The pistons have it for the first three months of the year.
Any hope that the surge relayed in the Year-End 2010 GAMA Shipment Report may have marked the end of the recession in our industry was dashed when GAMA released its first quarter delivery numbers in May.
Business jet shipments were off a staggering 22 percent from a year ago- down from 164 units to 128. Turboprops were down too- but not as much (56 units delivered this year compared with 60 in the first quarter of 2010). The only bright spot was the Piston deliveries- up 13.3 percent at 188 units- compared with 166 a year ago.
Overall- total shipments were off 4.6 percent- from 390 a year ago to 372- and for the first time in quite a while- total billings were also down by a hefty 19.6 percent- from $4.6 billion to $3.7 billion this year. This first quarter was the lowest quarter for GAMA billings since the second quarter of 2005. Not a very good start.
Many times when you look at the GAMA numbers- a careful analysis reveals a somewhat different picture than the top level numbers seem to indicate. This time- however- analysis seems to be bear out what the top level headlines tell us – there’s still a recession and recovery could still be some distance ahead.
There is- however- one strong piece of good news – the upturn in the piston market. I won’t say it’s impossible for this industry to develop a recovery that doesn’t have roots in the piston market- but in 35 years of studying this market I’ve never seen it happen. So when the piston numbers show a significant gain- that fact is very encouraging news.
Moreover- there is evidence that the piston market’s recovery may be even stronger than the top level numbers indicate. The Light Sport category also made significant gains- and while these airplanes aren’t listed in the GAMA totals- they are piston products of the kind that have traditionally helped signal pending recovery in our industry. At this point- I think we should be looking for all the positive indicators we can find.
THE JET MARKET
Things in the jet market this first quarter were grim. Of eight companies reporting deliveries- seven were down and one was even. The number of reporting companies was down- too- as Emivest was liquidated by a bankruptcy court earlier this year. Emivest’s SJ30 will apparently continue under a new name with new owners. Utah-based MT-LC has purchased Emivest’s assets and says it will continue building SJ30 jets.
Among the assets acquired were two nearly complete SJ30s- so deliveries could possibly resume as early as this year. There are currently four operational SJ30s. MT-LC is reportedly associated with (but is not the same as) Metalcraft Technologies- of Cedar City- Utah. Elsewhere in the jet market- the overall situation in business jet sales seems to be evolving.
Previously some segments of the jet market - most notably the very-high-end - had seemed largely immune to the effects of the recession. That was not true this quarter- as both Boeing and Airbus endured reduced sales for the first time in a while. Airbus was down from five units to three while Boeing delivered no BBJs in the first quarter- off from two a year ago.
Bombardier maintained its status as the jet market leader- with 42 deliveries worth $1.25 billion. An interesting change- however- is the mix of those airplanes compared with a year ago. Last year- all but seven of Bombardier’s 47 deliveries were super-midsize (Challenger 300) or larger. This year- 13 were light-medium or medium- including 10 of the Learjet 40 or 45 series. Last year- just one unit was a Learjet 40 or 45.
Cessna was solidly in second place for jet deliveries- with 31 units. Cessna was in fact the only manufacturer with delivery totals matching last year’s first quarter number. From a model standpoint- Cessna’s Mustang deliveries were down from 21 units to 11- but its CJ-series was collectively up at 13 units compared with six a year ago. Both Cessna’s and Bombardier’s results in the first quarter suggest some firming in the lower- to middle-portion of the jet market – a segment that was particularly hard hit last year.
Third place in business jet unit deliveries in the first quarter went to Gulfstream- with 24 units- (down from 28 a year ago). Of the 24 units delivered- 20 were larger models (G350 and up)- equaling the total of larger Gulfstreams delivered in the first quarter of 2010. Gulfstream’s billings totaled $1.045 billion- putting it in second place in terms of sales dollars.
