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Mike Potts

Mike Potts   |   1st March 2007
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Mike Potts Mike Potts

Mike Potts is a writer and consultant who has been involved in aviation for more than 30 years....
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March 2007

2006 Year-End GAMA Shipment Analysis

$18.8bn billings represent nearly 25% increase on final numbers for 2005.

This was one for the ages – there’s no doubt about it! The General Aviation Manufacturers Association held its annual Industry Review and Market Outlook on Monday- February 12- and confirmed what those of us watching the market throughout last year already knew… 2006 was a record setting year in business and general aviation – one of the best ever!
   How good was it? Financially it was simply the best year ever – by far. Total billings reached $18.8 billion- an increase of 24.1 percent over the $15.1 billion we recorded a year ago- and almost twice the $9.9 billion sold as recently as 2003. That’s almost 90 percent growth in just three years. Amazing!
   Unit deliveries- meantime- totaled 4-042- the best in the last 24 years.
It was the best year ever for business jets- by a wide margin. A total of 885 business jets were delivered in 2006 - a 13-percent increase over the 784-unit total in 2001- which was the previous best year. 
   Business Turboprop Aircraft for Sale had a banner year- too- with 407 units- also the best since 2001. Piston-powered aircraft deliveries totaled 2-750- the strongest since 1982. Piston twin deliveries- at 242 units- were the best since 1984.
   Speaking at the Industry Review and Outlook Briefing- GAMA Chairman Dr. John J. Grisik attributed the strong results to “worldwide economic growth- a strong export market- and increased use of general aviation for both business and personal use.”
And Grisik is predicting no end to the party: “As our aircraft manufacturers continue to fill their order books- GAMA anticipates another robust year for general aviation in 2007 and beyond.”

The milestones established in 2006 extended beyond just delivery records. Two new airplanes from all new airplane companies made their debuts- both as the year was coming to a close.
   The first Sino Swearingen SJ30 business jet for sale was delivered in the fourth quarter- although the company apparently did not join GAMA soon enough to be included in the year-end shipment report – so the jet total is actually one higher than noted.
And the first Eclipse 500 from Eclipse Aviation – the first entrant in the Very Light Jet or VLJ category – was delivered in the final hours of 2006.
   Yet- even as these two deliveries heralded what may be a whole new era in business aviation- one of the older companies in the industry was changing hands. Raytheon Aircraft- formerly the Beech Aircraft Corporation- was sold to a consortium of new owners consisting of Onex Partners of Toronto and GS Capital Partners- an affiliate of Goldman Sachs in New York City- in a deal reportedly worth $3.3 billion US. The new company will be called Hawker Beechcraft Corporation- once the deal is completed around mid-2007.
   Raytheon bought Beech in 1980- renaming it Raytheon Aircraft in 1993- about the same time that it merged Hawker into the organization.
   As good as the market was in 2006- though- it wasn’t strong enough to sustain all the players who were present in 2005. AvCraft Aviation- maker of the Dornier 328 regional aircraft for sale- which was also sold as the Envoy3 business jet- was out of business as an aircraft manufacturer by 2006.
   Tiger Aircraft faltered early in 2006- delivering only three aircraft for the year (and those in the first two quarters) compared with 15 in 2005. The Tiger factory in West Virginia is now closed- so it is unlikely there will be any more Tigers anytime soon. Tiger’s demise apparently was more related to internal affairs involving its investors than any lack of interest in the market for the product.
   For all of the records and milestones established in 2006- I suspect that aviation historians looking back on the year just passed will remember it mostly for the continuing emergence of the business- and mostly for the continuing emergence of bigger and bigger business jets for sale

The airliner-as-business-jet really came of age in 2006- with 23 bizliners delivered between manufacturers Boeing and Airbus. Strictly speaking- it wasn’t the highest year for bizliner sales (that actually came in 1999- the first full year after Boeing introduced the concept). But after that initial surge- and a couple of fairly good years following- the sale of airliner-based business jets fell-off with the business aircraft downturn that followed 9/11 and the recession years that came after.
   Beginning with last year- however- there has been a steady increase in demand for these products- and both Boeing and Airbus appear to be delivering at a consistent rate of two to four units each per quarter that appears to be sustainable well into the future.
   Boeing is reporting sizeable backlogs for its 737-based BBJ model- and has announced a new version that will be built around the 757 platform. Airbus is already delivering models derived from its A318- A319 and A320 series.
   Airbus and Boeing business jets for sale billings for the year totaled almost $1.1 billion U.S.- thus more than six percent of the total sales dollars were spent on just 23 airplanes.

