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GAMA 3Q 2014 Shipment Analysis

A review of the trends revealed by GAMA's latests shipment report. What are their implications for today's market?

Mike Potts   |   15th December 2014
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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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For the third quarter in a row the General Aviation Manufacturers Association (GAMA) has issued a very positive report on deliveries and billings, which continues to support the idea that the long-awaited recovery in Business Aviation is finally underway. Shipments for the first three quarters of 2014 totaled 1,678 aircraft, up 5.7 percent from the 1,587 recorded at this time last year. Billings for the nine-month period totaled $16 billion, up four percent from the $15.4 billion recorded a year ago.

Business jets are leading the recovery, with deliveries up 9.3 percent over last year at 460 units (versus 421 by 3Q 2013). Turboprops are lagging slightly at 412 units, down from 428 a year ago, but the 3.7 percent reduction consists mostly of agricultural airplanes. Business turboprops are actually holding their own. Piston airplanes deliveries are up 9.2 percent at 806 units over the 738 reported at this time last year.

GAMA President & CEO Pete Bunce noted the weakness in the turboprop market as he called on the US Congress to renew tax incentives, including bonus depreciation and the research and development tax credit that benefit Business Aviation OEMs before the end of this year’s legislative session. There is little doubt that these incentives help the industry, and with recovery starting to develop nicely this year it would be a shame to see anything happen to curtail the progress we seem to be making.

Jet Market Specifics

It’s particularly encouraging to see the recovery begin to spread throughout all segments of the jet market after the lower end had previously seemed mired in recession. That is no longer true.

Looking at the specifics of the jet deliveries, we see a market where six of the eight companies reporting have equal or better results than a year ago. Of the two with reduced numbers, one is down by only two units and the other down just three. In short, everyone is doing pretty well.

The leader in unit deliveries is Bombardier, with 126 jets for the year, up five percent from 120 last year. Bombardier had 45 in the 3Q alone, up a solid 25 percent over a year ago when it had 36. Bombardier’s billings thus far have totaled $4.875 billion, the second best total in the jet market. First in billings and second in unit deliveries is Gulfstream, with sales totaling $5.58 billion for the first three quarters. 108 Gulfstreams were shipped in the first nine months of the year (up 4.85 percent over 103 shipped last year), including 84 of its large cabin G450/550/650 series and 24 of its smaller G150/280 models. In 3Q 2014 alone, however, deliveries were down by 18.42 percent from 38 to 31 units.

Textron Aviation’s Cessna subsidiary reported another strong quarter, finishing 32 percent ahead of last year with 33 units versus 25 a year ago, bringing Cessna into a fairly tight race for second place in jet deliveries. With a total of 104 units, Cessna trails Gulfstream by just four deliveries going into 4Q 2014. Cessna’s total was 35 percent ahead of last year, when it delivered 77 jets. Bearing witness to the long-awaited recovery in the lighter end of the jet market, the company’s results were strongly impacted by the introduction of its new M2 model which has seen 31 deliveries this year including 12 in 3Q 2014, lending credence to the concept that new models will help to fuel recovery in the jet market.

Dassault ended 3Q 2014 third for jet billings with a $1.53 billion total, although its 38 deliveries in the period was only good for fifth place. Embraer finished fourth in the deliveries race. Both Dassault and Embraer were narrowly behind their 2013 totals, with the French company off 7.3 percent from the 41 jets delivered last year while the Brazilian firm was down three percent from 66 to 64 units.

Eclipse, back in the market for the first time since 2008, made a single delivery in the third quarter, bringing its YTD total to 10. With no deliveries a year ago, they are 100-percent ahead of 2013. Also showing a 100-percent gain was Boeing in the businessliner category. Boeing’s 3Q delivery total was four, up from two a year ago, while its YTD total is seven, up 40-percent from the five it had last year at this time. The year-over-year gain is entirely attributable to its 3Q performance.

Airbus was the one jet manufacturer with results that equaled last years – showing three deliveries for both 2013 and 2014 so far, and zero in the third quarter of both years. It’s good to see all segments of the jet market finally performing well. Until this began to happen earlier this year, it was difficult to label the jet market as being in a full recovery mode. Now it seems easier to say that recovery is upon us.

Turboprop Market Specifics

With recovery spreading throughout the jet market, it is distressing to read in GAMA’s news release that the turboprop market is lagging. As noted above, however, when it comes to business turboprops this simply isn’t true.

The traditional business turboprops are level with last year’s 3Q results at 264 units, although it takes a little searching through the numbers to determine this. While it would be nice to see the 2014 total up a few percentage points over 2013, the fact is that 264 business turboprops in three quarters of the year represents an already fully-recovered market. Don’t believe me? Look back to the market peak of 2008 and the years immediately before and after. In 2008 there were 348 turboprops delivered in the first nine months. Based on that, we still have a way to go - but in 2007 the number was 300 and in 2006 it was 256 – a number we’re slightly ahead of right now.

Looking on the other side of the market peak, in 2009 there were 293 turboprops in the first three quarters – 9.8 percent ahead of where our market stands today. In 2010, however, the third quarter total was 237. We’re eight percent ahead of that. So today’s business turboprop market lags only the three peak three in the history of the modern Business Aviation market. Nobody thinks the market is going to achieve those levels again anytime soon, so in the context of reasonable expectation, today’s business turboprop market is in full recovery.

[By comparison, if the jet market were doing equally well (as a percentage of 2006 or 2010 results) we would be seeing deliveries in the 540 to 560 range. So while it didn’t grow in the past year, the business turboprop market is pretty healthy right now.]