As a comparison from better (pre-recession) times- Bombardier’s first quarter totals for 2008 (the industry’s best-ever year) were 67 units and $1.635 billion in billings. Gulfstream enjoyed 37 units (including 22 of its larger models) and $1.28 billion that quarter.
Cessna’s jet sales totaled 96- with a billings number impossible to calculate because the numbers are blended with the piston and turboprop sales from the OEM. Total jet sales in the first quarter of 2008 were 297 units – a number we called “amazing” at the time - although the total did include 52 units from ill-fated Eclipse. These numbers further illustrate the erosion that affected the lower and middle segments of the jet market more heavily than the high-end.
Looking at the rest of the jet market in the first quarter of 2011- Hawker Beechraft was the only other manufacturer with a double-digit delivery total- with 11 units (compared to 14 for the first quarter 2010). Like Cessna and Bombardier- Hawker Beechcraft’s deliveries were more evenly distributed across its product line this quarter than a year ago- when its two largest aircraft accounted for 12 of its 14 deliveries.
Dassault- which has no small jets in its line-up- reported nine deliveries for the quarter (down from 17 for 1Q 2010)- and Embraer was something of a surprise with just eight deliveries (compared with 20 a year ago). Up to last quarter- Embraer had been pretty much defying the trend of a soft market in the light jet segment. The Phenom 100 and 300 recorded collective deliveries of 126 units throughout all of last year- including 16 of the Phenom 100 and one Phenom 300 in the first quarter 2010. It was rather unexpected- then- that only two 100s and four 300s were delivered among this first-quarter’s totals. Two Legacy 600/650 models made up Embraer’s total.
There is some speculation that the strong surge in the jet market during the fourth quarter of 2010 (272 units delivered) had an impact on the first quarter 2011 deliveries. Fully 35.6 percent of all the jets deliveries last year came in the fourth quarter- so viewed from that perspective- it perhaps isn’t too surprising that tax decisions and other yearend incentives may have had an impact on the first quarter’s results for 2011.
That doesn’t make it any less sobering. It will be interesting to see whether the market picks up enough to match last year’s yearend total of 763 business jets for the year- or whether our industry is headed for a third straight year of reduced business jet deliveries.
Honeywell has always maintained that the bottom of this recession would see jet deliveries at - or below - the 700 unit range. Perhaps those forecasts will yet be proved right. While I deeply respect Honeywell’s forecast- I certainly hope that isn’t what develops!
THE TURBOPROP MARKET
Results in the turboprop market- although off 6.7 percent compared with last year- were a lot more encouraging than the jet market. Looking at turboprop sales- it’s not that hard to envision a scenario in which recovery might be developing.
Of eight turboprop manufacturers reporting to GAMA- three had better sales than a year ago- and one matched its prior year total. So- half the turboprop makers did at least as well as during the first quarter of last year.
The companies with improved results included Hawker Beechcraft - whose 16 deliveries led the category; Piper (seven units- up from two a year ago); and Pacific Aerospace (three units- up from two). Matching its first quarter 2010 total was Piaggio- with one unit shipped.
Down from last year was Cessna with 14 units- five off the pace set in 1Q 2010. Cessna’s reduction was also enough to knock it off top-spot for turboprop deliveries that it captured from Hawker Beechcraft over the course of 2010. Look for this to be a steady battle all year to see who will emerge as ‘King of the Turboprops’. (Also down were Pilatus (from 12 to eight); Socata (from seven to five); and Quest (from four to two).
It would not seem unreasonable to think the big fourth quarter 2010 surge- which saw 126 turboprops delivered in the last three months of the year also had some effect on this quarter’s turboprop deliveries. If that’s true however- it’s hard to see just how the numbers correlate to support this thesis.
Hawker Beechcraft- which had one of the strongest surges - 49 percent of their deliveries (36 units) - in the fourth quarter maintained its momentum moving into this year. So did Piper- which had a 40-percent surge (10 units) in the final quarter of last year. On the other hand- Socata- Piaggio and Pilatus- which also had strong year-end surges (37 percent- 45 percent and 39 percent- respectively) all lost ground in the first quarter- which is what you might expect from a big push to achieve maximum deliveries at the close of the year.