For the second year in a row- business jets for sale were the fastest growing segment of the market. This year the growth rate was 18 percent over a year ago. By comparison- the piston segment grew at a rate of 11.6 percent and business turboprops for sale were up 11.5 percent.
    The business jet market was so strong in 2006 that two of the manufacturers each had sales in excess of $4 billion. One- Bombardier- nearly reached the $5 billion mark- finally totaling out the year at $4.82 billion on sales of 213 business jets. That was up from $3.87 billion on 188 units a year ago. To put that into perspective- $4.82 billion is more than the full total of GAMA billings for the entire industry in any single year before 1998. From just one company!
   Bombardier’s strongest sales were in the middle of its market- with its Challenger 300 for sale model leading the line with 55 units. Next came the Learjet 45/XR with 30 units- followed closely by the Challenger 604 with 29.
   In second place for jet billings was Gulfstream- with $4.12 billion for a total of 113 deliveries. This also represented a significant gain over last year- when Gulfstream delivered 89 airplanes worth $3.43 billion.
   Gulfstream consolidates its model reporting into two groups- the smaller Gulfstream G150 for sale and Gulfstream G200 for sale- which were based on models acquired from IAI a few years back- and the larger traditional Gulfstream Jet for sale models – the Gulfstream G350 business jet for sale- Gulfstream G450 aircraft for sale- Gulfstream G500 business jet for sale and the Gulfstream G550 business jet for sale. The bigger airplanes outsold the smaller ones by a total of 71 to 42.
   The sales leader in business jet unit volume- however- was Cessna by a significant margin. Cessna reported deliveries of 307 business jets in 2006- up 60 units from the 247 it recorded in 2005. That’s a production increase (and sales increase) of almost 24 percent in a single year – a significant manufacturing feat that speaks volumes about Cessna’s confidence in the continuing strength of the market.
   Because Cessna reports its dollar sales in a combined format that includes its jets for sale- business turboprops aircraft for sale and piston products in a single total- it’s impossible to tell exactly how much its 307 business jets were worth. We do know- however- that they were below the Bombardier and Gulfstream totals since Cessna’s total sales volume- at $2.6 billion- was lower than the former two companies’ totals.
   Cessna’s largest selling model was its mid-size Citation XLS with 73 deliveries- followed closely by its entry-level CJ3 at 72 deliveries. The third best seller in the Cessna line was its super mid-size Sovereign at 57 units.
   Cessna’s CJ line- including the Citation CJ1+ for sale- Citation CJ2 business jets for sale- Citation CJ2+ aircraft for sale and Citation CJ3 airplanes for sale finished with a strong collective total of 134 units in 2006. This light jet/entry level segment had been the slowest segment of the business jets for sale market to experience strong recovery- but it now appears to be doing very well as 2006 came to a close.
   Raytheon had a solid year for jet production- delivering 140 units- which was virtually identical with its 141-unit total from a year ago. Like Cessna- Raytheon reports combined sales totals for jet- turboprop and piston segments- so you can’t tell exactly what its jet sales volume was. Like the other jet manufacturers- though- Raytheon sold more expensive jets than modestly priced ones. Raytheon’s leading model for 2006 was its top-of-the-line 850XP model- which accounted for 45 percent of its total jet sales.   The next major player in business jets for sale in the past year was Dassault- which had steadily been building up its production capability to meet growing market demand. Dassault finished the year with $1.77 billion in sales that spanned 61 units- including 25 in the fourth quarter. Dassault’s total was 10 units (or nearly 20 percent) ahead of its previous year’s total of 51 units worth $1.41 billion.
   Dassault’s best selling products were its biggest airplanes- the Falcon 2000EX EASy for sale and the Falcon 900EX EASy business jet for sale.
   Embraer- meantime- enjoyed strong sales growth with its Embraer Legacy Executive business jet for sale model- delivering 27 units over the 12 months of 2006. This represented a 35-percent increase over the 20 Executives the company delivered throughout 2005. Embraer’s billings totaled $637.2 million- up 41 percent from the $449.4 million it reported in 2005. Finally- the business jet market was swelled by the first deliveries from Sino Swearingen and from Eclipse- noted above. With every jet maker except Raytheon reporting significant delivery increases- it was an unprecedented year for business jets for sale.
   And with the advent of the VLJs we can look for the business jet aircraft for sale growth rate to increase even faster over the year ahead. The 885-unit record set for jet deliveries in 2006 will almost surely be surpassed next year- and whatever record is finally established in 2007 probably will not stand beyond 2008. We are truly seeing what I believe is a greening of the business jet market that will make most of the years prior to 2000 look like the dark ages.

