EBACE Show News - May 20, 2008 - (Page 36) NEW AIRCRAFT EBACE 2008 The Gulfstream 650 Is Already a Hit Gulfstream Aerospace generated a tsunami of market interest for its recently announced Gulfstream G650 business jet, and officials are now sorting through letters of intent representing potential orders for hundreds of the $60 million aircraft. Nicholas Chabraja, chairman and CEO of Gulfstream’s parent General Dynamics, GD, says that the number of potential orders received to date has far exceeded the most optimistic projections. Gulfstream started taking letters of intent for the G650 immediately after its March 13 announcement, but did not begin accepting refundable deposits of $500,000 until April 15. A week later the company had received “what some might call an overwhelming response,” Chabraja says. While he does not mention a specific number, analysts say Gulfstream has received letters of intent for some 500 G650s. Chabraja’s comments suggest that estimate is accurate. Gulfstream expects to begin delivering G650s in 2012. Chabraja revealed Gulfstream plans to deliver 17 in 2012, and a combined 66 more in 2013 and 2014, for a total of 83 aircraft in the first two-and-ahalf years of production. But the initial market response indicates there is demand for six to seven times that many G650s, which would equate to somewhere between 498 and 581 aircraft. The GD chairman acknowledges that “our initial production planning is inconsistent with the demand” for the G650. “We’ll have to replan and pulse our supply chain and take them kicking and screaming” if Gulfstream decides to significantly ramp up initial production…“We’re at the very early stages of dealing with demand we didn’t anticipate.” When launching new aircraft programs in the past, Gulfstream traditionally offered delivery positions for the new model to its existing customer base first. In the case of the G650, officials say that presentations were made to about 100 potential customers after program launch, but because the G650 is an entirely new airplane and not just an extension of an existing model line, the decision was made to accept letters of intent from any qualified buyers. Delivery positions were assigned to each LOI signee on a first-come, first-served basis, depending on the precise time the deposit was received and banked. Major Expansion Under Way Gulfstream is two years into a seven-year, $400 million facilities expansion program. One major element of that expansion is a new 306,104-square-foot manufacturing/assembly building where the G650 will be built. The new building, which is largely complete, will accommodate two G650 production lines. Original plans called for initially operating just one line, with a capacity of 45 aircraft per year, with the possibility of the second line starting in 2014. The huge market response to the G650 is now causing officials to reconsider those schedules. Trying to find the right answer on production levels is a complex issue that is challenging not only top executives but also specialists in a variety of disciplines including manufacturing, material and engineering. And determining how many aircraft to build depends not only on Gulfstream’s production capacity, but also on that of its vendors. “It’s not just us,” a spokesman said, “it’s everything that goes into (the G650),” from engines and avionics to transparencies and landing gear. A desire to boost production rates to shorten the time from aircraft order to delivery also must be balanced against the increased costs that a sharper production ramp-up would impose. While the business jet manufacturing industry is currently enjoying record and unprecedented demand for its products, Gulfstream doesn’t want to risk raising production rates to levels that cannot be sustained, perhaps remembering that just five years ago it announced one-month furloughs for some 1,000 of its initial-phase manufacturing employees in Savannah because of slowing sales of new —DC aircraft. Analysts say Gulfstream has received letters of intent for some 500 G650s. That has upset some customers who found themselves with tentative aircraft deliveries scheduled years into the future. “A lot of very good friends, (including) friends of mine, are very unhappy about their position in the queue,” Chabraja notes. Gulfstream contract officials are now contacting LOI signatories to confirm their aircraft delivery positions and determine if the customer is still interested in proceeding. If so, a contract will be negotiated and a schedule of nonrefundable deposits will be established. Asked how large fleet customers are being handled in this process, a spokesman said that Gulfstream is trying to satisfy as many individuals as possible before taking care of bulk orders. Customers ordering multiple aircraft are being told they can expect to receive only a limited number of G650s per year. —David Collogan Orders for the new G650 have exceeded Gulfstream’s most optimistic expectations—500 oders already? 36 May 20, 2008 www.aviationweek.com/shownews http://www.aviationweek.com/shownews
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