Gulfstream Aerospace, completing its strongest quarter of the year in terms of new orders, expects sales to grow further in the fourth quarter and is increasing its delivery estimates for 2012 slightly to as many as 124 aircraft.

Gulfstream continues to shine in the General Dynamics (GD) portfolio, leading the Aerospace group to a 30% increase in third-quarter revenues and a 20.3% increase in operating earnings. The GD Aerospace group includes both Gulfstream and Jet Aviation.

These returns – which come as Gulfstream’s large-cabin deliveries increased by 45% in the third quarter – buffered lower returns of GD’s Combat Systems and Information Systems and Technology units.

Gulfstream delivered 28 of its large-cabin aircraft in the third quarter and 78 through the first three quarters. This compares with 20 in third quarter 2011 and 60 in the first nine months of that year.

As a result, third-quarter revenues for the Aerospace group were up $424 million to $1.8 billion and earnings climbed $44 million to $261 million. For the year, revenues are up 22% to $5 billion and earnings increased 20.3% to $789 million.

While Gulfstream continues to work through its G650 backlog, which began delivery nearly a year ago but received full certification in early September, overall backlog has begun to come down. The Aerospace group’s funded backlog by the end of the third quarter stood at $15.827 billion, compared with $16.05 billion at the end of the second quarter and $18.306 billion at the end of third quarter 2011.

While large-cabin deliveries remain strong, Gulfstream’s mid-cabin line continues to stumble as the company transitions to its new G280 super mid-sized aircraft. Gulfstream, which obtained full certification for the G280 two months ago, had no mid-cabin aircraft deliveries in the third quarter and just 10 so far this year. This compares with five in the third quarter of 2011 and 16 for the first three quarters of that year.

But GD Chairman Jay Johnson predicts that, with the certification of the G280, the company will deliver 15-20 of its mid-cabin aircraft in 2012. That will combine with the 24 G650s and 80 G450 and G550 aircraft on schedule for delivery this year.