At this point last year, the aircraft sales market was burning like jet fuel. So far in 2023, the fasten seatbelts light has remained aglow. Even with a bit of apprehension and winds of caution beginning to blow, most pundits in the industry feel things are adjusting but remain stable and strong.
Now with numbers coming out from the large business jet makers, we have a better sense of things at least when it comes to new aircraft rolling off assembly lines.
In recent days, Gulfstream, Textron and Bombardier have published first-quarter financial reports, while Embraer has issued an update on its aircraft production ahead of its earnings report due early next month.
Textron Q1 2023 Earnings Results
Textron and its suite of aircraft brands beat estimates on its earnings per share but lagged on its overall revenue target, resulting in its stock price staying flat on Thursday. As of Friday morning, its price was just over 1% off from where it started the week.
The adjusted earnings per share was $1.05, compared to $0.97 a year ago. Textron Aviation delivered 35 jets in the first three months of the year, down from 39 in 2022. In the most recent quarter, the company delivered 34 turboprops, three more than last year.
The backlog for the aircraft division is $6.5 billion.
Profit for the aviation segment was $125 million, a $15 million gain, year to year, even with fewer jets delivered. Textron accredited that to “ favorable pricing, net of inflation, and the impact from higher volume, partially offset by an unfavorable impact from performance.”
For the Bell Helicopters division, revenue was down $213 million from 2022, finishing at $621 million, due to lower revenue from the military, as well as V-22 and H-1 production volume, the company said.
Revenue for the Bell division shrunk from $91 million to $60 million. The Bell backlog is $4.6 billion.
In Textron’s eAviation division, research and development continue to operate beyond a 2X multiple of revenue. The $4 million gained was offset by $9 million in cost.
Bombardier Q1 2023 Earnings Results
Canadian jet maker Bombardier’s swift to focus solely on business aircraft, as well as the company’s efforts to shrink debt, have cleaned up its balance sheet. However, that did not stop its stock from losing more than 13% on the week, as of Friday morning, most of the selloff coming after Thursday’s report.
First-quarter revenue was up 17% year to year at $1.5 billion, of which $424 was generated from “continued strong aftermarket revenues.”
The backlog is “stable” at $14.8 billion, with a book-to-bill of 0.9, in range with the other plane makers. Bombardier said it remains on track for its full-year guidance of producing at least 138 business jets this year.
Update on Embraer production
Brazilian aircraft maker Embraer delivered eight business jets and seven commercial planes in the first quarter. Of the business jets, six were in the light and two were large. The company said that it was a 7% year-to-year growth rate. Its backlog ended the quarter at $17.4 billion.
In 2022, the company delivered 59 Phenom 300-series jets, taking the top honor for the 11th year as GAMA’s best-selling light jet worldwide.
RELATED STORY: Embraer’s 300 series is world’s best-selling light jet for 11th consecutive year
Gulfstream’s movement in the first quarter
Gulfstream Aerospace delivered 25 business jets in the first three months of last year but only delivered 21 this year. That was three fewer than the company had anticipated, with engines showing up late for a pair of Gulfstream G280 deliveries, along with an ultra-long-range jet not making it to its international customer due to red tape in the customer’s home country, General Dynamics Chair and CEO Phebe Novakovic said on Wednesday during the company’s report.
Novakovic noted a “light at the end of the tunnel” for supply chain constraints and said that the ramp-up of production of the Gulfstream G700 would limit the company’s output for the first half of the year.
RELATED STORY: Deliveries dip in Q1 for Gulfstream – but the G700 looks to change that
General Dynamics reported revenue of $9.9 billion, a 5.2% gain year to year, with diluted earnings per share of $2.64. Its stock was down 3.5% on the week as of Friday morning, bouncing back slightly from a 9-month low hit on Wednesday morning.
What the earnings reports say about the overall business aircraft market
While production hobbles along, aircraft makers are still benefitting from the margins, showing that demand remains strong. Novakovic noted that the failure of a pair of regional banks in the U.S. and its ripple effect on global markets did spook buyers a bit, but she believes the scare was shortlived and described the American and Middle Eastern markets as strong, with China lagging.
The lid on production has been one of the key drivers of demand and valuation hikes of aircraft on the preowned side. Even with higher interest rates and banks tightening the screws on any risk factors, the demand is still there.
At GlobalAir.com, we have seen aircraft inventories rise and brokers more willing to put price tags on inventory. However, in historical context, volume remains low and popular planes with proper pedigree still sell.
While the course might be altering a bit, the market remains at cruising altitude. However, it would not be overly prudent to keep those seatbelts fastened and to refrain from smoking in the cabin, as nobody quite knows where all this will end up landing.
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