- General Dynamics, parent of business jet maker Gulfstream, said Wednesday that potential customers are having to wait longer for their jets for several reasons, including due to "additional board approvals"
- Some boards may be slow to approve corporate jet purchases when they are still letting workers go or looking for ways to trim other spending
- Analysts say there have been improvements in the overall business jet market, but new jet deliveries still remain well below the 2007-2008 peak
Just when it looked like the business jet market was ready for take off, there are new challenges: corporate executives caught in a waiting game for their shiny new planes.
Gulfstream parent General Dynamics said it's been taking longer to get new orders signed, but not for the reasons you might think. The wait is due in part to corporate boards taking their time to approve new business jet purchases.
"We've got potential customers who are waiting on the sidelines," said General Dynamics CEO Phebe Novakovic. "It's simply just taking longer for a whole series of reasons — everything from the introduction of brokers to additional board approvals ... for fleet aircraft purchases."
Indeed, some boards may be slow to approve corporate jet purchases when they are still letting workers go or looking for ways to trim other expenses.
Novakovic didn't share customer names on the waiting list, but the company's Gulfstream G650, a $65 million aircraft, is one of the most popular high-end corporate jets on the market today.
Following the election of President Donald Trump (a long-time private flyer), some analysts had predicted that "anti-bizjet rhetoric" that began during the Great Recession would fade and make buying corporate jets hip again. But the waiting time for board approval may be a sign companies are in no rush to loosen the purse strings.
Analysts say there have been improvements in the overall business jet market, but new deliveries still remain well below the 2007 to 2008 peak.
The higher-end business jet market generally recovered faster after the Great Recession than the lower-end market, but it was then hurt again about two years ago by declining commodity prices, especially oil, as well as weakness from emerging markets.
A strengthening dollar also made it more expensive for international customers to buy U.S. planes.
Another factor that has impacted new deliveries has been elevated levels of pre-owned business jets on the market. It has allowed some buyers to get better pricing on aircraft this year.
"Used bizjet prices continue to ease, but this may reflect an increasing base of older and more heavily used aircraft for sale," Cowen analyst Cai von Rumohr said in a note last week.
General Dynamics on Wednesday said Gulfstream aircraft deliveries in the first half of 2017 fell 6 percent compared with the year-ago period and second-quarter deliveries slid almost 17 percent against the year earlier. The biggest decline in the quarter was to the large-cabin aircraft segment, the company said.
That said, Novakovic said the company is "comfortable with the anticipated third-quarter orders based on early contract activity and contract discussion. The interest in the G650 and G650ER as well as the G550 remains quite good and supportive of next year's operating plan."
Dassault manufactures the Falcon 8X, which competes in the ultra-long range business class with jets made by Gulfstream, Canada's Bombardier and others. Bombardier is scheduled to report its second-quarter financial results on Friday.