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GAMA Q2 2016 Shipment Analysis

An in depth review of YTD new business aircraft shipments and billings

Mike Potts   |   5th September 2016
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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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Business Aviation’s forecasting organizations have all predicted 2016 would not be a good year for business aircraft deliveries, so it was perhaps unsurprising that GAMA’s Q2 delivery report was disappointing, assesses Mike Potts…

Total OEM shipments for the mid-point of 2016 came in at 970 units, off 4.5% from the 1,016 aircraft the industry delivered by that point in 2015. Billings of $9.3bn, were down 11.0% from $10.4bn reported last year.

By market segment, the downturn was remarkably uniform in its distribution, with jets down 4.3%, turboprops off 4.9%, and piston aircraft 4.5% below its previous year’s level. In raw numbers that equated to 292 jets (versus 305 the year before), 235 turboprops (versus 247 last year), and 443 pistons (versus 464 last year).

While the new GAMA report is unquestionably disappointing, a closer look at the details reveals some optimistic points hidden behind the grim headlines. For example, more than half the jet OEMs had equal or better results in Q2 than a year ago. And in the turboprop segment, two-thirds of the reporting companies that build traditional business turboprops had improved Q2 results. Individual companies in all three segments are significantly out-performing their respective markets.

That’s not to say Q2 was a resounding success. It wasn’t. But it did contain elements to support optimism about the future.

GAMA Q2 2016 New Airplane Shipment Summary

Jet Market Specifics

Looking at the jet market, we see that the emergence of Textron’s Cessna unit as the leader in jet deliveries in Q1 was no fluke. In Q1 Cessna edged out Bombardier for the jet market lead by 34 units to 31. For Q2 Cessna led by the same three-unit margin, with 45 jets compared with Bombardier’s 42.

What was different this time, however, was that Cessna recorded a significant jump over both its prior year Q2 and Year-to-Date (YTD) totals. For Q2 Cessna was up 25% over a year ago with 45 deliveries, versus 36 in 2015. YTD, Cessna’s total was 14.5% up, with 79 jets delivered versus 69 in 2015. This trend indicates that the lower end of the jet market could be experiencing some recovery for the first time in several years.

Prior to 2010 Cessna had historically been the leader in business jet deliveries by a wide margin. It was in 2010 that the industry saw the beginning of a steep downturn in light jets, while the market for larger jets remained comparatively strong and in fact grew in the following years while light jet deliveries stagnated.

Now the market, although still heavily depressed, may be returning to a pattern that was previously typical prior to 2010.

Bombardier, which had been the leader in jet unit deliveries since 2010, finds itself in second place YTD with 73 deliveries, down from 92 a year ago. For Q2 alone, Bombardier’s total was 42, down from 47 in Q2 2015. Bombardier was one of six jet builders whose delivery total did not match last year’s.

Gulfstream was third in jet deliveries for both Q2 (34 units) and for YTD (61). Like Bombardier, Gulfstream did not match its 2015 performance for either Q2 or YTD, when 41 and 73 units were reported respectively.

Gulfstream easily maintained its position as the billings leader in business aircraft manufacturing with a total of $3.27bn. This was off by approximately $699m, or 17.6% from the $3.97bn billed in the first half of 2015. Second in billings was Bombardier, with $2.81bn, down from $3.50bn last year.

Embraer was fourth in jet deliveries with 26 units for Q2 and 49 YTD. While Embraer’s Q2 total was behind the 33 reported in Q2 2015, YTD was ahead of the 45 that the Brazilian company had recorded mid-year last year. Dassault was fifth in jet deliveries with 15 YTD. Dassault now reports only in half-year increments. By mid-year in 2015 Dassault had reported 18 deliveries, three ahead of its total this year.

The newest entry in the jet market, Honda, reported seven deliveries for Q2, bringing it to 10 for the half-year period. Bringing up the rear in business jet marketing in the current GAMA report are Boeing and Airbus. Neither company reported any Q2 deliveries, but Boeing had one unit in Q1. Needless to say both firms trailed their 2015 performance when Boeing had 4 deliveries while Airbus had one.

While the total jet market trailed its 2015 performance by 13 units, the results for Q2 were actually much closer with just one unit separating the overall market’s performance in Q2 2016 versus Q2 2015 (170 units versus 171 respectively).

It will be interesting to see whether jet sales in Q3 2016 can overtake the 2015 pace. To do that, the nine jet OEMs reporting would need to surpass the 160 jets delivered in Q3 2015. Since that Q3 2015 total is lower than what was just delivered in Q2 2016, that goal seems within reach.

