Gulfstream posts strongest order quarter in four years

Gulfstream plans to deliver approximately 160 aircraft during the year.

General Dynamics’ Aerospace segment, home to Gulfstream and Jet Aviation, delivered what CEO Phebe Novakovic called a “special quarter” in the second quarter of 2026, posting its strongest order performance since 2022 and delivering the 100th Gulfstream G700.

Aerospace revenue reached $3.5bn in the quarter, up 15.1% from $3.06bn a year ago, driven by three additional aircraft deliveries and higher service revenue at both Gulfstream and Jet Aviation.

It delivered 41 aircraft in total during the quarter, of which 35 were large cabin and six were mid cabin. 

Management also confirmed improved operating earnings at Jet Aviation both year-on-year and sequentially.

Operating earnings of $510m were up $107m, a 26.6% increase, with operating margin expanding 130 basis points to 14.5%. Gulfstream delivered 41 aircraft in the quarter, comprising 35 large-cabin and six mid-cabin jets.

“The Aerospace team had a special quarter, both operationally and in terms of order activity,” Novakovic said during the earnings call.

The standout story for the quarter was on the demand side. Aerospace booked $5.3bn in orders, resulting in a book-to-bill ratio of 1.5x. This is the strongest first half for Gulfstream orders since 2022. The Aerospace backlog grew to $24bn, up 20% year-on-year, and 16 more aircraft were ordered than in the year-ago quarter and 20 more than in the first quarter.

“We see very active interest across all models in the US and Asia, with some cautious concern from customers in the Middle East, but they’re still active in the pipeline,” Novakovic said.

President Danny Deep added that productivity improvements are flowing through across all new aircraft types. “We see durable productivity improvements on all new aircraft types with modestly improved margins both year-over-year and sequentially. We performed quite well across all service categories at both Gulfstream and Jet Aviation with improved operating earnings at each, both quarter-over-quarter and sequentially,” he said.

The 100th G700 delivery in the quarter was a landmark for the programme, but management was clear that margin improvement on both the G700 and G800 has not yet peaked.

“I think we’re still coming down the curve, specifically around completion. So, I think there’s still more opportunity [on margins], and we’re seeing that both on the G700 as well as the G800. So, I think there’s still more room for them,” he said.

The completion process has historically been one of the more variable cost items in Gulfstream’s production chain, and management’s comments suggest that further margin upside remains as throughput and efficiency improve.

One of the more notable disclosures from the quarter concerned the transition from the current G280 to the incoming G300. Novakovic confirmed that the final G280 is expected to deliver in the second quarter of next year, with the G300 entering production in “late 2027, early 2028.”

“We will have a planned production break, so that if you infer from that quite correctly, we’ll talk more about large cabins next year,” Novakovic said, while adding that the production partner arrangement means the financial absorption impact should be manageable.

On the G400, she signalled an acceleration of development efforts. “We’ve whipped up our efforts on the 400, and we’ll have more to say over the next couple of quarters about where we think the 400 will be,” she said. “These new airplanes are coming, and we’re pretty excited about it.”

With some competitors struggling publicly with supply chain constraints, analysts asked whether Gulfstream is doing something special. Deep credited the depth of the supplier relationships rather than any single operational advantage. Textron Aviation in its results highlighted their supply chain woes.

“For the major components, Gulfstream has a very clear relationship that has really given the supply chain visibility into our production plans for whatever period is appropriate. And so, they are able to keep up now, and our expectation is they will be in the future as well,” he said.

“The supply chain’s ability to continue to produce and produce on schedule has been very helpful in ensuring that we continue to drive our orders. And orders were a significant component of our cash for this quarter,” added Novakovic.

For the full year, General Dynamics raised its Aerospace revenue forecast to approximately $13.8bn, up from the January guidance of $13.6bn, and lifted the anticipated operating margin to 14.7%.

Gulfstream plans to deliver approximately 160 aircraft during the year. So far, during the first half of 2026, it has delivered 79 aircraft in total.

Full-year company-wide EPS guidance was raised to $16.80 to $16.90, up from $16.45 to $16.55 in April.