Private jets have long been considered one of the ultimate status symbols. They’re also a bright spot in the beaten-up aerospace sector.
Textron Inc., the maker of Beechcraft turboprops and Cessna jets, on Wednesday reported fourth-quarter results that beat analysts’ expectations and forecast an almost 15% increase in sales for its aviation division this year as the coronavirus pandemic encourages those who can afford to fly private to do so. Gulfstream-maker General Dynamics Corp. also reported earnings, revealing that fourth quarter was the strongest for new private plane orders in the year. Its aerospace unit ended 2020 with a book-to-bill ratio of 0.96, indicating it’s replenishing its backlog at nearly the same rate it’s shipping out existing orders.
The private-jet market is notoriously volatile and tends to correlate closely with economic swings. But the pandemic has been kind to the ultra-wealthy, with rising asset prices making many of them even richer. US flight activity in November and December on Textron aircraft was higher than the year-earlier periods, Chief Executive Officer Scott Donnelly said on a call to discuss the company’s results. “That’s primarily leisure travel at this point,” Donnelly said. But all signs are “pointing to continued momentum and strength.”
This year’s projected boost won’t be enough to fully make up for last year’s decline, which reflected difficulties delivering and servicing planes, particularly during the rough early months of the pandemic. Still, it’s a notably brighter outlook than what’s ahead for its larger rivals in commercial aerospace.
Boeing Co. continues to bleed cash and orders as it contends with the pandemic, the aftermath of a prolonged grounding for the 737 Max and production snafus with its 787 Dreamliner. The planemaker on Wednesday said its commercial airplane backlog had shrunk by almost $100 billion from a year earlier and that it had burned through a whopping $19.7 billion in cash last year. Boeing reiterated its expectation that it would take three years for air-travel demand to return to pre-pandemic levels, even with vaccines now going into arms. When it comes to 2021, Boeing would only say that it expected revenue, earnings and operating cash flow to improve from last year’s levels — a low bar considering it would be hard for things to get much worse.
There are worse places to weather a pandemic than aboard a private jet.