Let the party continue! The General Aviation Manufacturer’s Association (GAMA) has released its 2005 first quarter delivery and airplanes for sales figures- and the numbers were great. Shipments totaled 627 units- up 15.7 percent from the first quarter of 2004 and industry billings totaled $2.7 billion- up 14.1 percent.
To put that in perspective- $2.7 billion is more than the industry recorded for the entire year as recently as 1994.
Pete Bunce- GAMA’s newly installed president and CEO- noted that; 'strong industry billings speak for the overall health of the general aviation industry and importance of private aviation as part of the world’s transportation system.'
Bunce took over the top position at GAMA on April 1- shortly after his retirement from the U.S. Air Force- where he had most recently been director of Air Force Congressional Budget and Appropriations Liaison. GAMA is looking to maintain and perhaps strengthen its relations with the U.S. lawmakers.
'With each new airplane for sale certified and delivered to a customer- ' Bunce told attendees at the media conference where the GAMA numbers were announced- 'we introduce new safety-improving technology into the air space system.'
The safety-improving technology is also helping to drive aircraft sales. This is clearly evidenced in the single-engine airplanes for sale market where Cessna- Mooney- Raytheon and others are seeing sales of their piston models spurred by the addition of new Garmin avionics as standard equipment.
Looking at the first quarter GAMA numbers in detail- we see that all three segments of the industry recorded strong gains:
• Piston deliveries totaled 432 units- up 9.6 percent from the 394 aircraft delivered in 2004. The market for piston airplanes is actually probably stronger than this- because at least some of the major piston airplane manufacturers report that they are now at- or very close to production capacity.
• Business turboprops for sale scored the biggest percentage of increase- with the market growing more than 67 percent over a year ago. A total of 57 turboprops were delivered last quarter- compared with just 34 in the same period in 2004.
• Jet sales were up more than 21 percent- reaching 138 deliveries this year against 114 in the first quarter of 2004.
Clearly the good times are back in the general aviation manufacturing industry.
Interestingly though- not every company reporting to GAMA recorded an increase in total deliveries over a year ago. In fact- there were almost as many (nine) companies failing to match their 2004 totals as there were companies reporting increased airplane sales (10).
Companies whose aircraft sales for the past quarter surpassed their 2004 totals included: Bombardier; Cessna; Cirrus; Diamond; Embraer; Gulfstream; Lancair; Mooney; Pilatus; and Raytheon.
Companies with deliveries below their 2004 levels included: American Champion; AvCraft; Boeing; Dassault; Maule; Piaggio; Piper; Socata and Tiger.
One company – Gippsland – reported sales that were equal in both the first quarters of 2004 and 2005. And two of the companies that reported deliveries in 2004 – OMF and Pacific Aerospace Corporation – are missing from the GAMA list in 2005.
First Quarter Trends
The rising tide- evidently- is not lifting all the boats equally. But what does this mean? It’s hard to say at this point. There doesn’t seem to be any particular segment that is experiencing weakness. The list of companies reporting reduced sales includes makers of piston airplane for sale- business turboprops for sale and business jets for sale.
Nor is there any apparent commonality among the companies whose sales did not increase over the same period last year. Each situation appears unique. Nonetheless- the phenomenon is interesting and bears watching as the market develops over the coming year.
In assessing first quarter delivery data- it is also important to remember that the first three months of the year are historically the worst period for general aviation deliveries in the entire sales year. The degree to which this is true can depend to some extent on how aggressively individual companies push to record deliveries of airplanes in the fourth quarter.
In recent years the U.S. Internal Revenue Service has cracked down on companies recording sales of not-yet-delivered airplanes in the fourth quarter to boost year-end results- so this trend has been curbed somewhat. Still- the fact remains that a third of all aircraft sales are recorded in the fourth quarter and the following first quarter is usually correspondingly lousy. That’s just how it is.
Looking closely at the details of first quarter deliveries- some trends that were becoming evident over the past year appear to be continuing.
Business Jets Aircraft For Sale
In the business jet category- the middle segments are stronger than either the very top or the very bottom of the market.
