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Airline Management, General Aviation, UPDATES

SUMMARY: The 2015 General Aviation turboprop market numbers are out, with 557 aircraft (46 less than in 2014) worth $US 1.894 billion (equal to 2014 figure). Single engine turboprops were 78.5% of all deliveries (25.5% were Ag aircraft, 27.3% were pressurized singles and 25.7% were utility singles). The winners were Textron Aviation (USA) King Air line with 117 deliveries (inc. 74 x King Air 350’s), Daher (France) TBM 900 with 55 deliveries, Quest Aircraft’s (USA based, Japanese owned) Kodiak 100 with 32 deliveries. While the losers were Piaggio Aerospace (Italy based, Abu Dhabi owned) with only 3 Avanti Evo deliveries and Pacific Aerospace’s (New Zealand) PAC 750XStol with only 4 deliveries at a time the SE turboprop utility market had its best year ever with 143 deliveries worth $US 306.6 million ? New comer will be Textron Aviation’s SETP single, Mahindra Aerospace’s (Australia based, Indian owned) GA10 single utility and Evektor Aircraft (Czech Republic) EV-55 twin turbine utility. Overall a good year considering Exim Bank was shut down for awhile hurting some foreign export orders and the Euro/$US exchange has made US aircraft more expensive in Europe. Piper Aircraft (USA based, Brunei Darussalam owned) new M600 delays are worrying, its M500 deliveries are down as are it’s piston deliveries, and the ‘improvements’ to the M600 are not good enough to make it a close competitor to the likes of the TBM900, Textron’s SETP and possibly EPIC E1000. Mahindra Aerospace is struggling with its GA10 certification, 2 years behind on a rather simple stretch and Rolls Royce re-engine of it’s piston powered GA8. Meanwhile, “old” Type Certificate designs looking for a revival in their fortunes, like the Dornier Seastar (Germany/China), Turbo Mallard (USA) G-73T and Australian/Indian GA18 (ex-GAF N24A) are not looking very promising, few second chances in this business, though the Chinese continue to buy old Type Certificates in the “hopes” of reviving them, none so far have succeeded, and few if any will.

The General Aviation turboprop market in 2015 was mix of success and failures for the 9 remaining OEM’s, of which only 3 are now US owned (Textron Aviation, Air Tractor and Thrush Aircraft) and 6 owned by France, Japan, Switzerland, UAE, Brunei Darussalam and New Zealand. Two of the foreign owned companies are USA based (Piper Aircraft and Quest Aircraft).

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Of the 9 OEM’s in this market today, only 3 are US owned (Air Tractor, Thrush Aircraft and Textron Aviation), 1 French owned (Daher/Socata), 1 Swiss owned (Pilatus Aircraft) 1 Brunei Darussalam owned (Piper Aircraft), 1 New Zealand owned (Pacific Aerospace), 1 Indian owned (Mahindra Aerospace) and 1 Abu Dhabi-UAE (Piaggio Aerospace) owned, a very diverse global business today for sure.
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We had 10 OEM’s last year, but lost Extra Aircraft (Germany), as it sold its $US 1.75 million EA-500 program (only built 5 units since 2012) to Jiangsu A-Star Aviation Industry (China) and now it will be lost in the “black hole’ of many western aircraft Type Certificates bought in the past few years only to disappear somewhere in China, never to be seen again, as they have no idea how to revive a “dead” western aircraft program.
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In terms of total aircraft deliveries, 2015 was down to 557 units (-7.6% versus 2014 deliveries of 603). The break down between single engine turboprops versus twin engine aircraft is 437 single engine turboprops vs 120 twins, in short 78.5% of all deliveries were single engine turboprops in 2015.
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In comparison to 2014, the single engine deliveries in 2015 were down -7.8% or 37 units, while twin turboprop deliveries were down -7.0% or 9 units.
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Finally, the delivery billings for 2015 were in fact up by 0.4% over 2014 at $US 1.894 billion, versus $US 1.887 billion in 2014. Several factors have led to lower deliveries, from EXIM Bank financing due to the bank being shut down due to politics in mid 2015 till fall and the Euro/US$ exchange rate has gone from roughly 0.72 in 2014 to 0.90 in 2015, making $US priced aircraft more expensive in Euro terms by +/- 25% ouch !
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Let’s take a look at the 4 turboprop market segments being serviced today.

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1. Single Engine Turboprop Agricultural Market (142 units, 25.5% of deliveries, $US 172.2 million)

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There are 2 OEM’s today in this market, Air Tractor (USA) and Thrush Aircraft (USA) which in 2015 combined for 142 units with a delivery value of $US 172.2 million (ave. $1.21 million per delivery), and combined this segment delivered 25.5% of all turboprops in 2015 or 9.0% of delivery value.

