GAMA: Business Jet and Turboprop Shipments Down in 1Q16

The sagging energy sector and general global economic uncertainties contributed to a 3.7-percent dip in general aviation fixed-wing shipments from a year ago and a 9.5-percent downturn in billings, according to data released last month by the General Aviation Manufacturers Association (GAMA). Helicopter shipments at the same time plummeted 18.9 percent, with billings falling 30.4 percent, GAMA also reported.

 “The entire industry is feeling the effect of retrenchment in the energy sector, as well as global geopolitical and economic insecurity,” said GAMA president and CEO Pete Bunce.

The industry shipped 422 airplanes worth $3.974 billion in the first three months, both down from 438 aircraft shipped and $4.377 billion in billings during the first quarter of last year.

Business jet deliveries declined 4.7 percent, falling to 122 this year from 128 in the first quarter last year, despite new player Honda Aircraft shipping three HondaJets in the quarter. Since Dassault reports deliveries only at half- and full-year intervals, the first-quarter business jet numbers do not include any Falcon shipments.

Bombardier’s business jet shipments were down by 14. While Global deliveries declined as expected by three aircraft to 14, it was Learjet deliveries that marked the biggest drop, to just one in the most recent quarter from nine in the first quarter of 2015. As a result, the manufacturer’s billings were down by $380 million in the quarter. In addition, Gulfstream’s billings were down by $325 million as its shipments dropped by five to 27.

Offsetting some of these declines was Embraer, which reported a near doubling of shipments to 23 in the first quarter. Embraer’s shipments were propelled in part by the new Legacy 450 and 500. Textron Aviation was also buoyed by new products such as the Citation Latitude, up by one in the quarter.

Despite the first-quarter dip, industry analyst Brian Foley was not as concerned by the business jet results. “I don’t find six fewer [business jets] delivered year-over-year to be troubling or even surprising.” Foley added that he believes business jet deliveries may edge up in one or more quarters this year. “By year-end, I expect 2016 to be on par with or a little better than 2015 was,” he said, adding that he predicts relatively flat business jet deliveries over the next few years.

Turboprop and Piston Market

Turboprop deliveries, however, he added, might have weaker results. The number of pressurized business turboprops handed over to customers in the most recent quarter slipped by 7.4 percent year-over-year, to 50 airplanes, four fewer than in the first quarter of last year. Deliveries of Piper’s Meridian slid to two from 11, while Daher TBM deliveries fell to five from 11. This offset a more than doubling of PC-12 shipments to 16. Textron Aviation’s Beechcraft King Air deliveries also inched up in the quarter, by one.

“The 7-percent delivery deficit compared to last year will roughly carry through the rest of 2016,” Foley said. “Given their utilitarian ability for agricultural purposes or operating out of unapproved unimproved runways, a higher percentage of the market for turboprops is in emerging markets compared to jets. With places like Latin/South America and other resource-rich areas feeling the commodities price pinch, this will translate into lower worldwide turboprop demand.”

Foley is more bullish on the piston market. Piston airplane deliveries were mostly flat year-over-year, down by two aircraft to 191. But he believes a stronger U.S. market could provide a small boost to deliveries. “Even though GAMA indicates a 1-percent drop in the first quarter, it’s conceivable that the relatively healthy U.S. economy (where most sales occur) and some bulk orders from flight schools could drive a 5-percent improvement by year-end,” he said.

As for rotorcraft, the industry shipped 163 piston and turbine helicopters in the first three months, compared with 201 in last year’s first quarter. Piston shipments were flat in the first quarter and turbine shipments were down 27 percent. This plunge in turbine shipments led to a corresponding drop in billings to $600 million from $800 million.

 “What’s concerning is that most of the weakness is in the high-end rotorcraft used by oil and gas, which account for the most industry value,” Foley said. “With offshore gas and petroleum service operators struggling, including the recent bankruptcy filing and proposed fleet reduction of CHC, we’re moving into uncharted territory that will be particularly painful for helicopter lessors and manufacturers and could take years to unwind.”

But Bunce remains optimistic about the underlying strength of the industry overall. “Despite these headwinds, our industry continues to invest in research, development and certification of more efficient and safe products,” he said. “Therefore, actions taken by elected officials to stimulate R&D and improve regulator efficiency have a far-reaching impact on the economy.”