IFG -Bloomberg News Global Private Aviation Status Article

InterFlight Consulting advised and added content to Bloomberg News article focused on the very sensitive and timely issue of corporate aircraft use and its impact to shareholders. Adding to current and urgent actions from global leading business aviation entities such as NBAA, EBAA, NATA and AOPA, IFG’s Chairman Oscar S. Garcia provided expert opinions and commentary to this very important article. Bloomberg news is a true authority in business and economic issues globally and their assessment of private aviation realities was greatly enhanced by IFG’s group subject expertise. Oscar Garcia commented “ The interview leading to this article was of prime importance to both Bloomberg news and IFG Group. Our consultancy IFC is very often used as a leading source of industry status and forecasting. We are proud to have contributed to this piece and remain available for further comments to both media and industry stakeholders as necessary. The importance of corporate and private aviation as economic development generators cannot be deformed by political interests and public reactions to sensationalist news”

Article excerpt:

By Andrea Rothman and Susanna Ray April 28 (Bloomberg) -- Gulfstream and Cessna will need at least two years to revive sales of corporate jets after the public shaming of executives like Elan Corp.s Kelly Martin.    The Dublin-based drug company chief helped run up a bill of as much as $6 million last year flying to a San Francisco research center in a Gulfstream V. Now he will be lining up at the airport with everyone else after investors campaigned for him to switch to standard airline flights costing $1,000.    With businesses shunning luxury planes costing up to $55 million apiece, manufacturers including Bombardier Inc., General Dynamics Corp. and Dassault Aviation SA are slashing output and shedding 15,000 jobs. Gulfstream maker General Dynamics tomorrow will report the slowest profit growth in more than five years, according to analyst estimates compiled by Bloomberg, and Cessna owner Textron Inc. today said first-quarter profit from continuing operations fell 81 percent.    Corporate aircraft make commercial airliners look like a safe haven, said Richard Aboulafia, vice president of the Teal Group aviation consultancy in Fairfax, Virginia. Its the market most exposed to the huge downturn in corporate profits and where the economy really hits the tarmac.    Business-jet deliveries may fall 50 percent this year and next, according to UBS AG. The $22 billion industry has been left reeling after companies and wealthy individuals began scrapping orders and selling business jets last year as the global economy started to contract.

Detroit Three

Pressure to avoid the planes mounted after the CEOs of General Motors Corp., Chrysler LLC and Ford Motor Co. used them to fly to Washington hearings on taxpayer bailouts, prompting Democratic Representative Gary Ackerman of New York to ask: Couldn’t you all have downgraded to first class?    GM terminated its leases for two Gulfstream V planes and five Gulfstream IIIs. Royal Bank of Scotland Group Plc Chairman Philip Hampton told shareholders April 3 that keeping its Dassault Falcon 7X jet would be an embarrassment following the companies rescue by the U.K. government.    The outlook for business-jet manufacturers is bleak. Deliveries, which rose 28 percent last year to 1,138, may fall to less than 600 in 2010, according to New York-based UBS analyst David Strauss. That’s about the level of 2003, when 591 planes were built.    Wichita, Kansas-based Cessna, the largest maker of business jets by aircraft built, is eliminating almost 5,000 posts, or 30 percent of the workforce. The unit last year generated about 40 percent of revenue at parent Textron.

Top Performer

General Dynamics will scrap 1,200 jobs at Savannah, Georgia-based Gulfstream and cut production by one-fifth. The unit was previously the companies top performer, with an 18.5 percent operating profit margin compared with an average 11 percent at marine, weapons and information-systems divisions.    Textron today said first-quarter profit from continuing operations dropped to $43 million, or 18 cents a share.    Excluding some costs, profit was 26 cents a share. Analysts had predicted 1 cent a share. General Dynamics may say profit growth slowed to 3 percent, dropping below 10 percent for the first time since 2003. It lowered the 2009 earnings goal to as little as $6 a share on March 5 from as much as $6.75.    Neither company would comment yesterday prior to announcing their results. Bombardier, the Montreal-based maker of the Learjet, is cutting almost 4,500 jobs after aerospace sales fell 4 percent in the quarter. The company said April 2 it will deliver 25 percent fewer business jets this year and declined to comment further yesterday.

Shares Slide

Textron fell 1.7 percent in regular New York Stock Exchange composite trading and has fallen 19 percent this year. General Dynamics declined 1.2 percent, taking losses for the year to 11 percent, and Bombardier slipped 2.2 percent for a 19 percent drop.    Bertrand Grabowski, the board member responsible for aviation clients at Germanys DVB Bank SE in London, said the move away from private planes is questionable when aircraft are eliminated because of a general mood of austerity and otherwise make good business sense.    People are abandoning jets for corporate-communications purposes, Grabowski said. Farm-equipment maker Deere & Co. plans to keep its aircraft even after criticism by shareholder advisory group Risk Metrics, which said in a February report that CEO Robert Lane spent $400,000 on private flights in 2008, four times the norm for industrial companies. Deere also flew directors and their spouses to India for a board meeting, Risk Metrics said.

Far Flung

The company, which has four Cessna’s and a Gulfstream V, told Bloomberg that the difficulty of traveling from its base in Moline, Illinois, to often the far-flung headquarters of its customers generally makes using airlines impractical.    Lane also employs private aircraft for safety and security reasons, spokesman Kenneth Golden said by e-mail. He said Deere is more frank in disclosing costs than its peers.    Dublin-based Elan, whose stock has lost 74 percent in 12 months, hasn’t renewed a contract with Net Jets Inc., the private-jet company owned by Warren Buffett, though that could change.    We use commercial transport for the most part but would prudently consider the use of an independent plane if the scales balanced in terms of less overnights, associated expenses and executive time, spokeswoman Niamh Lyons said in an e-mail.

Elan Letter

Chairman Kyran McLaughlin has said in a letter to investors that Elan spent less than 1 percent of its $618 million in operating expenses before one-time items on private jets last year, without providing an exact figure. Lyons said she couldn’t expand on that guidance.    Matt Strobeck, a partner at Boston-based Westfield Capital, which owns 17.5 million Elan shares, backed the campaign to force the unprofitable company to use scheduled flights. They don’t need private jets because you can get pretty much anywhere on commercial airlines, he said in an interview. Charles Edelstenne, CEO of Paris-based Dassault, said in an interview that every day brings a fresh piece of bad news.    He blames the U.S. automakers Washington trips for making it a scandal to own a business jet. Dassault stock fell 1.6 percent today, taking the decline this year to 23 percent.    Cessna President Jack Pelton says industry profits closely mirror those at major companies, just with an eight-quarter lag.    Plane makers need to defend the products as time-saving business tools to access markets poorly served by airlines, he said. Pelton started an advertising campaign urging executives not to be intimidated into shunning corporate jets.    That stigma is a factor we’ve never experienced in the past, Pelton said. We need to make sure we show leadership for the industry and demonstrate the importance of our products and the jobs they create. For Related News and Information:    For aircraft deliveries and orders: ALLX FRAV For aerospace stories: NI ARO Top stories: TOP Top transportation stories: TRNT Bombardier company news: BBD/B CN CN BN Textron company news: TXT US CN BN General Dynamics company news: (GD US CN BN } --With assistance from Trista Kelley and Jon Menon in London, Edmond Lococo in Boston, Melita Garza in Chicago and Linda Shen in New York. Editor: Chris Jasper, David Risser.