““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
The major airplane manufacturers at a glance
Fewer than a dozen airplane manufacturers account for the vast majority of business jets and turboprops being built today. Here are the key facts about each of those manufacturers, including data on their parent companies, their 2008 business aircraft sales and the models they offer.
Airliner manufacturer Airbus followed Boeing into the pre-packaged bizliner market in 1997 when it announced the Airbus Corporate Jet (ACJ), a then $35 million executive version of its Airbus A319 airliner. At first, ACJ sales lagged those of Boeing's 737 airliner variant. But in recent years, ACJ sales have surpassed Boeing's on an annual basis, thanks largely to orders from the Middle East and Asia-Pacific regions. In 2006 Airbus established a beachhead in Miami to market the ACJ more aggressively to the North American market and added a second U.S. authorized completion center to finish the aircraft's custom interiors.
The A319 ACJ is one of four aircraft (A318, A319, A320 and A321) in Airbus's A320 family. Worldwide, more than 2,600 A320 family aircraft are flying, mostly for the airlines. More than 800 of them are based in the U.S. with airlines that include Delta, Frontier, Jet Blue, United and US Airways. Airbus claims that more than 25,000 pilots are qualified to fly the airplane and that the fleet has accumulated more than 40 million flight hours and enjoys a dispatch rate of 99.6 percent.
Boeing Business Jets
The BBJ spawned in 1996 from a partnership between Boeing and General Electric (maker of the CFM-56 series of engines for newer-generation 737s). Now entering its fifth decade of production, the 737 twinjet is the most successful and ubiquitous jetliner ever produced.
The BBJ took components of two 737 models, the 737-700 series airframe and the larger 737-800 series wing, landing gear and center fuselage section. Anywhere from three to 10 auxiliary fuel tanks can be installed in the belly of the airplane, giving it a maximum unrefueled range of 6,196 nautical miles (eight passengers) or 14 hours in the air. A larger, stretched version called the BBJ2 boasts 25 percent more cabin capacity, but at the price of slightly reduced range. In 2005, Boeing announced the even larger BBJ3, based on the Next-Generation 737-900ER. The BBJ3 has 1,120 square feet of cabin space. More than 100 BBJs have been sold.
Bombardier began as a snowmobile manufacturer in 1942 and has grown into one of the world's largest manufacturers of rail cars, business jets and regional airliners. Over the years, the company has expanded its aircraft business largely through acquisitions, buying brands such as Canadair, DeHavilland, Learjet and Shorts.
Bombardier entered the business jet market through its Canadair and Learjet acquisitions. Canadair had acquired the manufacturing rights to an innovative business jet designed by Learjet founder William Lear. The Learstar 600 featured a stand-up cabin, high-efficiency engines and a new airfoil design. It was later badged the Challenger 600.
Canadair buckled under the strain of bringing the Challenger to market and Bombardier acquired the state-owned company in 1986. It used the 600 for the foundation of its popular regional jets and refined the model over time. It also added the larger and longer-range models of the Global series. In 1990, Bombardier bought Learjet and in 1995 it founded the Flexjet fractional corporate jet ownership program.
Cessna Aircraft Company
Cessna spent $35 million in the late 1960s-then half the worth of the company-developing a twinjet called the Citation. During the 1970s and 1980s, the Citation destroyed much of the market for business twin turboprops. Fairchild, Mitsubishi, Piper, Rockwell and even Cessna itself stopped building them. Today, the only "vintage" twin turboprop still in production is the venerable Beech King Air.
Of the roughly 16,000 business jets worldwide, Cessna has made one-third of them-after entering the market almost a decade after several of its competitors. Two years ago, Cessna delivered its 5,000th Citation. Last year the company delivered 466 jets.
