“We remain encouraged by Gulfstream’s sizeable large-cabin backlog and healthy order pipeline,” Johnson says, noting G650 backlog remains at five years, and G450/550 backlog extends 18 months.
Since the time-until-delivery for new G650 orders stretches out so far, Gulfstream is not anticipating order intake for that aircraft to match deliveries right now, Johnson says. But, he adds that Gulfstream is still taking orders for the aircraft.
Overall, the company had the strongest order intake of the year in the third quarter. “Several multi-aircraft orders from North American customers, which we had originally expected in the second quarter, materialized in the third quarter,” he says. North American customers overall accounted for nearly 60% of the new orders, marking a “resurgence” for the market while international markets were potentially softening.
While a little softer, Johnson says Gulfstream has a number of potential orders in the pipeline. “We continue to believe that we will realize several multi-aircraft international orders in next month, although their exact timing … is difficult to predict,” he says.
Despite the stronger orders, Johnson says, “Relative to other periods, however, the order cycle remains somewhat protracted, with a number of factors causing deal closure time to increase.” He cites global economic concerns, particularly in Europe and Asia, along with political uncertainty in the U.S. and abroad for slowing potential deals.
While Gulfstream had a strong quarter, Jet Aviation continued to have its struggles. But this time it was in the services arena, rather than the completions business, that has plagued Jet Aviation over the past couple of years.
Profitability was modestly down at Jet Aviation, Johnson notes, “as the business works aggressively to confront overhead absorption issues exacerbated by the European debt crisis, which is impacting aircraft utilization and service work across the continent.”
Jet Aviation is seeing mixed demand with some pockets of strength, but continued weak demand in Europe, he says. “The leadership team at Jet is working aggressively to address this dynamic situation by optimization our repair services footprint ... with particular focus on right-sizing facilities located in slower markets and investing in our facilities and customer outreach in growth markets,” Johnson says.