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(Updates with closing share prices in 14th paragraph.)
Oct. 10 (Bloomberg) -- General Dynamics Corp.’s Gulfstream unit, Textron Inc.’s Cessna Aircraft and other business-jet builders are adding new models as the industry recovers from an order slump that forced output cuts of more than 40 percent.
Gulfstream expects to boost deliveries about 10 percent in 2011 and more than 15 percent next year as the long-range G650 enters service, President Larry Flynn said in an interview. Cessna announced the $4.2 million Citation M2 on Sept. 26 and the $14.9 million Citation Latitude today at the National Business Aviation Association conference in Las Vegas.
“Barring any major shifts in the world activities, we’ll see a slight uptick in our deliveries” this year, Cessna’s new president, Scott Ernest, said in an interview yesterday. He declined to give a more specific forecast.
Worldwide business-jet sales may rise next year because of emerging-market demand and introduction of longer-range models, components-maker Honeywell Inc. said in its annual corporate-jet forecast before the convention. Deliveries will probably fall this year, weighed down by the U.S. economy, it said.
The slump in business-jet orders had forced planemakers to curtail new models and cut staff. Cessna canceled development of the Columbus jet in 2009 amid the recession and fired more than half its staff.
The planemaker is now pushing ahead with the Citation M2, which will seat six, fly faster than competitors and have a range of 1,300 nautical miles. The Citation Ten will also have its first flight this year, said Brad Thress, Cessna’s head of business jets.
The Latitude, which has space for a two-person crew and eight passengers, offers a range of 2,000 nautical miles. The aircraft is scheduled to enter service in 2015, Cessna said at the show.
“The investments in new products will position us for strength, regardless of what the economy does,” Thress said in an interview yesterday. “It’s our intent to have new products every year into the foreseeable future.”
Thress was named to his post by Ernest, who took over as head of Cessna about four months ago. Jodi Noah was put in charge of single-engine models. Ernest also simplified a sales- force model that had been in place for 40 years, removing layers while adding more regional directors and giving them power to make decisions and do deals faster.
Textron Chief Executive Officer Scott Donnelly is molding units together, including Cessna and Bell Helicopters, to “harness the energy across all the businesses,” Ernest said. Cessna has started joint service centers with Bell in Prague and Singapore and will continue to leverage the companywide resources for sales offices globally, he said.
Gulfstream’s new eight-seat G650, which has a top speed of Mach 0.995, is set to complete testing and certification this year, Flynn said. It will reach the first customer in the second quarter of 2012, he said.
The planemaker has added 1,300 jobs this year at its plant in Savannah, Georgia, as it boosts production. The company is selling more large-cabin jets, with deliveries up 20 percent this year, Flynn. Sales of midsize aircraft, which dropped by about 20 percent, now are starting to pick up, he said.
“The buyers of larger planes can weather this market,” said Greg Irmen, head of business and regional systems for parts maker Rockwell Collins Inc. “Owner-operators are a bit more affected by downturns. Whatever the stock market is doing is going to happen to the light jets.”
Stock Market Effect
The Standard & Poor’s 500 Index has tumbled 5 percent in 2011, as five straight monthly declines starting in May erased a gain built this year through April. Textron rose 1.5 percent to $18.62 at 4:15 p.m. in New York, while General Dynamics climbed 3.6 percent, the most since Aug. 11, to $61.68.
Honeywell expects global business-jet deliveries to fall to fewer than 650 this year from 732 in 2010. Shipments may climb next year without surpassing 700, it said. Replacing older planes was the top purchase reason, while increased range ranked second for the first time, the company said.
Bombardier Inc. is developing the eight- to ten-seat Global 7000 and 8000 jets, with a maximum cruise speed of Mach 0.90, that will enter service in 2016 and 2017.
“Through the ups and downs we just have to keep focused on making sure we have the right product regardless of market conditions,” said Bassam Sabbagh, head of Bombardier’s Global jet lineup.
Embraer SA, the Brazilian planemaker that entered the business-jet market in 2002, is developing the Legacy 450 and 500 jets, which will start ground testing in December. The company has delayed the maiden flights beyond year-end, said Ernie Edwards, who has been president of Embraer Executive Jets since May. He didn’t elaborate on the reason for the postponements.
Edwards is moving the unit’s headquarters to Melbourne, Florida, from Brazil. An assembly line for the Phenom 100 is already operating in the southeastern U.S. state, and Embraer is adding a customer design center for all its models, Edwards said. The company has 80 employees there, a quarter of which had worked for NASA, and plans to hire 140 more, he said.
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