Gulfstream Aerospace Inc. is expanding its sales operations in Latin America and Africa, fast-growing regions where the Savannah-based business jet manufacturer already has significant footholds.
Last week Gulfstream named SkyJet Aviation Services Ltd. as its representative in the central Africa region, which for the company’s purposes includes Nigeria as well as the Ivory Coast, Ghana, Uganda, Kenya and Tanzania.
Gulfstream also opened the Latin American Business Aviation Exhibition & Conference in Sao Paulo Aug. 12 with announcements about its widening Latin American reach.
Over past five years, Gulfstream has sold more than 70 aircraft in the region, boosting its fleet there by 70 percent to 180. While Mexico is its regional powerhouse with 80 jets deployed, the Gulfstream fleet in Brazil has nearly tripled to 40 during since 2009.
Brazil, which has a massive industrial base, a huge landmass and nearly twice as many people as Mexico, is expected to surpass Mexico as at the largest business-jet market in the coming years. Brazil’s Embraer, a Gulfstream competitor which makes commercial and business jets, projects that the Brazilian market will add 560 business jets over the next decade, compared to between 110 and 140 for Mexico, according to the Wall Street Journal.
Latin America isn’t new as a key player in the corporate jet market, business aviation consultant Brian Foley told Global Atlanta. It’s been a steady No. 3 behind the U.S. and Europe for decades. It’s diverse enough that a downturn in one country is often offset by the emergence of another, and business jet sales weren’t hit as hard there as in other regions after the 2009 recession. According to a recent forecast, more jets are deployed in Latin America than in Western Europe.
“What’s important for Gulfstream and others is that the South American market is pretty stable compared to the rest of the world,” Mr. Foley said.
Brazil, Mexico, Argentina and Venezuela are the primary regional players, he said, though it has been a bit like a game of musical chairs depending on the region’s volatile election seasons.
In July, Gulfstream moved maintenance operations into a larger hangar at the Bertram Luiz Leupolz Airport in Sorocaba, Brazil. At 38,000 square feet, it’s nearly twice the size of the service center Embraer launched in March at the same airport, which sits outside Sao Paulo.
Embraer mostly makes relatively smaller business jets, with its newly announced Legacy 500 about the size of the mid-range Gulfstream G280. Much of Gulfstream’s growth has been at the top end of the market with last year’s introduction of the G650, which has the largest cabin and longest range of any business jet. That model accounted for a much of Gulfstream’s 50-plane sales jump between 2012-13.
Gulfstream is also looking at other key markets. More than 30 Gulfstream jets are based in oil-rich Venezuela, and in July the company also International Aircraft Operators as its independent sales rep in Panama, the Central American nation that serves as a regional hub.
Gulfstream delivered 144 jets worldwide last year. It doesn’t break out sales by region, but China and the Middle East have been significant drivers, helping build a $14 billion backlog that extends out to 2017, a Gulfstream spokesman has told Global Atlanta.
According to the General Aviation Manufacturers Association, or GAMA, North America is still the industry’s cash cow, accounting for 52.4 percent of jet deliveries in 2013. But Latin America (11.1 percent) and the Middle East and Africa (9 percent) are growing as the industry recovers from a precipitous decline after the 2009 financial crisis. The 678 jet deliveries recorded worldwide last year are less than half the 2008 peak.
While international markets will help drive growth, oversupply of used inventory from the production glut of the 2000s will put pressure on sales in the coming decade, according to a Citi research note from October. Jets with small and mid-size cabins, like Embraer’s Legacy 500, will face especially acute challenges as tastes change.
Larger-cabin jets like the G650 aren’t immune to such factors but have seen some consistency in the aftermath of the downturn, according to the note authored by Citi analyst Jason Gursky, who covers Gulfstream parent company General Dynamics Corp.
“We can explain persistent demand by pointing to rising customer preference for larger and longer-range aircraft, especially as emerging markets begin to demand business jets. It’s also the case that the large-cabin manufacturers enjoy larger backlogs and a less elastic customer base,” the note reads. A Gulfstream spokesman couldn’t be reached immediately for comment.
Gulfstream is also aided by its elite branding, Mr. Foley said, comparing its jets to Mercedes-Benz and Embraer’s to Chevrolet; both get you where you need to go, but with different levels panache.
Georgia has benefited from Gulfstream’s resilience. The company has hired more than 2,500 new workers in the last three years through a massive expansion of its main factory in Savannah. It’s also spending $100 million beefing up its maintenance center in Brunswick.
This week Georgia Gov. Nathan Deal visited the facility where Gulfstream makes the G650. Mr. Deal greeted workers as part of the nationwide General Aviation Manufacturing Week.
Read more about Georgia’s aviation exports here: Planes, Parts Help Georgia Exports Soar