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An optimist could interpret the aircraft sales data

Mike Potts   |   1st December 2003
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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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An optimist could interpret the aircraft for sales data as a further sign that recovery is underway.

The General Aviation Manufacturer’s Association has published its numbers for the third quarter of 2003 and the numbers look pretty good. For the third quarter in a row- there are positive signs that the long-awaited recovery in business aviation has begun. In fact- the signs of recovery are stronger in this GAMA report than they were in either of the previous two.

Taken with the positive news of a very optimistic National Business Aviation Association convention in October- I believe we can be quite confident about the direction the business aviation industry is headed and the long-term prospects for improving airplanes for sale in the months ahead.

Moreover- if we can put any confidence in the highly-respected Honeywell and Rolls-Royce forecasts that were issued at NBAA in early October- the recovery now starting to develop should be strong and long-lasting – potentially extending to the end of this decade and beyond. How’s that for good news!

'Wait a minute-' you say. 'Are we talking about the same GAMA report? The one that just said total deliveries were down 9.3 percent from the same period last year- with industry billings off 24.4 percent? That doesn’t sound so darn optimistic.'

Well- yes- we are talking about the same GAMA report. And while the total year-to-date numbers from 2002 to 2003 are still down by quite a bit- a careful comparison of the aircraft sales figures between just the third quarter of 2002 and the third quarter of 2003 show a definite upturn in most segments- with the exception of the business jet sales. This is good news.

Moreover- the news is entirely consistent with what you would expect to see in a developing business aviation recovery- based on the historical performance of the market.

Typically- single engine airplane sales begin to pick up- then the twins and the turboprops start to show improvement. Last to recover are the jets for sale. A careful look at the Third Quarter GAMA Report paints just such a picture. Let’s look at the numbers from the specific companies- starting with the single-engine aircraft producers- in alphabetical order as GAMA presents them.

First is American Champion single piston aircraft for sale- builder of the classic Citabria- Decathalon and Scout series – classic light airplanes. American Champion reported twelve deliveries in the third quarter of this year- compared with thirteen a year ago. Off a little- but not too bad. Next is Cessna aircraft for sale. Last year they sold 133 piston singles in the third quarter. This year 136 – up a little. Then comes Cirrus- who were off somewhat – 119 in 3Q 2002 compared with 107 this year. Commander was down- too – from two units last year to zero this year. That is a cumulative net loss of twelve units if you’re keeping track so far- but things are about to brighten up.

Gippsland Aeronautics- a newcomer- reported five sales for this quarter- up from zero last year. Lancair single piston aircraft for sale scored fourteen units in the third quarter- compared with just four a year ago. Maule delivered thirteen- up from eleven last time- so our cumulative number is back to plus five now- and from here on it really improves.

Mooney aircraft sales reported 14 units in third quarter 2003 – up from zero in 2002. OMF- maker of the Symphony- delivered six airplanes. They- too- had recorded zero last year – so our cumulative total is suddenly 25 units ahead of a year ago- and it only gets better.

Raytheon delivered sixteen Bonanzas in the third quarter- up from eleven in the same period for 2002. Socata’s numbers were off a little – eleven single-engine pistons this year compared with fifteen the year before. The New Piper Aircraft numbers were up six units in the piston single category- from 31 a year ago to 37 this year. Tiger also improved- from three airplanes in 2002 to five for third quarter 2003.

That’s a net gain of 34 units over the same period a year ago – a 10-percent jump in the total number of piston single-engine airplanes delivered – 376 compared with 342. Clearly the single-engine piston sales market is improving.

The same cannot be said for twin engine airplanes for sale- but the segment is so small that it hardly matters. There were 15 piston twins delivered in the third quarter of 2003- compared with 24 the year before. There are only three models of piston twins in production right now – the Beech Baron single piston aircraft for sale- Piper Seneca V twin piston aircraft for sale and Piper Seminole aircraft for sale.

Baron and Seneca sales were essentially flat- with the Baron one unit ahead of last year’s total (six vs. five) while Seneca deliveries were off two (from seven to five). Piper Seminole for sale- on the other hand were off by 67 percent- down from twelve in 2002 to just four in the third quarter of this year. Those numbers almost certainly reflect a tough market for piston twin trainers- while the Baron and Seneca numbers would appear to indicate a stable albeit limited airplane for sale market for owner-flown piston twins.

