Aviation Sales Drying Up

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When jet sales dry up, it means it won't be long before aircraft production rates fall, followed by cuts in employment.

Aircraft executives have always said corporate profit is the leading indicator of the direction of the business jet market.

With the sudden fall of world markets, companies are finding it difficult to give guidance of what their profits are now or will be in the future.

Suddenly, planamakers' sales departments are finding difficulty landing sales when it had once been seemingly so easy.

"Well our sales force has had three of the best years they've ever had, even all the way up to July of this year. It's getting tough for them. The prospects out there are harder to find and they're having to work real hard for each sale they can get," said Cessna CEO/Chairman Jack Pelton.

Companies who had ordered planes when the economy was expanding are asking for later delivery dates because they can't pay now.

"The deferral and cancellation activity has calmed down. We had a lot of activity in the November time-frame and we think the majority of that's behind us now," Pelton said.

Layoffs started last month and will continue into next year.

"Right now we think we've sized the company appropriately for where we are today in the economy and we hope it holds up going forward," Pelton said.

But aviation analyst Richard Aboulafia spoke at the Wichita Aero Club Tuesday and said this down cycle will be worse for general aviation than 2002 and 2003 were. During those years, Cessna alone had 3,000 layoffs.

"People do have money to buy airplanes. It's a matter getting their
confidence up that that's where they want to place some of their
investments," Pelton said.

If a waning economy wasn't enough, Detroit automakers' CEOs dealt general aviation a PR slap.

"The backlash from the three CEOs of the auto companies flying into
Washington on their private jets was obviously a public relations nightmare for our industry," Pelton said.

This time those executives are driving to Washington. Although the trip will be more scenic, they'll likely not get as much work done. Cessna's Pelton reminds us business jets are meant to be a productivity tool, not for fun.

The industry will have to work harder at selling that message to the public, or at least certain members of Congress.

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