It has been speculated upon that this period of unprecedented growth in the jet market will finally signal the end of the road for the turboprops - but I don’t really believe that’s true. There are some missions – particularly short trips under 400 miles- or operations involving short or unimproved runways – that will always favor the turboprop and that should ensure their continued place in the market for the foreseeable future. As if to prove this point- the business turboprop aircraft for sale market enjoyed its best year since 2001- and the third best year for turboprop sales since 1982.
   Leading the turboprop for sale market was the traditional leader in this segment- Raytheon- with 140 units from its venerable King Air line. Interestingly- Raytheon’s historical top seller- the Super King Air 200 business turboprops for sale- was outsold by its two stalemates- the C90B/GT with 52 units and the Super King Air 350 with 46. The Model 200 came in third- with 42 units. (In addition to its commercial sales- Raytheon sold two King Airs (both Model 350s) and 62 T-6A Texan single-engine trainers to the U.S. military.)
   The two largest selling turboprop models were non-Raytheon products- however. At the head of the line was the Pilatus PC-12 business turboprops for sale with 90 deliveries- followed by the Cessna’s Caravan 1B with 59.
   Single-engine turboprop competitors Piper and Socata finished the year with the Piper Meridian outscoring the TBM 850 by 49 units to 42.
   It’s also well worth noting that Piaggio’s Avanti recorded a surprisingly strong finish at the end of the year with 16 deliveries in the fourth quarter. In each of the previous three quarters- Piaggio had reported just one Avanti delivery- and thus ended the year on 19 units.
   All of the turboprop makers except Cessna reported stronger sales in 2006 than they had the year before.

The single engine airplanes for sale market continued to grow in 2006- with the highest sales volume in the past 24 years. That’s really good news- because weakness in the piston market would likely be a harbinger of bad news to come. Of course- we all know that this strong market won’t last forever- but for the time being at least- there is no sign that things are even starting to slow down.
   Cessna led the piston segment with 865 units – a number that is higher than the total piston aircraft market in any of the years between 1990 and 1996. This is a five-percent increase over the 822 piston products Cessna delivered in 2005.
   The largest selling single piston model continued to be Cirrus Design Corporation’s Cirrus SR22 single piston aircraft for sale- with 565 units for the year. This was a 90-unit increase over the 2005 total of 475 SR22s. Total Cirrus production reached 721 units- up from 600 in 2005- or a production increase of more than 20 percent. That’s quite an accomplishment for a small and relatively new company in a single year.
   Diamond continued to be the third-place producer of piston singles- with a total of 275 airplanes including 220 of its DA40 model. Columbia was next- with 185 units for the year – up from 114 a year ago. That’s a remarkable production increase of more than 62 percent.
   Piper- with 152 single-engine piston airplanes- matched its 2005 total- while Raytheon’s classic Bonanza model- approaching its 60th anniversary of continuous production this year- saw sales climb by more than 12 percent- up from 71 units in 2005 to 80 in the year just past.
   Maule was up 40 percent over 2005- with a total of 38 aircraft delivered in 2006 compared with 27 the year before.
   Liberty Aerospace- which debuted in 2005 with two deliveries- had a total of 29 in 2006. This company made steady production and delivery increases throughout the year- to record a 1-350 percent improvement.
   Mooney was one of the few single engine Airplane for sale makers that did not see a sales increase in 2006. Its total of 75 was off 10 units from the 85 it delivered the year before. American Champion’s single piston aircraft for sale 60-unit total was also down from 89 in 2005. Gippsland- meantime- with 20 deliveries- was slightly off the 22 total it recorded in 2005.
   Both Symphony and Tiger failed to deliver any airplanes during the second half of 2006- and are probably finished. All in all- though- it was a very good year for single engine piston production.

Twin Engine Airplanes for sale
2006 was also a great year for twin engine airplanes for sale- largely due to the efforts of Diamond and its diesel-powered DA42 Twin Star.
   At the end of the third quarter I concluded the twin market could have a record year if Diamond could manage to match the 37 Twin Stars it delivered in the third quarter. I figured that if Diamond could just score another 37- and if Raytheon and Piper Aircraft could match their last-year totals- we could break 200 piston twin deliveries – a number not seen in the past two decades.
   Well- Diamond succeeded beyond my wildest expectations. Instead of 37- it managed to crank out 65 – that’s right- 65 Twin Stars in the fourth quarter. Both Raytheon and Piper held up their end of the bargain in the fourth quarter too- with 13 and 37 units respectively- and then Adam tagged on another three for good measure.
   The net effect: we blew through the 200 mark easily for a final tally of 242 piston twins in 2006. That’s quite a triumph for a segment of the market that has had little to cheer about for a long time. Good show- Diamond!

So what about the whole year? I had originally forecast that we might finish with 4-250 units- or maybe as many as 4-300. Even in this remarkable year of 2006- that forecast was a little too optimistic. GAMA’s final total was 4-042.
   Looking at the total numbers more carefully- though- it wasn’t quite as far off as I initially thought. It turns out that Aviat- makers of the Husky and the Pitts S-2C- didn’t report to GAMA at all this year. In the past Aviat has withheld numbers until the end of the year- and then reported a whole year’s worth at once. This year it didn’t. Based on previous years- that would have added another 50 to 60 airplanes for sale to the total.
   Aviat’s missing airplanes- along with the 66 military aircraft for sale delivered by Raytheon and Cessna that GAMA doesn’t include in its total- would bring the total number of airplanes delivered by GAMA member companies this year to between 4-150 and 4-200. Now if the VLJs had just met their early year delivery projections… Oh- well- maybe next year…
   There’s no doubt about it – 2006 was an epic year for business aviation. With a little bit of luck- 2007 will be even better- and that’s a good enough forecast to start off the year!

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