New orders for Gulfstream jets ramped up considerably in the first quarter of 2010, offering hope a business aviation market ravaged by politics and the economic downturn of the past few years is beginning to thaw.
"The aerospace group is off to a very good start in 2010," Jay Johnson, president and CEO of Gulfstream parent General Dynamics, told analysts in a recent conference call.
"First quarter revenues are up 15 percent over the last quarter of 2009, and the G650 order book remains strong. Aircraft maintenance, repair and overhaul demand is good."
The Savannah-based company is on pace to deliver 77 large and 14 mid-size aircraft in 2010.
"I think we'll continue to see gradual improvement in the business aviation market this year," Johnson said.
Defaults on orders chipped away at Gulfstream's backlog in the first quarter, bringing it down about $800 million to $18.5 billion - a situation Johnson said came as no surprise to company executives. After a successful first flight, Gulfstream collects a significant "progress payment" from deposit holders.
"We had five G650 defaults in the quarter, all tied to the aircraft's first flight. They were instantly backfilled, and we still have 200 solid orders," Johnson said.
"And an $18.5 billion backlog is very robust by any estimation."
Gulfstream's year-over-year revenues were down 6.7 percent, reflecting the reduction in production instituted last year at the height of the business aviation downturn. Most of the reduced production was in the mid-cabin aircraft - the G150 and G200 - models not produced in the company's Savannah facilities.