While Gulfstream added a longer-range “ER” G650 to its growing product line during the 2014 European Business Aviation Convention and Exhibition, the Savannah, Ga., manufacturer is widely expected to unveil its next major new product, or product family, later this year.
Analysts have long believed that the next aircraft to roll
out will be successors to Gulfstream’s venerable 450/550 line. At the same
time, though company President Larry Flynn isn’t ruling out development of a
larger aircraft.
Analyst JPMorgan recently noted company performance bears
watching as Gulfstream “moves closer to new product announcements, likely in
second half we believe, as the bridge from the current 450/550 products to the
new ones in the 2015/early 2016 range will be an important moving part in
earnings.”
But Phebe Novakovic, chairman of Gulfstream parent General
Dynamics, maintains that the company is committed to the G450/550 for a number
of reasons. First, any new product will take a number of years to get to
market. Second, those aircraft are still
strong sellers. Order activity strengthened in the latter part of last year and
the 550 outsold all of the company’s other models in the first quarter.
Despite the wide speculation on the next-in-line 450/550,
Gulfstream officials have remained quiet on what’s next in line for them. But
at the same time, when asked whether Gulfstream would go larger, Flynn would
only say the company is “always looking” at options. He adds that when
Gulfstream announces an aircraft, the company will ensure there is a market for
it. Except for the G150 midsize aircraft, Gulfstream’s product line has
remained in the sweet spot of the business aviation market, with deliveries
jumping nearly 50% last year to 144. “We’re at the end of the market where it
only went down 10%,” Flynn says. “We like where we are.”
Gulfstream has evolved significantly from the one-aircraft
company it was two decades ago. That changed when it unveiled the original 550
predecessor, the GV, beginning a head-to-head competition with rival Bombardier
on range. The company later went smaller with its acquisition of the Israel
Aircraft Industries Astra and Galaxy product lines, which have evolved into what
are now the G150 and G280.
But rather than pushing lower, Gulfstream decided to move
the boundaries of range, developing what became its largest, fastest and most
expensive plane, the G650. It also flew the farthest, until Gulfstream added a
sixth option, the ER version.
The G650 was the company’s most successful launch of a new
product, with a backlog that extended seven years. “It’s done incredibly,” says
Scott Neal, senior vice president for worldwide sales and marketing, adding it
created a new market. Sales are picking up again now that its backlog has been
whittled down to about three years, he adds.
Gulfstream plans to continue selling both the G650 and ER
versions, with Neal noting they are offered at different price points and some
may not need the range.
In fact, it’s speed
that appears to matter most to Gulfstream customers, Neal and Flynn agree. With
the 650, Neal says, “they are flying as fast as they can.”
Cessna Aircraft, which had claimed the speed title until the
650 snatched it away, is poised to retake it once its Citation X+ is certified
in the next several weeks.
That aircraft will be certified to fly at Mach 0.935,
besting the 650’s maximum speed of Mach 0.925. But the 650 is believed to have
brushed up against Mach 1 in testing. Gulfstream officials are remaining mum on
how fast the plane will actually fly.
What they do say is there is a point of diminishing returns
on speed beyond the low Mach 0.9s, with a performance penalty that negates
benefits of the speed. That is the typical response when queried on whether
they are planning a plane that will return the speed title to Gulfstream. But
at the same time, they haven’t stated categorically that the next plane or
planes won’t go even slightly faster.
Gulfstream has also had a background in supersonic research.
Flynn notes that the company continues to invest “in a very small way.” But
both Flynn and Neal believe regulatory barriers are preventing it from reaching
the market for the foreseeable future. Such a product would only be viable if
it would be permitted to fly over land, the executives maintain.
As for the lighter end of the market, Flynn and Neal are
both pleased with the progress of sales of the G280 now that it is in the
market. The company has now placed 31 280s into service since it was certified
in late 2012, and interest remains strong. “That end of the market is instant
gratification,” Flynn says. “When that
aircraft got certified, the orders started [flowing] in.”
Neal adds that its entry into service has been among the
smoothest of all of its aircraft, adding that reliability rates already are
matching those of the 450/550. He credits that to the decision to embed product
support early in the development cycle. Gulfstream took that approach with both
the 280 and 650.
As for the 150, Flynn is more pointed, saying, “We’re happy
with the 150. We’re not happy with the 150 market.” The midsize market remains
a difficult one, with sales not as strong. Neal indicated that this is not an
end of the market where the company is focusing its research and development
dollars.
At the same time, Neal reiterates that “we’re pretty
comfortable with what we’re doing now.”
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