Cessna's eight business jet models are precisely positioned along well-defined performance and price points. This strategy has enabled the company to sell more bizjets than any of its competitors. Cessna currently manufactures the fastest business jet, the 520+ knot, Mach .92 Citation X, and one of the slowest, the 340-knot, $2.9 million entry-level Citation Mustang, with plenty of choices between. Probably not since Alfred P. Sloan commanded General Motors from 1923 to 1946 has a company so skillfully executed branding, market positioning and the concept of stepping up customers through price-progressive products.
Cessna is a majority partner in the CitationShares fractional ownership program.
Dassault Industries, EADS and a small group of private investors own Dassault Aviation, of which Dassault Falcon Jet is its marketing and support subsidiary in the U.S. The company's plant in southwestern France builds its airframes. Aircraft destined for U.S. buyers are outfitted with avionics, interiors and paint at Dassault's Little Rock, Ark. maintenance and completion facility.
Dassault's Falcon 20 business twinjet first appeared in the U.S. in 1963 and quickly developed a reputation as a rock-solid, comfortable airplane. The French company was already renowned for its Mirage fighter jets, and the Falcon's military heritage translated into an aircraft that in many ways was overbuilt. Using the Falcon 20's fuselage, development of the Falcon 50 trijet began in 1973. The new model was the first civilian aircraft fitted with a highly efficient supercritical wing. That, along with new engines, gave the Falcon 50 a true unrefueled transatlantic cruising range. The three-engine design also provided the 50 with better safety margins over water and great short and "high-hot" field capabilities.
Production of the 50 series ended in 2008, but the trijet philosophy remains a Falcon Jet staple on the larger Falcon 900 series, first delivered in 1986, and the new long-range 7X. The same fuselage cross-section of those aircraft is used on the shorter, super-midsize, twin-engine Falcon 2000 series that entered service in 1995.
Embraer-Empresa Brasileira DR AeronÁutica
Brazilian manufacturer Embraer has been building airplanes for more than 30 years, but made its first splash in the American market in the 1970s with its family of commuter turboprops. In 1994, the Brazilian government sold the company to private investors who began developing a regional jet, the ERJ Models 135/145. The new RJs carried the company to $3.4 billion in annual sales and $380 million in profits by 2004. Today, Embraer is the world's fourth-largest commercial aircraft manufacturer. More than a thousand 135/145s have been built and the airframe served as the foundation for the company's first business jet, the Legacy 600, in 1999. The Legacy was the first stage in a plan to develop a complete line of business jets that may someday account for up to 20 percent of company revenues. That project appears well under way.
In 2005, the company announced plans to develop two entry-level jets, the Phenom 100 and 300. Deliveries of the 100 began late last year. Embraer claims a combined order book of 850 Phenoms and is building an assembly and delivery center for the aircraft in Melbourne, Fla. In 2006 the company announced the Lineage 1000, a large business jet based on its Model 190 airliner. Deliveries began this year. In 2008, Embraer announced it was proceeding with development of two new midsize jets, the Legacy 450 and Legacy 500.
Gulfstream has been building business aircraft since 1958. In 1966, it introduced the GII, the first large-cabin pure business jet. The GII was designed by Grumman, the same company that developed carrier-based naval aircraft, most famously the F-14 "Tomcat" as well as the original GI turboprop.
Grumman sold its Gulfstream division in 1978. After subsequently passing through three civilian owners, the company is today owned by another defense contractor, General Dynamics. Over the years, subsequent iterations of the aircraft have been developed with different engines, avionics, wings and fuselage length, but they all still use the GII fuselage cross-section.
In 2001, Gulfstream bought Galaxy Aerospace, thus adding two smaller aircraft, which it renamed the G100 and G200, to its product line. Those aircraft are manufactured by Israel Aircraft Industries but completed at Gulfstream facilities in the U.S. An improved version of the G100, the G150, was introduced in 2005.
