Cloud 7 for business jets
Companies that make private aircraft are doing something that would make a pilot's jaw drop: They're flying at high and low altitudes at the same time. Those that sell planes to corporations are encountering some turbulence but are still flying high.
The ones focusing on selling to weekend pilots are struggling to stay aloft. And both groups are running into new air pockets, created by the federal government.
''The market has divided into two segments,'' notes Paul Borwell, an Argus Research Corporation analyst. Sales of small piston engine planes ''did not do well in 1980, will do worse in 1981, and barring a major change (in interest rates), I would not look for an uptick in 1982.''
In the first nine months of 1981, shipments of single-engine planes nosedived 19.3 percent, compared with the same period in 1980, while shipments of twin-engine piston planes dropped 26.1 percent.
By contrast, planes designed to speed chief executives between cities ''are selling well and manufacturers have good backlogs,'' Mr. Borwell says. In the first nine months of 1981, shipments of turboprop planes climbed 14.2 percent over the same period in 1980, while jet plane sales soared 20.3 percent.
High interest rates are the most important downdraft buffeting the general aviation industry, which produces planes for personal and corporate use. While the recession has played a part, ''the key thing is interest rates,'' says Edward W. Stimpson, president of the General Aviation Manufacturers Association.
Last week the industry was buffeted again, this time by the Federal Aviation Administration. The FAA imposed the same restrictions on general-aviation flights which had already been placed on commercial air travel as a result of the air traffic controllers' strike. The rules limit the number of flights in controlled airspace to 75 percent of their prestrike level.
''When demand is weak in any event, getting socked with aircraft control restrictions does not help,'' notes a Morgan Stanley & Co. analyst, Wolfgang Demisch.
A few weeks before the government had created another storm cloud. The Reagan administration proposed boosting the tax on fuel for general-aviation users 829 percent by 1986. The administration wanted the tax on turbine fuel to be 65 cents a gallon by that year.
Last week, however, the chairman of the House Ways and Means Committee, Dan Rostenkowski (D) of Illinois, and the ranking Republican member, Barber B. Conable Jr. of New York, introduced a compromise bill that would place a tax of only 12 cents a gallon on aviation fuel. While the industry had favored an 8.5 -cent tax, ''we can live with'' the new proposal, Mr. Stimpson says.
The tax is especially significant for pleasure or weekend flyers. A major tax increase could ''knock them out of the box,'' says Mr. Demisch. Fuel costs are less important for corporate owners who are more concerned about purchase costs.
Since their owners are less bothered by fuel cost uncertainty and interest rate gyrations than individuals, corporate plane sales have held up relatively well. ''Our distributors tell us they want more planes then we are planning to build during 1983,'' says Richard Robinson, marketing vice-president of the Swearingen Aviation division of Fairchild Industries. Swearingen's 1982 production is already sold out.
And at the Beech Aircraft division of the Raytheon Company, sales for the first nine months of 1981 set a record, according to Beech spokesman Stephen Caine. While demand was strong for the company's business propjet, piston aircraft ''have experienced moderate impact from high interest rates and increasing fuel costs,'' the spokesman admits.
Sales of piston aircraft are also down at Cessna Aircraft Company, which last week reported that sales of these planes declined in the 12 months ending Sept. 30. Meanwhile, Cessna's shipments of turbine-powered planes climed to $465 million, from $294 in the year-earlier period.
Even sales of corporate jets have not been immune to high interest rates and a sagging economy. Gates Learjet Corporation is reporting brisk demand for its new $4.9 million, wide-body ''Longhorn'' business jet.''If you put down a deposit today, you could expect delivery no earlier than 1984,'' says John Meyer , a spokesman.
But he reports ''a diminishing number of orders'' for Lear's two smaller jets. As a result, the company has canceled plans to expand production of its older-model jets.
Analysts say the Piper Aircraft Division of Bangor Punta Corporation has been hurt more than other airplane makers because its strength is in smaller planes. For the first nine months of 1981, Piper's shipments were off 15 percent. ''If you look at the numbers they have been hurt more,'' explains Borwell at Argus.
A Piper spokesman counters that interest rates and the recession ''have hurt everyone - Beech, Cessna, and Piper.''