New jet demand still outstripping supply


Do you want the good news or the bad news from the second-quarter manufacturer results? The bad news is that building aircraft is still hard due to supply chain issues. The good news is that demand for aircraft is holding up well.

There are two reasons for this. First, corporate buyers are ordering aircraft. Second, many of the new entrants that discovered business aviation are happy. OEMs did see a brief pause in sales when several US banks had issues, but demand has bounced back since.

Demand in the second quarter was at the same level as the demand in the first quarter. It felt very similar,” said Phebe Novakovic, chair and chief exec of Gulfstream parent General Dynamics on an analyst call this week. “As we enter Q3, we have a very strong pipeline.”

 General Dynamic’s Aerospace division (which includes Jet Aviation) had a book-to-bill ratio of 1.3 in the second quarter of this year. This is down from 1.96x in the second quarter of 2022 (and 2.03x in 2021). A 1.3x ratio shows the market may be down but is far from out. Gulfstream delivered 24 aircraft in this quarter versus 22 in 2022.

 “It’s really the Fortune 500 that are really driving the demand. These are long-established customers as well as new Fortune 500 customers,” said Novakovic. She says that ultra-high net worth buyer demand is still strong. Gulfstream is also seeing strong demand from the Middle East and Asia.

Dassault saw a slowdown in the last quarter of 2022 which has continued for the first half of this year. The French manufacturer booked 12 new Falcon orders in the first half of 2023 compared with 41 in the first six months of 2022. This gave the company a book-to-bill of 1.33.

Dassault delivered nine Falcon business jets in the first half of the year against 14 in the first half of 2022. It expects to deliver 35 aircraft – including Falcon 6X. While orders are down, it has a backlog of 90 aircraft compared to 87 at the end of June 2022.

Textron Aviation had a book-to-bill of 1.2x. “The market is still quite strong and we’ve posted a strong book-to-bill again in the quarter,” said Scott Donnelly, chair, president and CEO of Textron (we hope he gets three salaries for doing all these jobs). “We continue to be really happy with how the market is behaving in terms of demand and pricing.”

Textron Aviation’s backlog at the end of the second quarter was $6.8 billion – up from $6.4 billion at the end of 2022. Textron had hoped to deliver around 200 jets this year, it expects to deliver fewer now (in 2022 it delivered 178) because of issues with getting parts from suppliers.

Gulfstream had planned to deliver about 145 aircraft in 2023, it is now expecting to be closer to 140 jets. Some of these are likely to be its new G700.

Supply chain problems are easing but manufacturers will not rush to increase production when things improve. This prudence and the new customers who have entered the market mean that the industry is well placed for a soft economic landing – and in a better position for a hard one.

“The demand environment is driven by the fact that people – in particular people who have come into this market and started using aircraft and experienced what private aviation is all about – have had a great experience,” said Donnelly. “They are time machines, right? It allows you to do things that you just can’t do if you’re using commercial transportation. The productivity, the efficiency, the ability to get from anywhere to anywhere on your time and in an expeditious way is something that more and more people have been exposed to.”

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