Gulfstream delivered 21 business jets in the first quarter, three shy of its projections and four fewer than it delivered in the same period a year ago, according to parent company General Dynamics in its first-quarter earnings call this morning.
Through the first three months of the year, the Savannah, Georgia-based OEM handed over four super-midsize G280s and 17 large-cabin aircraft. While bureaucratic registration delays in a customer’s home country impacted the delivery of one large-cabin twinjet, General Dynamics chair and CEO Phebe Novakovic noted that this past quarter was the first in which the company missed an airplane delivery due to supply-chain issues when a pair of G280s was delayed due to late engine arrivals.
“The shortage of parts-to-schedule from the supply chain, especially from Honeywell, has created significant out-of-station work, which is inherently less efficient,” Novakovic said during the conference call. “The other impact of late-to-schedule parts deliveries—apart from cost growth—is that we cannot increase our build rate until the supply of parts is more predictable.” She added that most Gulfstream suppliers expect that situation to resolve itself by the third quarter.
"Up until now, we have managed to work around late-to-schedule parts deliveries," Novakovic continued, noting that the supply chain particularly in aerospace has been taxed for some time. "We have a very clear line of sight into the third and fourth quarters, and the majority of these suppliers fully anticipate getting better. We will work with the remaining ones to ensure they've got the resources to execute the contract."
Overall, General Dynamics' aerospace unit finished the quarter with just $11 million less revenue than a year ago, despite delivering four fewer aircraft. The deficit was almost completely offset by higher Gulfstream services, special mission aircraft work, and Jet Aviation volume.
In dollar terms, Gulfstream ended the first quarter with a book-to-bill of just below 1:1. “The quarter was looking quite good until the two regional bank failures in early March,” explained Novakovic. “This created a pause in the market for about three weeks.” She added that since then, strong sales activity and customer interest have resumed, with broad interest across the entire product line.
The company forecast that it will deliver 145 aircraft this year, and it is looking to deliver 26 in the second quarter with a strong ramp-up in deliveries anticipated in the second half of the year as the G700 comes online. “We’re pretty confident we can get there,” said Novakovic. “If we miss, it’s just going to be by a little.”