Alderman & Company partner Bruce Andrews and analyst Connor Bernard turn their attention to the business aviation sector and how supply chain issues are impacting three key players
Throughout this year, the aerospace and defence industries’ supply chain issues have been well documented, particularly regarding their effect on commercial aviation.
However, the aviation industry is more than just its commercial side. In this article, we will discuss how the business aviation supply chain is faring and what some business jet OEMs are doing to mitigate issues faced in their supply chains.
Since the pandemic, demand for business jets and subsequently business jet travel has picked up dramatically.
As wealthy flyers were fleeing from commercial air travel due to health and safety concerns, we saw a surge in demand for business jets.
Such demand has kept up even as the pandemic has subsided, with 730 deliveries in 2023, compared to the 10-year average of 709 during the period 2014-2023.
However, business jet manufacturers have been facing a similar range of challenges impacting their production processes as have the large commercial OEMs.
A major issue is the global shortage of essential components and raw materials, exacerbated by pandemic-related disruptions.
This shortage has resulted in delays in receiving critical parts, affecting assembly lines and manufacturing timelines.
In addition, logistical problems like transportation restrictions and port congestion have made it harder for manufacturers to get shipments on time. So, what are they doing about these issues?
To get a better look, let’s dig a little deeper into the production issues facing three major manufacturers; Bombardier, Dassault, and Gulfstream.
Bombardier is facing a significant issue in its supply chain – the restructuring of Spirit AeroSystems, whose Belfast facility manufactures critical fuselage sections for Bombardier.
Bombardier president and chief executive Eric Martel said in July: “If another buyer can guarantee long-term visibility on pricing, on execution, delivering on time and quality of the product, we’re open to that. But we could also be the solution”
For Martel and Bombardier, the decision hinges on weighing the need to reintegrate an important piece of their supply chain versus paying upwards of a billion dollars for a potentially loss-making operation.
The situation with the Belfast facility highlights a critical issue being discussed across the aerospace industry – how much outsourcing is optimal and what processes should be kept (or brought back) in-house.
Now let’s look at Dassault, which is also facing supply chain issues. In its latest earnings report on July 9, the company stated that “there are many shortages in our production lines due to supplier inefficiencies in some cases, especially in the aerostructure sector.
“These difficulties have given rise to risks affecting Falcon and Rafale deliveries, and also impact customer support.”
To combat this, Dassault is focusing substantial resources on immediate deliveries, which should enable the manufacturer to meet near term delivery commitments.
However, management has acknowledged that this shift in resources will likely result in delays in later deliveries, unless there are substantial changes in its supply chain. In that regard, Dassault is looking to substantially increase content from India.
Through this move, which is one part of a broader strategy to create a more geographically diverse supply chain, Dassault is hoping to increase supply chain resiliency, increase throughput, and keep control of costs.
Finally, what about Gulfstream, which appears to be taking supply chain issues in stride. In the first half of 2024, Gulfstream Aerospace experienced a significant increase in both aircraft deliveries and revenue.
By mid-year, the company had delivered 61 jets, marking a 36% year over year rise, fueled primarily by a 72% surge in large-cabin jet shipments, including 11 newly certified G700s.
The G700’s rollout encountered delays due to late FAA certification requirements, but these issues are largely resolved now.
Gulfstream expects to deliver approximately 150 jets by year-end, its highest delivery year since 2015.
Despite ongoing supply chain challenges and geopolitical uncertainties, Gulfstream remains positive, as demonstrated by the 150-million-dollar expansion, to be completed by the end of the year, of its Savannah Service Center East, which boosts its maintenance and repair capabilities and supports its expanding fleet.
Sources:
https://aeroclassifieds.com/blog/business-jet-manufacturers-still-reporting-supply-chain-issues