Dear Prudence


Two aircraft. That is the total rise in business jet deliveries last year compared with 2020. During the strongest demand for aircraft in 15 years, business jet manufacturers managed to increase production by just two. When OEMs said it was hard for supply chains to rebuild after Covid, they really meant it.

The General Aviation Manufacturers Association (GAMA) says that business jet manufacturers delivered 712 jets in 2021 aircraft compared with: 710 in 2021, 644 in 2020, and 809 in 2019. 

Manufacturers are looking to speed up production this year, but they are doing it gradually. Gulfstream delivered 120 aircraft in 2022, up one from 2021. It plans to increase production by 20% and build around 145 jets in 2023. (Gulfstream delivered 147 in 2019).

“It’s really important to remember that our 2023 and 2024 estimates about production levels and delivery levels are independent of current demand,” said Phebe Novakovic, CEO of Gulfstream’s parent General Dynamics speaking at investment bank Cowen’s Aerospace and Industrial Conference this week. “They are based entirely and solely on our strong durable backlog. So even if there was a macroeconomic permutation, the next few years are solid for us.”

The Savannah manufacturer is – perhaps conservatively – expecting to sell about one jet for each one it delivers this year. If this happens, it will still have a decent backlog in 2025. (It had a book-to-build of 1.47 in 2021.)       

Bombardier delivered 123 aircraft in 2022 (some 49 of these in the last quarter). It is also not looking to speed up production rapidly. The Canadian manufacturer is planning to deliver at least 138 aircraft this year – a 12% rise. “As we see the market stabilising, we are not going to over-tweak our rates. We are going to stick to the plan and ensure our production remains de-risked. I talked last quarter about reaching a book-to-bill cruising altitude of one. That’s where we are at today,” said Éric Martel, president and CEO, Bombardier, on an analyst call this month. “The demand itself is stable to the level of full year production and further padded by our healthy backlog.”

Intriguingly, Martel said that Bombardier could produce 200 aircraft a year without increasing its facilities. But do not expect this to happen in the next few years.

In 2013, equity analysts at Citi dubbed the years after the Global Financial Crisis as “the lost decade” for business aviation. They argued that too many aircraft deliveries in the run up to 2008 had created an overhang, preventing new orders. This is not happening now.

We are now four years into the “Prudence decade.” Where manufacturers have put prudence and future profits ahead of short-term wins. A new cohort of customers has discovered the benefits of business aviation through charter, jet cards or fractional shares, but are having to wait before they can own a whole new aircraft.

Being prudent may not be as much fun as going crazy, but it is worth it if it stops the industry from being lost for another 10 years.