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NOTE: The below originally appeared as the editorial in our January 29 One Minute Week newsletter. To find out more, and sign up for free, please click here.


 

After tough results from Dassault, Gulfstream had a good 2015. Both sales and profits were up. This was helped by increased G650 deliveries. It also had a sales-to-delivery ratio above one, so grew its backlog.

“We find demand to be reasonable. We see no evidence at Gulfstream of a cyclical decline. The order activity is good, but not frenetic, and North America is particularly good,” says Phebe Novakovic, chairman and CEO of General Dynamics. Half of its sales were in North America.

It also sold more in-production in aircraft in 2015 than 2014. This may have been helped by a fall in G650 waiting lists which were too long for impatient potential buyers. You can now get one in early 2018.

“I should also point out that, despite the hand-wringing by some, our orders from Asia Pacific improved by more than 60% over 2014,” says Novakovic. “In short, this market is not ebullient, but it is steady from our perspective. We also seem to be picking up market share from other OEMs. All in all, the order activity going into the first quarter of this year is quite good.”

Gulfstream cut production of G450s – and started cutting G550 production – but increased G650 rates. There is now a nine month to a year waiting list for G450s and G550s.

In 2016 it is expecting to deliver 104 large cabin aircraft and 34 medium cabin aircraft. That would be down slightly on 112 large cabin aircraft this year and 35 medium aircraft.

Textron had a tougher year. But not a terrible one.

Its backlog at the end of 2015 was $1.1 billion, down $308 million. But it has learnt to manage this. (And it is nothing compared to its backlog drop from $12.6 billion in 2008 to $4.9 billion in 2009 and $2.9 in 2010). It also announced new aircraft and morale at the company is strong.

“We have been doing this for a long time,” said Scott Donnelly, CEO of Textron. “It has been at least six years, right, we have been kind of operating in this mode and that is just the nature of this industry right now.”

Donnelly added. “It is not announcing a plane and getting billions of dollars of backlog. You go out and you sell them pretty much one plane at a time. That is working for us right, so our revenue keeps going up and our margins keep expanding. That is what we keep doing.”

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