If the market is playing according to the predicted script- the next segment to show recovery signs should be the turboprops. Sure enough- in the third quarter of 2003 the turboprop market began to show that it may have hit bottom and could be starting to rebound. Turboprop aircraft sales were actually up almost 8.5 percent from the year before in the third quarter- but the raw numbers were so small that the percentage of change is probably statistically meaningless. Nonetheless- the raw numbers painted an interesting picture.

Single engine turboprop sales were more or less flat compared with a year ago- recording 43 units- down one from the 44 delivered in third quarter 2002. The biggest change was in Cessna Caravan deliveries- which were off ten units from a year ago- while Pilatus posted a gain- from eight airplanes delivered to seventeen.

Socata TBM 700 for sale recorded a net gain of three units in the third quarter this year- up from six units to nine- while the Piper Meridian business turboprops for sale lost an equal number of sales- falling from six deliveries to three in the quarter. With numbers this small- however- it is virtually impossible to identify meaningful trends.

In the twin turboprop category- Raytheon saw sales in its King Air series beginning to pick up a little- improving from eleven units in third quarter 2002 to eighteen units in this year’s third quarter. The only other entry in this category is the Piaggio Avanti business turboprop aircraft for sale- which scored three deliveries in this quarter’s GAMA report- compared with just one delivery in the same period a year ago.

The combined effect of single - and twin-engine turboprop deliveries was a net increase of five airplanes- from 59 units in the second quarter of 2002 to 64 units in the third quarter of this year. It will be interesting to see if this trend continues in the next few quarters. One would expect that it might- based on historical trends of the market.

Whether we can put too much faith in those trends would be a fair question. Over the past ten years the business turboprop aircraft for sale market has experienced a significant evolution- from being a mainstream product to becoming a niche market player. The eighteen King Airs Raytheon delivered in the third quarter just passed would have accounted for less than three weeks of airplanes for sale during the airplane’s peak year of 1981. That was a year when Raytheon (Beech Aircraft back then) delivered 435 King Airs – and that represented only about half of the total twin-engine turboprop airplanes for sale market. Clearly- the airplane sales market has changed.

Nonetheless- the turboprop segment experienced improvement in the third quarter of this year over a year ago- and that is a good sign that the overall business aircraft sales market is well into the recovery mode.

The business jets for sale market is still languishing- but that is to be expected since it’s historically the last to enter recession and the last to recover. The third quarter saw corporate jet deliveries fall nearly 20 percent from a year ago- dropping from 146 units to 117. A closer look at the numbers- though- reveals a somewhat more complex picture. Some jet manufacturers were way off their third quarter 2002 pace this year- while others held their ground or actually gained a little.

The biggest loser was Cessna aircraft sales- which saw every model in their jet product line fall below last year’s results. Cessna delivered 42 jets in the third quarter of 2003- compared with 74 in the third quarter of 2002. Falcon also experienced a tough quarter- delivering ten aircraft during the third quarter compared with eighteen a year ago.

By contrast- Raytheon’s jet deliveries were up 31 percent over a year ago- rising from sixteen units in third quarter 2002 to 21 in the same period this year.

Other companies with improved jet deliveries over the same quarter a year ago included Gulfstream- up from seventeen to nineteen; Bombardier- up from sixteen to seventeen; Embraer- up from one unit to three- and Boeing- up from two to three.

As sometimes happens- there were some anomalies in the GAMA numbers. Two examples occurred in the jet category this quarter. One involved Airbus- which reported the delivery of one ACJ in the third quarter of 2002- but for whatever reasons- isn’t reporting its results in 2003- so we don’t know whether Airbus gained- lost or stayed even.

Then there is Fairchild Dornier and AvCraft. Fairchild Dornier reported the delivery of two Envoy 3 heavy jets in the third quarter of 2002- and then disappeared from the GAMA listings as a result of Fairchild Dornier’s bankruptcy and subsequent dissolution.

After an absence of three quarters- the Envoy 3 re-emerges in the latest GAMA report with three deliveries under the company name AvCraft. To make sense of this- it is necessary to know that AvCraft acquired certain of the Fairchild Dornier assets in the interim- including a number of completed Envoys- which are corporate versions of the Dornier 328 regional airliner.

Summing up the business jets for sale category- we see that while the overall market is still down from a year ago- some of the players have started to exceed their 2002 results on a quarter-to-quarter basis. An optimist could interpret this data as a further sign that recovery is underway.

So there you have it – a third quarter 2003 GAMA report that initially looks quite grim- but on closer examination supports the contention that recovery in business aviation is definitely underway. Look for improvement to continue as we finish 2003 and move into 2004.

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