The Turboprops

Although GAMA’s numbers say otherwise, news in the turboprop segment is actually more optimistic than in the jet market. While GAMA lists year-to-date turboprop deliveries at 235 units, 4.9% behind the 247 delivered this time last year, those numbers include agricultural turboprops.

Looking at output from just the traditional business turboprop manufacturers (deducting the 57 agricultural deliveries), the turboprop market is doing better than advertised with 168 deliveries this year compared with 172 in 2015. That’s a difference of only about 2.3%. Thus, in reality, business turboprops are actually the strongest performing segment in the GAMA report, not the weakest.

Leading the way is Textron’s Beechcraft unit, which made 49 deliveries YTD, including 23 in Q2. This compares with 55 in the first six months of 2015 and 30 in Q2. All of Beechcraft’s deliveries are twin turboprops, a total augmented by a single unit from Piaggio that came in Q1 2016.

Leading in single engine turboprop deliveries by a significant margin was Pilatus, which had 22 in Q2 and 41 YTD. That was well ahead of Pilatus’ 2015 pace when it reported 12 in Q2 and 19 for the six-month period. That’s an improvement of 83.3% in this year’s Q2 performance and 115.8% YTD. Clearly Pilatus is seeing no recession in turboprop sales...

Others in the turboprop market are having a good year too, with three of the six OEMs (including Pilatus, Quest and Pacific Aerospace) reporting improved deliveries over 2015, YTD.

Second place in the single-engine turboprops went to Cessna, which is not doing as well as last year, reporting 32 deliveries YTD, including 20 in Q2 2016, versus 42 and 29 in 2015.

Daher narrowly secured third place with 18 – including 13 in Q2 – closely followed by Quest with 16 and 11 respectively. Daher’s totals trailed its 2015 performance when 25 and 14 deliveries were made, respectively, while Quest saw gains, up from 12 and seven.

Piper enjoyed a better Q2 with six turboprop deliveries, up from five in Q2 2015, but the YTD total lagged at eight units compared to the 16 made during the first half of 2015. Rounding out the turboprop deliveries was Pacific Aerospace, which had two in Q2 2016 and three YTD compared with one and two units, respectively, the year before.

The Piston Markets

Single-Engine Pistons: Of the 13 single-engine piston makers reporting deliveries, eight saw worse results than a year ago – a clear indication of a market in trouble. Flying in the face of this depressing statistic, however, is the fact that the largest participant – Cirrus – is actually having a very good year!

Cirrus reported 96 deliveries in Q2 2016, up from 74 for the same period a year ago. That’s a gain of 29.73%. YTD the Cirrus numbers are even better, with 153 deliveries this year compared with 117 in 2015 – a 30.77% improvement. Perhaps significantly, Cirrus offers arguably one of the most advanced product lines in the piston segment, lending credence to GAMA’s contention that new product development will drive the market.

Following Cirrus in the piston market is Textron’s Cessna unit with 38 deliveries for Q2 and 65 YTD. Compared with Cirrus, Cessna’s performance in the piston market this year has been disappointing, down 38.7% for both the quarter and the half-year. Ironically, Cessna’s 2015 piston delivery total would have been good enough to lead the market this year if only they could have matched it!

Third and fourth place in single-engine pistons was pretty close, with Tecnam edging out Diamond.

Piper, in fifth place for single engine deliveries is having a mixed year. Piper’s Q2 total trailed its 2015 performance, but YTD is still ahead of 2015. Beyond these companies, only two firms, Extra and Textron’s Beechcraft had deliveries in double digits.

Piston Twin Market: By comparison the piston twin market is remarkably healthy. It was the only segment in the GAMA report where every participating company had equal or better numbers than a year ago. The companies, including Diamond, Tecnam, Beechcraft and Piper reported total deliveries of 66 units for the first half of 2016, up 22.22% from 54 in 2015.

The market leader is Diamond, with 35 deliveries in the first half, spurred at least partially by the introduction of the company’s new DA-62 model. Diamond’s deliveries were up 29.63% from the 27 it reported in the first half of 2015.

In Summary

The current market for business aircraft appears to be at a crossroads. Softness in the piston market could imply a further downturn for the jet and turboprop markets. Growing strength in the lower end of the jet market, however, as we are currently seeing with Cessna and others, seems more likely to herald an upturn in 2017 that could last through the end of the decade and beyond, with the jet market perhaps returning to the 800 range for annual deliveries.

The market’s direction in the remaining two quarters of this year seems likely to signal the direction it will take for the remainder of this decade.

Read more about: Aircraft Sales Trends | Turboprop Aircraft | Single Piston Aircraft | Twin Piston Aircraft | Jet Sales | New Jets to Market

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