Gulfstream manufactures its four large-cabin jets-the G350, G450, G500 and G550-in Savannah, Ga. These aircraft are mainly differentiated by cabin length, range and price. The G550 has an unrefueled range of 6,750 nautical miles. Last year, Gulfstream announced that it was developing two new aircraft: the G250, which will be an updated and improved G200, and the G650. The G650 will have a larger and wider cabin than the G550 and be able to fly up to 7,000 nautical miles unrefueled. The G650 is being designed to have a maximum operating speed of Mach 0.925, a speed that will make it the world's fastest civil aircraft.
Hawker Beechcraft Corp.
In 1937, Walter Beech introduced the Model 18, arguably the first cabin-class twin-engine business airplane. In 1958, Beech launched the Queen Air, a twin piston-engine aircraft that remarkably resembles today's twin turboprop King Air.
Beech delivered the first King Air in 1964. It was an immediate hit; quickly Beech commanded an amazing 77 percent market share of the corporate twin turboprop market. Several models of updated King Airs remain in production today.
Walter Beech died in 1950 and his widow, Olive Ann, oversaw the company until its sale to Raytheon in 1980. Raytheon sold the company to an entity formed by several investment firms in 2007. The company was renamed Hawker Beechcraft to reflect its two aircraft brands.
Today, the company makes King Airs as well as jets including the Premier 1A and Hawker series. Several of these models were acquired from other companies, including Mitsubishi and British Aerospace, before the sale of the company to Raytheon. Hawker Beechcraft pioneered the use of composites on business aircraft on several models it developed, including the discontinued Starship turboprop and the current Premier and Hawker 4000 jets.
Piaggio America, Inc.
The Piaggio Avanti is the sole survivor of a trio of fast pusher turboprops developed in response to the energy crisis of the 1970s. Italian airframe maker Piaggio teamed with Learjet (then owned by the Gates Rubber Company) on a design that became the P.180 Avanti.
Learjet, then awash in financial difficulties, bailed out of the program. Piaggio took on the project alone and the aircraft has been manufactured in fits and starts as the company has endured various financial struggles, including bankruptcy in 1994. Over the last several years, Piaggio has been buoyed by major foreign investments and production has increased at stable rates. The Avanti was first delivered to customers in 1990. In 2005, the aircraft was updated with glass-panel avionics (the Rockwell Collins Pro Line 21 system), given slightly more powerful Pratt & Whitney engines and branded the Avanti II.
The Avanti II is made at Piaggio's venerable Finale Ligouri plant in Genoa, Italy, and then flown to Jet Works in Denton, Texas, where updated executive interiors are installed. Seventy percent of Avanti sales are in North America. Because the $7.4 million, 398-knot turboprop has speed comparable to that of a light jet, interior dimensions nearly equal to those of a midsize Hawker jet and better fuel efficiency than a King Air 350 turboprop achieves, the Avanti offers the market a unique value proposition.
Pilatus Business Aircraft, Ltd.
Based in Stans, Switzerland, Pilatus has been making airplanes since 1939 and is the world's largest manufacturer of single-engine turboprops. Most of these are military trainers like the U.S. Air Force's "Texan II."
The first PC-12 flew in 1991. The single-engine turboprop can alight from rough and short airstrips-as short as 2,300 feet-climb to 30,000 feet, cruise at 269 knots and fly nearly 1,400 nautical miles with 45 minutes of IFR reserve flying time. Maximum takeoff weight varies from 9,920 to 10,495 pounds, depending on serial number. The PC-12's maximum useful load (passengers and fuel) is 4,233 pounds. Its electrically actuated 53-inch-wide rear cargo door can swallow motorcycles, snowmobiles, pianos and even outsized wildlife. Various executive or utility configurations generally offer seating for two pilots and six to 14 passengers. The airplane is routinely flown single pilot. After a two-and-a-half-year flight test program, the PC-12 received Swiss certification in 1994. In 1996, Pilatus established its Broomfield, Colo. operations to better serve the Americas and, by 1997, the 100th PC-12 had rolled down the production line. Today, more than 800 PC-12s are in service.
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