At the high end- neither Airbus nor Boeing reported any deliveries this quarter- although it’s a little hard to tell from the GAMA report whether Airbus didn’t have any sales or just didn’t report them. Boeing reported two BBJ deliveries in the first quarter of 2004 but only one sale for the remainder of the year. AvCraft reported one delivery of a Dornier 328 jet- well off the four-unit pace it recorded in last year’s first quarter.
With just one BBJ delivery reported in the past 12 months- no news coming out of Airbus; and AvCraft apparently in financial trouble- it seems reasonable to conclude that the airliner-based business jet aircraft for sale market has yet to enter the recovery mode being enjoyed by much of the rest of the industry.
At the bottom end- in the light jet category the situation is better- but this segment is still not performing at pre-recession levels. Cessna’s Citation Jet series was buoyed by the introduction of a new model- the CJ3- and thereby was able to exceed last year’s first quarter Citation Jet sales total by five units- (18 to 13). The total of CJ1s and CJ2s collectively was two units below last year’s total however.
Raytheon’s Premier I business jet for sale matched its 2004 first quarter deliveries at three units. When you consider that the collective market for Citations and Premier Is totaled 145 units in 2002 and recorded just 84 last year- it is clear the entry level jet aircraft for sale market is still soft. Perhaps the introduction of CJ3 will stimulate it.
The strength of the corporate jet sales market is apparently in the middle of the market. All of Cessna for sale models above the CitationJet level- including the Citation Bravo business jet for sale- Citation Encore aircraft for sale- Citation XLS business jets for sale- Citation Sovereign business jet aircraft for sale and Citation X business jets for sale exceeded their previous year’s totals.
Gulfstream reports its sales by groups of airplanes rather than individual models- so it is harder to tell from Gulfstream’s numbers just where the greatest strength in the market might lie. But both of Gulfstream’s reporting groups were up- and dollar volume Gulfstream jets for sale in 2005 exceeded the 2004 total by more than $150 million- so clearly things are looking up in Savannah.
Raytheon’s Hawker business jet aircraft for sale series matched its 2004 levels- while sales of Bombardier’s smallest jet - the Learjet 40 - was below last year’s level. But all of the mid-market products in Bombardier’s line were up- including the Learjet 45/XR for sale and 60- the Challenger 300 business jets for sale and Challenger 604 business jets for sale and the Global 5000 business jets for sale. Bombardier’s Global Express was below its 2004 pace- supporting the observation that the top of the jet market is still a little soft.
Among the traditional business jet producers- only Dassault reported sales significantly below its previous year’s level. Dassault had five deliveries in the first quarter of this year- compared with 11 a year ago.
Looking at the turboprop market- where unit volume sales were up a whopping 67.6 percent- it’s hard to believe that any of the six manufacturers wouldn’t have met or exceeded their 2004 sales figures- but in fact two of them did not- and another only managed a tie. The other three- on a percentage basis- recorded huge increases. What an interesting market we are seeing.
Based on percentages- the big winner in the turboprop market was Cessna- where sales of its Caravan models went from three units a year ago to 22 in 2005. That’s a gain of 633 percent. It also puts Cessna in the position of being the leading manufacturer of turboprop-powered airplanes- at least for this quarter. That’s a position that Cessna would have jealously coveted in the late 1970s or early 80s- but today the title might not be so meaningful.
Traditional turboprop market leader Raytheon finished second in unit deliveries this quarter- with sales of 14 of its King Air business turboprops for sale models- compared with five a year ago. That’s a 180-percent increase over last year – respectable- but only good enough for third place in the percentage-of-gain category.
Second place in the percentage race (if there is such a thing) went to Pilatus- with a sales increase of 350 percent in its PC-12 model – up from two units a year ago to nine this year.
Faring less well in the turboprop market were Socata business turboprops for sale- which saw TBM-700 sales fall from nine to four- and Piaggio- where deliveries of Piaggio P-180 Avantis business turboprops for sale dropped from two to one.
Piper’s Meridian sales were stable at seven units both in this year’s first quarter as well as last year’s.
Piston Airplanes for Sale
Like the turboprop segment- the piston market was characterized by clear winners and some also-rans- but without the huge differences in percentage of gains and losses.
