Gulfstream Will Cut Completion Delays Following its Acquisition of K-C Aviation

Gulfstream believes the additional capacity afforded by its purchase of K-C Aviation will enable the company to expand its completions capability and to work off a backlog that has seen G-V deliveries slip by several months as the company boosts production. The company is at a five-aircraft per month production rate now and expects to deliver 64 aircraft in 1999. However, Gulfstream took 42 orders in the first half of this year, and has a total G-V/G-IVSP backlog of 103 aircraft.

The ramp-up in production and the commensurate expansion of completion capability is aimed at whittling down the time between order and delivery to 18 months. Currently, a G-IVSP ordered today wouldn't be available until spring 2000, and a G-V ordered today wouldn't be available until the fourth quarter of 2000. Prior to buying K-C, Gulfstream was completing aircraft in Savannah; Brunswick, Ga.; and Long Beach, Calif. Completions on G-Vs are averaging 45-50 weeks, about twice the time initially allotted, and one of the reasons for the long backlog.

Gulfstream struck quickly when K-C Aviation went on the block, taking just four weeks to conclude a $250-million cash purchase of the completions and service company with facilities in Appleton, Wis.; Dallas; and Westfield, Mass.

The deal has the dual benefit of expanding Gulfstream's capacity while crimping its competitors'. K-C has been oriented toward completing Challenger 604s and was one of the sites chosen by Boeing for BBJ completions. Eight Challengers are in progress and four more are under contract; K-C had not yet signed any BBJ contracts.

Beyond honoring its existing contracts, all of K-C's capacity will be devoted to Gulfstream. Two G-IVSPs already are in completion at K-C and a total of six will be completed this year. The facilities will complete 18 aircraft in 1999, according to Gulfstream Aerospace President Jim Johnson. Once the backlog is trimmed, Gulfstream said, any excess capacity will be devoted toward building its service business, which also has been running at full capacity.

Gulfstream Aerospace Chairman Ted Forstmann said he concluded the purchase in just four weeks, enabling him to cut out other interested bidders, including Bombardier. "We weren't the only people who wanted to buy it," Forstmann said.

K-C was one of eight sites Gulfstream looked at for out-sourcing completions work.

By Perry Bradley