up 50 percent from 14 deliveries last year to 21 this year. Piper’s are up even more- gaining 71 percent this year with 24 sales- compared with 14 last year.

So- over all- the piston markets are doing pretty well. After a weak start- we’ve seen a strong second quarter. If this trend continues- it is possible piston sales could finish the year even or very close to last year’s totals. In the current environment of high fuel prices and a weak U.S. economy- that would be a significant achievement- attesting to the overall health of the piston market.

The Business Turboprops for sale are doing fine
There isn’t much concern about the health of the rest of the market. It’s doing great. In the turboprop segment- for example- deliveries increased from 186 units last year to 222 in the first half of 2008 - a gain of 19.4 percent. Of nine companies now participating in the turboprop market- two failed to match or exceed their 2007 totals. The number of turboprop manufacturers is increasing- with one all-new market entry and another looking like it might come back from what looked like oblivion.

Hawker Beechcraft continues to be the market leader in turboprops- with a total of 79 deliveries in the first half – 50 of them coming in the second quarter. That represented an increase of 27.4 percent for the half and 47 percent for the second quarter of 2008 – substantially outperforming the market average. The King Air C90GT was the largest selling turboprop for the first six months- narrowly edging out the Pilatus PC-12 which has held this position in recent years.

Second place in the turboprop race goes to Cessna- with 41 units for the half year- divided among its Caravan models.

Pilatus- which has had a lock on the number two position in the turboprop market for most of this decade- slipped to third spot in the turboprop sales with 35 deliveries. This half must have been a disappointment to Pilatus- which failed to match its 2007 totals for either the first half (41 units last year) or the second quarter (21 deliveries in 2007 compared with 13 this year).

Socata was fourth for turboprop deliveries for the half-year- with 24 TBM 850s shipped- which was 33 percent ahead of the 18 units it delivered in the same period in 2007. The 18 unit total Socata recorded in the second quarter of 2008 was 45 percent above its 2007 second quarter total of 11 aircraft.

Piper was fifth in turboprop sales with 20 units- a total that didn’t quite equal the 21 airplanes it delivered in the first half of 2007. Piper’s second quarter total of 14- however- was one unit ahead of its 2007 second quarter total. And Piaggio was next in deliveries with 13- up 117 percent over last year’s first-half total of six. Piaggio only reports to GAMA every six months- so there are no quarterly comparisons available.

Rounding out the turboprop market were Pacific Aerospace with six for the first half- up 50 percent over last year- and Quest- with three. In 2007 Quest had not yet delivered any airplanes. As noted earlier in the piston segment of this report- Maule joined the list of turboprop manufacturers with its first turbine delivery.

The Business Jets for Sale
Adam Aircraft- which declared Chapter 7 bankruptcy last year and was thought to be finished- has apparently been rescued by new investment from Russia. Adam hasn’t delivered any airplanes in 2008 and is not on GAMA’s list of active manufacturers- but it may yet be making a comeback.

Meantime- the jet market continues to set new records- at an almost unbelievable pace. For the first half of this year- 663 new business jets were delivered – an increase of 39.3 percent over the 476 jets delivered in the first half of last year. In spite of this huge market increase- however- two of the 10 jet makers did not report gains for the first half of 2008 over what they achieved a year ago. Even in the best of times- there’s always a little softness in the market somewhere.

Perennial market leader Cessna turned in a dominating performance in terms of units- delivering 117 business jets in the second quarter alone. This was more than all but one of its competitors delivered for the entire first half of 2008.

Cessna’s first half total was 213 units- up 30.7 percent from the 163 it delivered during the same period in 2007. Cessna’s sales were quite evenly distributed throughout its product line- with its Mustang- CJ3- XLS and Sovereign models all selling more than 30 units each.

Meanwhile- Bombardier continued in its familiar position as the billings leader in the jet market- taking $3.39 billion for the first half- and coming in second for unit deliveries with 134 units for the same period. The represented a 23.8 percent increase in billings and an 18.6 percent increase in deliveries for Bombardier during the second half of this year over the correlating period for 2007.

Bombardier’s evenly distributed delivery numbers – 67 units in each quarter in 2008 compared with 56 and 57 in the two quarters of the preceding year – indicate an organization with well balanced production.

Taking third place in the jet delivery derby this quarter (and for the first half of 2008) is Eclipse – a company whose deliveries have grown at a remarkable rate in less than three years. Eclipse made its debut in the jet market at the end of 2006 with a single delivery- tying Sino Swearingen (which also made its first delivery that year) for ninth place in the jet market.

By the second half of 2007- Eclipse was in sixth place with 21 deliveries. At the end of 2007- Eclipse had advanced to fifth place- with 98 deliveries. Now it sits in third place- with 112 units for the first half of 2008- a 433 percent increase over its first half performance in 2007.

In spite of this rapid growth- all is not well at Eclipse- with founder and CEO Vern Raburn stepping down recently as new investors brought in the necessary capital to stave off a financial catastrophe.

Longtime third place candidate- Gulfstream- is now in fourth place in the deliveries stakes with 76 units for the first half of the year- up from 66 last year. That’s a 15 percent gain over last year. Gulfstream continues to maintain its second place ranking in billings- though- with $2.61 billion for the half. This is up 13 percent over the $2.3 billion it took in during the first half of 2007.

Hawker Beechcraft currently holds the fifth spot in jet deliveries- with 70 units in the first half of 2008. Fifty of these came in the second quarter. If Hawker Beechcraft equals its second quarter sales in the third quarter of this year- it will overtake Gulfstream for the fourth position in total jet deliveries.

Dassault Falcon is next in jet deliveries- with 34 units for the half- up 13 percent from 30 in 2007. All of Dassault’s gains came in the first quarter. Its second quarter total of 19 matched its 2007 second quarter sales.

Embraer continues to expand its market for its Legacy 600- with 16 deliveries so far this year compared with 13 a year ago. Embraer’s quarterly totals were ahead of last year by two units in the first quarter and one in the second. Airbus continues to lead in the market for airliner-based business jets with six units in the first half of 2008- up from five a year ago. Airbus had a strong second quarter this year- with four deliveries.

Boeing- by contrast- didn’t report as many BBJ sales as it had a year ago- dropping from three units in the first half of 2007 to two this year. It was the only business jet builder to report lower sales for the first half of 2008 than it had in 2007.

Sino Swearingen remained even- with no sales in either the first half of 2007 or 2008. With new investment coming into the company now from Kuwait- however- it seems probable that deliveries of its SJ30 light jet will resume before the end of this year. When that happens- the airplane may not be called SJ30 and the company may not be called Sino Swearingen. The new investors are reportedly looking at re-branding both the product and the company.

On balance- then- 2008 is turning out to be another great year for aircraft sales. Piston sales appear to be picking up speed. The turboprop market is going great and the jet market has never been better. Enjoy this. We are living through a golden age of business aircraft sales.


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