ED DAHLBERG got 40 calls in one day when he put a Gulfstream G650 up for sale in February. That is unusual for a private jet — especially when the asking price tops the $64.5m on the sticker.
"We believe this plane’s going to bring north of $75m," says Mr Dahlberg, president of Manassas, Virginia-based Emerald Aviation and part-owner of the G650.
Barely 15 months after its debut, the world’s biggest and fastest business jet is a corporate status symbol, with owners as high profile as Exxon Mobil, Walmart Stores and Qualcomm.
The waiting list is almost four years long for a factory-fresh model, whetting appetites among tycoons and CEOs when a used G650 hits the market.
"It’s the must-have airplane if you’re in the top end of the spectrum," said Steve Varsano, founder of London-based Jet Business, who has sold two pre-owned G650s since November last year for more than $70m each to buyers he would not identify.
G650s are also must-have for Gulfstream parent General Dynamics Corporation, the tank and submarine maker squeezed by shrinking US defence budgets. The jets helped boost last year’s aerospace revenue 17% to $8.12bn, while combat systems unit revenue fell 23% to $6.12bn.
"The G650 is doing exceptionally well," says Sterne, Agee & Leach analyst Peter Arment, who has a buy rating on Falls Church, Virginia-based General Dynamics. "The demand for this plane is going to remain very strong."
Large, luxury aircraft are the bright spot in a $21bn private-jet market recovering unevenly from the 2008-09 financial crisis. While orders remain weak for small, personal models like the Mustang from Textron’s Cessna, corporate fleet managers and billionaires are shopping again for big planes able to make transoceanic routes.
Qualcomm’s G650 flew a round trip between California and Barcelona before February’s Mobile World Congress in the Spanish city, where then-CEO Paul Jacobs collected an industry award. That jaunt, as chronicled by airline-data tracker FlightAware, was well within the jet’s advertised range of 12,964km, enough to reach Beijing from New York without refueling.
Propelled by Rolls-Royce engines tucked on either side of the rear of the fuselage, the G650 can reach 1,009km an hour at 9,100m, about 93% of the speed of sound. It seats as many as 18 people. To ease jet lag, the cabin air pressure is kept higher than on typical airplanes.
On a flight from Phoenix on a G650 owned by Honeywell International, takeoff thrust pressed passengers into soft leather seats as the engines whispered.
Wood-veneer tables popped out at the touch of a button. Entertainment options included watching satellite television from a seat-belted sofa or gazing out the windows — billed as the largest on a business jet and fitted with powered shades — at the red sandstone cliffs of Sedona, Arizona.
"It’s just unbelievably capable and unbelievably reliable," Honeywell pilot Andy Eldringhoff says as he guides the plane above the Arizona desert. Honeywell CEO Dave Cote is among the users of the jet, which has the company’s avionics in the cockpit.
With more than 50 delivered so far, the G650 has reset the market for business aircraft designed for maximum speed, comfort and distance. There will not be a competitor in the G650’s class until 2016, when Bombardier’s Global 7000 is due for its handover.
The G650 may become Gulfstream’s most profitable aircraft ever, General Dynamics CEO Phebe Novakovic told investors on February 20 at a Barclays conference. The jet uses 50% fewer parts than the smaller G550 and G450 and is assembled at a plant designed for the G650, according to Gulfstream.
"We don’t know internally how good we can get, but we know we can get a whole lot better," she said of the plane’s profitability.
General Dynamics soared 54% to $108.92 in the 12 months ended on Tuesday, topping the 19% gain for the Standard & Poor’s 500 index. Montreal-based Bombardier rose 2% in the same period.
Buyers’ silence about the G650 contrasts with the demand. Corporate touchiness about jet ownership only intensified after US vehicle maker CEOs drew criticism for flying company aircraft to Washington in 2008 to beg Congress for an industry bailout.
Gulfstream is famous for secrecy about what is on the drawing board, and Ms Novakovic says the next jets will not be unveiled until they are ready to roll out on the tarmac under their own power.
Jefferies analyst Howard Rubel says that a redo of the G550 jet, the previous flagship, may be under consideration. The Jet Business founder Steve Varsano says buyers want other Gulfstream models to get cabins like the G650’s.
Mr Dahlberg says that the G650 itself could be modified to extend its range.
"Gulfstream really hit a home run with the product," Mesinger Jet Sales vice-president Josh Mesinger, says in Boulder, Colorado. "There is no other product in the world in service that will fly 7,000 miles."
Mr Mesinger was the broker that offered the G650 registered to Dick’s Sporting Goods, with an asking price of $73.5m, according to an online posting. It sold the day the ad appeared.
Bloomberg
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