The biggest question about the turboprop sector is what we are to make of Cessna- which experienced no surge in the fourth quarter and nonetheless saw deliveries drop by 26 percent three months later. The same applies to Quest- which also had no fourth quarter surge and saw sales drop 50 percent in the first quarter compared to last year- although- in fairness- the reduction actually totaled only two units.
The bottom line - I think - is that the turboprop market is simply roiled right now as it struggles to find a recovery that isn’t quite there yet.
THE PISTON MARKETS
On the subject of recovery- we have a piston market too. In defiance of everything else going on in the GAMA report- the piston news is really quite good- with deliveries up 13.3 percent- from 166 units in 2010 to 188 this year. The story is actually better than that!
As mentioned above- listed- but not counted on GAMA’s shipment report are another 19 units from Cessna – the first of the company’s Skycatcher Light Sport Aircraft. GAMA’s reason for not including them is to keep the numbers consistent from year to year- since they represent a new category of aircraft.
For many flight schools these Light Sport Aircraft represent the new training aircraft that will help launch the next generation of new pilots. Their sales reflect growth in the light piston market- which finally seems to be signaling the onset of recovery in our industry- however slowly it may be occurring. So the sale of 19 new Light Sport Aircraft in the first quarter is worth noting.
In the traditional single-engine piston category- Cirrus jumped out to an early lead over Cessna with 61 deliveries- signaling that it is serious about maintaining its position as the leading builder of piston-powered airplanes. That represented a 15-percent increase over the 53 units Cirrus delivered in the first quarter of 2010.
Cessna recorded 42 units- up 40 percent from the 30 it delivered in the first three months of last year. (Of course- if Cessna had been allowed to count its 19 Skycatchers- it would have matched the Cirrus total). Interestingly- in spite of the overall strength of the piston market in the last quarter- not all the piston manufacturers recorded sales gains. Like the turboprop segment- there were a mix of winners and losers in the piston market. In fact- of the 10 piston manufacturers listed by GAMA- four had increases- five were down and one broke even.
The other companies reporting increased deliveries were American Champion and Hawker Beechcraft. Breaking even was Maule.
Diamond retained third place in piston single deliveries- with 18 units- off slightly from the 21 it recorded a year ago. While its single-engine deliveries were down- Diamond’s piston-twin sales were up sharply (see below)- so the company’s net deliveries were in the plus column.
Piper’s single engine sales were down sharply at 15 units- off 40 percent from the 25 it had during the first quarter last year. Also reporting reduced sales were Liberty and Gippsland (GippsAero Pty Ltd). Mooney made no deliveries- but the company has been effectively shut down for more than a year with no apparent prospects for re-starting.
The pist on twin market was positively vibrant- with 28 units – up 55 percent from a year ago when there were 18 delivered. The market leader - and biggest gainer - was Diamond which delivered 19 aircraft- up from 11 last year. Both of the other twin manufacturers also reported increased deliveries- with Hawker Beechcraft recording five- up from four a year ago and Piper with four- up from three in 2010.
If this trend continues- 2011 could become the strongest year for piston twin deliveries since 2005- when there were 139 units delivered (the last time piston-twin sales exceeded more than 100 units in a year).
That would represent a very small victory in the overall scheme of the business aircraft market recovery- but it certainly is a place to start. For the moment- at least- it’s a milestone we are on target to achieve! Realistically- it’s not unreasonable to believe that recovery should begin to manifest itself more dramatically as this year continues to unfold.
All the forces that should lead to recovery in our industry appear to be coming together. Corporate profits are up- in many cases quite sharply. The stock market is up. Economies around the world are beginning to recover. And now- even the piston aircraft market is looking better than it has in a long time.
With a little luck- recovery in the other segments won’t be far behind…