Cirrus- which chased Cessna closely (albeit unsuccessfully) through most of last year for the title of ‘World’s Largest Maker of Piston-powered Airplanes’- opened this year’s race by getting out to an early lead. Cirrus reported deliveries of 143 airplanes for sale compared with Cessna’s 102. The Cirrus total represented a 36-percent increase over the 105 units it recorded in the first quarter of 2004. Cessna- by comparison- actually lost a little ground- delivering four fewer airplanes this year than the 106 it delivered in last year’s first quarter. Look for Cessna and Cirrus to slug it out all year long in the race for most deliveries. This is a statistic that both companies do care about.
Solidly in third place- although a distant third- is Diamond Aircraft- with 64 deliveries in the first quarter- including 62 singles and 2 units of its new DA-42 Twin Star (light twin). Diamond’s performance was a few percentage points ahead of last year- when it recorded deliveries of 57 units.
Meantime- Lancair deliveries were up by almost 50 percent- from 17 in 2004 to 25 aircraft for sale this year. And rejuvenated Mooney- with new ownership- recorded solid gains with the delivery of 20 aircraft in the first quarter of 2005. This was up 150 percent over last year- when Mooney managed to deliver just eight airplanes in the first three months of the year.
Raytheon delivered 13 piston-powered airplanes in the first quarter- including nine singles and four twins. This represented a gain of more than 62 percent over last year- when it delivered eight piston-powered airplanes – seven singles and one twin.
Thus Cessna- Cirrus- Lancair- Mooney and Raytheon delivered more airplanes in 2005’s first quarter than during the same period in 2004.
Gippsland Aeronautics- with five deliveries- stayed even with last year- as did Socata with three deliveries- although that company has announced its departure from the piston single engine sales arena and is apparently now working through backlogged inventory.
Piper reported delivery of 30 piston airplanes in the past quarter- including six piston twin models. The twin engine airplanes for sale marked an increase over the company’s total in 2004 when it delivered five. Piper’s single engine sales were down- however- with 24 units this year compared with 41 last year in the first quarter. Piper’s results- both in the piston and turboprop for sale segments- were almost certainly impacted by the hurricane damage the company suffered last fall. Look for Piper’s performance to pick up as the year unfolds.
The overall twin piston sales market is worthy of some consideration based on the current GAMA report. Piston twin deliveries for this year’s first quarter actually doubled from last year’s total- up from six units to 12. Part of this increase was driven by the introduction of Diamond’s DA-42 Twin Star- the first all new piston twin to hit the market in more than two decades.
Part of it was also brought about by Raytheon Aircraft’s production slowdown at the end of 2003 as the company struggled to match its production levels to market demand and get its costs under control. In other words- Raytheon’s first quarter totals for last year were unrealistically low. This was true for all aircraft for sale categories – jets- turboprops- piston singles and piston twins.
Perhaps Diamond’s new model will stimulate renewed interest in the piston twin engine aircraft sales market. It’s hard to remember now- but in the late 1970s the annual piston twin engine for sale market topped 2-800 units per. By comparison- last year’s worldwide market for new piston twins totaled 52 airplanes. It would be nice to see a revival of the piston twin. Before we could predict such an outcome- however- we will have to see a few more quarters of growing airplane sales performance.
Completing our consideration of the piston single-engine airplanes for sale market- American Champion delivered 19 airplanes during the quarter. This was a respectable showing for a comparatively small company- but the total failed to match the 26 units American Champion sales reported during the first quarter of last year. Oddly- American Champion’s first quarter in 2004 was its strongest all year- and may itself have represented an aberration. The company’s 19-unit first quarter this year positions it to match or exceed the 94 airplanes American Champion delivered last year- and that’s a good sign.
Tiger delivered four airplanes for sale this quarter- down from five a year ago- which probably does not represent a significant difference. Maule’s four-unit total in the first quarter was off somewhat from the seven it delivered a year ago. Interestingly- though- this quarter was actually up from the fourth quarter of last year- when Maule reported three deliveries.
Maule has a somewhat eclectic product line- so it is not unreasonable to assume that market demand for its products may occasionally be fickle. Look for Maule’s deliveries to pick up as the market for general aviation airplane sales continues to improve as the year advances. This forecast for sales improvement should apply to all of the companies that didn’t deliver quite as many units in this first quarter as they did in the last. The good times are starting to roll again. Let the party continue!