. In 2014 this segment delivered 181 aircraft, a decrease of 21.0% (38 units) in 2015 was recorded.

ag-802 fire bossAT

Thrush-Iomaxag-thrush2

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*Air Tractor (USA) delivered 113 units (79.5% of the Ag aircraft market) with delivery value of $136.5 million (ave. $1.20 million per delivery) in 2015, of which 49 deliveries were it’s top of the line AT-802’s that are used for crop spraying, firefighting to counter-insurgency (COIN), these aircraft go from $1.43 million (AT802A) up to $1.93 million (AT802AF). The OEM has delivered 730 aircraft in the past 5 years (ave. 146.0/year). Delivery value in 2015 is $US34.5 million lower from the 2014 figure of $US 171.1 million.

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In 2014, Air Tractor delivered 145 units, so a decrease of 33 units delivered (-22.6%) versus 2015, though 4 x AT-802UT’s were delivered in the 2Q/2015 under Military and Government shipments, which are separate from the GA deliveries, and therefore not included in the 2015 deliveries of 142 units, though other Military and Government deliveries of say Textron’s King Air 350’s are included under GA numbers ?

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Anyway, Air Tractor suffered a big delivery drop last year, and much of that drop for both Ag aircraft OEM’s is due to the US Export-Import Bank’s inability to make new financing guarantees that are so desperately needed in international purchases, the EXIM Bank was caught in US political games between Republicans and Democrats and was shut down July 1, 2015 temporarily which has hurt both Air Tractor and Thrush Aircraft export orders in 2015.

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Now, the AT802UT COIN aircraft has been ordered by the UAE (24 units) and supplied and “converted” by US company Iomax , as well as several units to Burkina Faso and Gambia (dictatorship run country) and recently the UAE has passed on some units to Jordan (6) and Yemen, as it is taking Iomax Block 3 configured Thrush 510P’s (base price $US 935k) converted to “ArchAngel” COIN capable aircraft instead.

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These ‘converted’ Ag aircraft are being used for intelligence surveillance and reconnaissance (ISR), medium to low intensity conflict, border patrol, law enforcement (?), counter-terrorism, stand off precision strikes, counter drug and piracy, this is sadly the NEW reality of our world today.

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For whatever reason, the company gives very low delivery values every year, as again in 2015, just the 49 x AT600’s would alone have a delivery value of $82.0 million, and yet for all 114 deliveries it quotes $US 70.2 million ($US 615k per delivery, which is less than it’s lowest priced product, the AT402B at $797k).

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Air Tractor now working on a larger AT-1000 with more hopper volume, so the market keeps expanding the envelope and a bright future is ahead, helps when the market is a duopoly as well.
Air Tractor has 79.5% market share of this segment by units and 79.2% by delivery value.

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* Thrush Aircraft (USA) (ex-Ayers Aircraft up to 2003), delivered 29 units (20.5% of this Ag segment) in 2015 worth $US 35.7 million ($US 1.23 per delivery), with the $US 953k, GE H80 powered S2R-H80 being it’s most popular with 14 deliveries (48% of deliveries). In 2014, there were 36 deliveries worth $US 34.3 million, so deliveries are off by 7 units but value is the same, most likely due to Thrush 510P’s being converted to “ArchAngel’s”. The OEM has delivered 202 units in the past 5 years (ave. 40.4/year).

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As a former and young Ag pilot, it is great for me to see this market thriving, and doing very well, and while I support Ag planes being used to kill insects and crop diseases, I am not a big fan of using Ag planes to kill fellow human beings, but that is the reality of the business today.

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Off the shelf GA aircraft are now commonly used by governments and the military for surveillance, ISR, ELINT, etc. though in the case of the Iomax converted AT802UT and Thrush 510P it is the first case of GA aircraft being used to kill in a long time.

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2. Single Engine un-pressurized Turboprop Utility Market (143 units, 25.7% of deliveries, $US 306.6 million)

 

quest kodial 100Textron C208B EX

PC-6pac-1547411

TOP PHOTO LEFT IS QUEST’S KODIAK 100, TOP PHOTO RIGHT IS TEXTRON’S C208B GRAND CARAVAN EX

BOTTOM PHOTO LEFT IS PILATUS PC-6 TURBO PORTER AND BOTTOM PHOTO RIGHT IS PAC 750XSTOL

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There are 4 OEM’s today in this market, Pacific Aerospace (New Zealand), Pilatus Aircraft (Switzerland), Quest Aircraft (Japan) and Textron Aviation (USA) and 2015 was the BEST year ever for deliveries for this market segment. The 4 OEM’s combined to delivery 143 aircraft in 2015 for a combined delivery value of $US 306.6 million, up from 138 deliveries in 2014, or 3.6% (5 units). The segment produced 25.6% of all turboprop deliveries in 2015 and 16.2% of total delivery value.