Of the eight traditional turboprop OEMs reporting to GAMA (Beechcraft, Cessna, Pilatus, Piper, Socata, Quest, Pacific Aerospace and Extra), four are equal to or ahead of last year’s numbers, while three others are lagging by just one or two units. Only Cessna is significantly behind its 2013 pace.

The leader in turboprop deliveries by a wide margin is Textron’s Beechcraft subsidiary, with 86 units for the year-to-date and 30 for the quarter. Both numbers represent an increase from the 84 it had made at this time last year (2.38 percent gain) and 26 in the prior 3Q (up 15.38 percent). Textron’s Cessna subsidiary was in second place with 64 units, down 12.3 percent from the 73 it reported last year. For the quarter Cessna was also off, from 28 to 22. Nevertheless, collectively Textron Aviation’s turboprops represent 56.8 percent of the total business turboprop market.

Pilatus is in third place in turboprop deliveries with 40 units, a 25-percent increase over the 32 it reported through 3Q 2013. On a quarterly basis Pilatus was up more than 57 percent, from 14 a year ago to 22 this year. Socata, in fourth place, also enjoyed gains, reporting 33 deliveries YTD, up from the 28 it had last year. For the quarter Socata’s deliveries were up from 11 to 13.

Fifth-placed Piper’s performance mirrored the market as it exactly matched its 2013 results, with 22 for the year-to-date and eight for the quarter both this year and last.

Making up the balance of the business turboprop market are minor players Pacific Aerospace and Extra, both with reduced deliveries. Unknown in the business turboprop market is the performance of Piaggio. For the record, the shortfall in turboprop deliveries that turned GAMA’s numbers negative came from Air Tractor (120 versus 132 in 2013) and from Thrush (28 versus 33 in 2013).

Will the business turboprop market grow further, meeting or even exceeding the peak years of 2007-2009? It is reasonable to expect that such growth will occur, but even if this market doesn’t gain another unit, it is still doing very well.

Piston Market Specifics

The piston market is interesting because of the light it sheds on the direction the rest of the market is likely to take. Recovery in the jet and turboprop segments has always been led by resurgence in the piston segment, and this cycle seems to be no exception. The continued growth in the piston market bodes well for sustained recovery in the rest of the industry.

Fourteen companies reported deliveries of piston aircraft in 2014, including three names not previously seen in GAMA lists, one of which made its debut in the current GAMA report. Of the 14, nine have equal or better numbers than a year ago, while five were behind their prior year totals.

In looking at the piston market, there are major players – companies with more than 100 deliveries in most years; intermediate players, with more than 25 but fewer than 100 units, and minor players that deliver fewer than two dozen aircraft annually. The performance of the major players is obviously much more significant to the overall situation of the market than the minor players, while the significance of the intermediates can depend on the heritage of the companies and the products involved, as well the sheer impact of their numbers.

Of the five major players in the piston market today (Cirrus, Cessna, Diamond, Piper and TECNAM) only two have improved numbers while one is even and two are down, suggesting that some structural weakness still exists in the piston market, despite its overall improving performance.

Cirrus leads with 212 deliveries so far. Its numbers are up 8.7 percent from 3Q 2013 (195 units). On a quarterly basis Cirrus is also up, with 72 units versus 65 (+10.77 percent).

Second place was a tie between Cessna and Diamond, both with 136 units YTD. Diamond’s numbers are up 52.8 percent over the 89 reported last year, while Cessna’s are down 2.86 percent from 140 in 2013. In addition, Diamond also delivers twin-engine piston aircraft so it seems fitting to proclaim that Diamond is now number two in piston aircraft – at least for now.

Piper, another major player whose market presence is enhanced by the production of twins as well as singles, is also down from a year ago. It reported delivery of 69 singles for the first three quarters, down from 78 a year ago. For just the third quarter, Piper exceeded last year by two units at 25, up from 23 in 2013. TECNAM, meanwhile, is new to the GAMA report for 2014 (although previous reports have been amended to include prior results). TECNAM matched its 2013 nine-month performance in singles this year with 49 singles. Its 3Q total of 18 was four units ahead of last year.

Intermediate performers with delivery numbers in the 20s for the nine-month period included Extra with 24, up from 22; Beechcraft with 23, down from 26; and American Champion with 21, up from 20 a year ago.

The twin-engine market now has four players, including Beechcraft, Diamond, Piper and TECNAM. Collectively they delivered 96 aircraft, up 18.52 percent from 81 units a year ago. The largest contributor was Diamond, with 38 units.


So as we wrap up a very successful 3Q, we have to consider how the various segments are likely to finish 2014. If the jet market performs like it did last year, with a 36 percent surge in the fourth quarter, we will finish the year with the first 700-unit jet market since 2010. Mitigating against quite such a strong finish is the production capacity of the industry, which has been scaled back to match the market of the past several years. I believe we will break the 700 jet barrier this year, perhaps with a total of 710-715 units.

I believe the traditional business turboprop market will continue to match last year’s performance, including a strong fourth quarter surge that should see us finish the year in the 425-430 unit range.

The piston market hasn’t surged as strongly as the turboprops or jets in recent years, and I don’t believe it will this year either. I expect piston sales will continue about 10 percent ahead of last year and that should see us finish with a total piston market of about 1,150 units. If all these numbers come together, 2014 should end with deliveries in the 2,300 unit range and billings perhaps as strong as $24.5 billion, bringing us close to breaking the industry’s all-time billings record of $24.87 billion set in 2008.

Read more about: GAMA | General Aviation Manufacturers Association | Shipment Analysis

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