Gulfstream has had a spring clean of its order backlog, removing firm orders and options from a ‘Fractional Operator’ worth USD$1.3 billion.
Bill Moss, Vice President & Corporate Controller of Gulfstream’s parent company General Dynamics said during a second-quarter earnings call that Gulfstream had completed negotiations with a fractional operator, and that roughly USD$300 million of firm orders, and USD$900 million in options would be removed from the backlog.
“This action essentially clears our backlog of any exposure to fractional customers and has no impact on our production and revenue forecast for 2022 and beyond,” said Moss.
The Savannah-based manufacturer delivered 22 aircraft during the second quarter, including nine G500s and G600s. An additional four G500s and G600s were due to be delivered, but were deferred at the customer’s request, with Gulfstream saying that they will likely be delivered in Q3, pending the removal of a Federal Aviation Administration (FAA) wind directive.
The FAA issued an airworthiness directive (AD) in May 2022 following two G500 hard landings, one in February 2020, and the second in April 2022.
Having investigated incidents, the FAA determined that the flight control system (FCS) was automatically setting the aircraft to pitch downwards to limit the angle of attack (AOA) on short final if the pilot in command issued rapidly alternating sidestick commands.
In response, the FAA issued an AD stating that no G500 or G600 can attempt to land if the wind speed from any direction is higher than 15 knots. This led to flight cancellations, as operators had to ensure that that the wind speed fell below 15 knots at their intended destination, before the aircraft could depart on the flight.
Gulfstream has been working on a software update patch to address this, which it expects the FAA to certify soon, with Jason Aiken, Generals Dynamic’s Senior Vice President & Chief Financial Officer saying that Gulfstream had delivered the vast majority of G500s and G600s that it intended to during the quarter and that the “little bump in the road” is expected to be resolved by the end of Q3.
Overall, order intake remained strong across all aircraft types, with the book to bill – the number of aircraft ordered during the quarter versus the number of aircraft delivered, reaching 2.7:1, with Gulfstream saying that the orders were a good mix of different types, including the G500, G600 and the G280.
Orders for the G650 continued to be strong, with Aiken admitting that the level of orders has been “beyond even what we think perhaps conservatively expected.”
Whilst Aiken went on to add that it proves that the G650 “continues to have legs”, he immediately added that the aircraft will be phased out once the G800 enters service.
“To make no mistake about it, the 800 is the replacement for the 650. And as the 800 comes into service, we will work the 650 out,” said Aiken.
You can read the full transcript from the earnings call on Seeking Alpha.
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