Does GAMA 2024 Report Portend Lower Performance?

GAMA, the General Aviation Manufacturing Association, released its 2024 Shipments and Billings report earlier today, summarizing the results of the general aviation industry for the 4th quarter and full year 2024. The report showed that while the industry delivered more aircraft in 2024 and Fourth Quarter Performance was Flat Business Aviation remained relatively flat in 2024, as the industry has generally been since the Great Recession 2008. The industry is unlikely to recover to near those record levels in the foreseeable future. Examining the data for the 4th quarter of 2024, warning signs are on the horizon, as shipments of single-engine piston and electric, twin-engine piston, single-engine turboprops, multi-engine turboprops, and business jets all fell during the fourth quarter of 2024 when compared with 2023. Typically, aviation is a bellwether, and that doesn't bode well for the economy as a whole. The following table shows the comparative results for the fourth quarter. We haven’t seen an across-the-board year-to-year decrease in units delivered in some time. The more relevant question is what market changes are causing the depressed market and what it portends. [caption id="attachment_89847" align="aligncenter" width="1125"] source: GAMA[/caption] We believe that the uncertainty associated with the new administration in the United States may be slowing capital investment decisions, particularly with concerns about tariffs. With aviation nearly always a discretionary expense that is one of the easiest to cut, there is reason for concern, despite book-to-bill ratios for the major players remaining around 1:1. But a 1:1 ratio doesn’t reflect any growth or improvements in profitability - just the status quo. Full Year Results Earlier in the year, the outlook was more promising, and the full-year numbers remained ahead of 2023 levels in most categories. Total fixed-wing shipments beat the prior year, with single-engine piston, single-engine turboprop, and business jets seeing growth. Multi-engine piston and multi-engine turboprops continued to lag in sales. The latter reflects a long-term trend with improvements in single-engine reliability. The following chart summarizes full-year performance over the last six years and illustrates that the industry still lags behind the pre-pandemic sales levels for business jets. [caption id="attachment_89849" align="aligncenter" width="1164"] source: GAMA[/caption] While billings remain higher than in 2019 nominal dollars, when inflation adjusted, they remain behind pre-pandemic levels. We utilized the aircraft manufacturing producer price index for July of each year to adjust billings to their equivalent in 2019 dollars. Unfortunately, despite strong growth in 2024, the industry remains, in real terms, behind pre-pandemic revenues. [caption id="attachment_89846" align="aligncenter" width="1132"] source: GAMA, Bureau of Economic Statistics[/caption] Rotary wing shipments in billings were relatively flat last year after several years of growth to levels higher than the pre-pandemic period. A slowdown in helicopter deliveries, combined with the downturn in fourth-quarter fixed-wing deliveries, indicates that the industry may be entering a slight downturn as we enter 2025. Manufacturers outside the United States, including Bombardier in Canada and Daher and Dassault in France, are particularly concerned about tariffs. Embraer, which assembles its business jets in the United States, is better positioned should the Trump administration take action, and Daher is planning a new final assembly line in the United States, its largest market, for the popular TBM turboprop. Performance by OEM in the Business Jet Market The business jet market has 10 players, which account for all of the world's business jet deliveries. The table below shows OEM deliveries for 2019-2024. [caption id="attachment_89854" align="aligncenter" width="1133"] source: GAMA[/caption] Based on aircraft delivered, Textron, Bombardier, Gulfstream, Embraer, and Cirrus hold 87% of the market, with Airbus, Boeing, Dassault, Honda, and Pilatus sharing the remaining 13%. Airbus and Boeing are in a niche market, Dassault is mounting a slow comeback, Pilatus is growing in a niche market, and Honda continues to struggle. Billings are dramatically impacted by the mix of aircraft, with Gulfstream concentrated at the upper end of the market, followed by Bombardier. Textron's focus on the light to medium-sized jet market brings down its billings compared to its high-end competitors. The following chart shows billings by OEM for 2019-2024. Note that the billing numbers for Textron, Cirrus, and Pilatus also includes piston and/or turboprop models, as the model does not split out business jet data. The two players dominating the top of the market, Gulfstream and Bombardier, capture 61% of industry revenues. [caption id="attachment_89853" align="aligncenter" width="1140"] source: GAMA[/caption] Market Share in the Business Jet Market The business jet market includes everything from the Cirrus SF50 personal jet to airliner derivatives from Airbus and Boeing. Industry trends tend to move slowly, and market shares based on aircraft deliveries and billings remain quite different. Market share calculated based on aircraft deliveries shows Textron in the lead, followed by Bombardier, Gulfstream, and Embraer, as shown in the table below. [caption id="attachment_89852" align="aligncenter" width="917"] source: GAMA[/caption] Textron has held the unit delivery lead for the last few years, albeit with a recent downward trend in the previous three years. With four years of recent positive results, Embraer’s market share is growing. Bombardier and Gulfstream, with top-of-the-market aircraft in their portfolio, continue to increase deliveries even with their more expensive price point. Graphically, the market share by volume data and trends over the last 6 years are shown on the following chart. [caption id="attachment_89850" align="aligncenter" width="810"] source: GAMA[/caption] Market share calculated on billings typically shows Gulfstream and Bombardier battling it out at the top end of the market. Last year, multiple new models were impacted by supply chain difficulties, and Bombardier out delivered Gulfstream, but Gulfstream held the edge in billings as it introduced the new G700. [caption id="attachment_89851" align="aligncenter" width="905"] source: GAMA[/caption] The mix of aircraft typically determines who wins this concept, and after Bombardier took the lead over Gulfstream in 2023, the tables turned back in 2024 to Gulfstream's favor. [caption id="attachment_89855" align="aligncenter" width="868"] source: GAMA[/caption] The Bottom Line The general aviation industry continues to be flat as we enter 2025. While supply chain constraints may have precluded some industry participants from peak production, demand for new aircraft has remained flat to slightly downward in the fourth quarter. Over the longer term, we don’t see a significant uptick in the foreseeable future. Still, we see a potential for a downturn if threatened tariffs emerge and negatively impact the global economy. We all know that aviation is the first thing to go, as it is hard to justify from economic, environmental, and social perspectives. Let's hope that the first quarter results are better year-over-year than the 4th quarter and that trends return to positive rather than negative.

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