Gulfstream Displaces Embraer in Q3 Jet Output

With the Covid-19 pandemic eroding airliner orders and deliveries, Gulfstream has displaced Embraer as the world’s third-largest manufacturer in terms of jet aircraft output. In the third quarter, Embraer delivered 28 jets, seven of which were regional airliners. Gulfstream, meanwhile, handed over 32 business jets.

Richard Aboulafia, v-p of analysis at the Teal Group, noted the switch but believes this turn is not a permanent one: “Embraer will be back, particularly since they’re now the world’s only provider of regional jets, and that market, along with the commercial transport market, will recover in time.” He also noted Embraer had a softer third quarter last year and believes its military work will ramp up as well.

Meanwhile, Aboulafia believes Gulfstream is facing a down year next year with the transition between the G650ER and G700.

But for the time being, he said, airliner manufacturers are facing a “U” recovery—“a deep drop, a relatively long floor, and a steep recovery”—while commercial air travel may have an even worse “L” recovery. Conversely, business jet travel has made a stronger recovery and, as a result, Aboulafia said, “Our business jet forecast now just shows a relatively shallow dip, while our jetliner numbers are tanking.”

This marks a reversal from the 2008 decline when airliner production kept growing and business jet output collapsed, he noted.

While Gulfstream is maintaining strong output in the current environment, the large-cabin segment is underperforming the small and medium classes. Citing JetNet statistics, Aboulafia noted asking prices are down 17.4 percent, compared with the 7 percent decline of midsize jet and 3.8 percent softening of light jet prices. “This too is the exact opposite of 2008, when larger jets continued to grow and the bottom half of the market disintegrated.”