1 SE Utility TURBOPROP ANALYSIS

THE ABOVE SHOWS HOW 2015 WAS BEST YEAR FOR THE SE UTILITY MARKET DELIVERIES AND THE DOMINATION OF THE TEXTRON CARAVAN.

1 SE Utility TURBOPROP ANALYSIS2

THE ABOVE SHOWS  CUSTOMER VALUE = (RELATIVE PERFORMANCE > RELATIVE PRICE), *Note: PAC750 best customer value, CE-208B least customer value.

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So let’s look at the various OEM’s and their various levels of success.

*Textron Aviation (USA), is the “BIG” dog in this market, it delivered 102 aircraft (64.3% market share) worth $US $226.3 million (73.8% of delivery value) in 2015, up from 94 units (81 x C208B’s, 13 x C208’s) in 2014, an increase of 8.5% and delivery value same, showing some possible discounting last year.

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The success of the C208/C208B is un-matched with +2,500 delivered since 1982 and shows no sign of slowing down. The company is now building C208B’s in Shijazhuang, China under a JV with CAIGA, seems everyone is jumping on the Chinese bandwagon, but not all OEM’s will see success there, surely the Chinese will have their own re-engineered single engine turboprop utility to replace it’s numerous Shijazhuang built Y-5’s bi-planes (copy of AN-2) still in service in China, especially in the PLAF (People’s Liberation Air Force).

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In 2015, 93 x $US 2.25 million C208B Grand Caravan EX’s were delivered and only 9 x $US 1.9 million smaller C208 Caravans 675, which has been a normal trend where in the past 5 years, 501 Caravans have been delivered (ave. 100.0/year), and of that total only 54 deliveries were the smaller C208 Caravan (10.8% of deliveries), so the C208B Grand Caravan EX now represents 89.2% of the Caravan sales.

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I should point out that the Caravan has also been ‘recruited’ by the military, and the AC-208 Combat Caravan converted by ATK has seen action with the Iraqi Airforce firing Hellfire missiles, and sent to Uganda and other countries as ‘military aid’.

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* Quest Aircraft Inc. (USA based, Japanese owned), is now 87.5% owned by Japan’s Setouchi Holdings and 12.5.% by Mitsui & Co (as of January, 2016).In the past 5 years, 118 Kodiak 100’s have been delivered (ave. 23.6/year). The company had its best year ever in 2015, with 32 $US 2.0 million Kodiak 100 deliveries (22.3% of this segment) worth $63.2 million, which gives Quest a 22.3% market share by volume in this segment and by revenue a 20.6% market share.

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The recent acquisition of 12.5% of Quest Aircraft by Mitsui & Co. for $US 10.0 million, valued the company at $US 80.0 million (1.26 x sales), based on a est. EBITDA of 20%, that is a valuation of 6.33 x EBITDA, in the ball park for a small GA OEM.

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The company is planning to introduce another aircraft in the future in the same market segment, now given it makes no sense to go smaller than the Kodiak 100, it will surely be something larger, and if I was a betting man, I think they should go for something larger than the Textron C208B Grand Caravan EX (MTOW 8,807 lbs, useful load 3,512 lbs. and cabin volume of 340 ft3). The company now has 75,000 ft2 of production space allowing it to increase production, and it will interesting how many Kodiak 100’s it can sell.

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I think that a move towards a 12,500 lbs. MTOW single engine aircraft powered by a +1,350 shp PT6 or GE engine would be very welcomed by the industry, 5,000 lbs. useful, 480 ft3 cabin, 195+ kts, short field performance and guys like Fed Ex and many other operators around the world, jump on such an aircraft.

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The future aircraft will need the input of the not for profit humanitarian organizations like AirServ International, Mission Aviation Fellowship, Wyciffe JAARS, Mercy Air,Advesntits World Aviation, Samaritan Aviation, etc. that originally gave birth to the Kodiak 100 with funding for certification, and the understanding that the organizations get 1 out of every 10 delivered for free, which means by now 11 ‘free’ aircraft should have been delivered.

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They surely will need a larger aircraft that can still handle short, unimproved airfields.

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Like every aircraft OEM, Quest Aircraft is eyeing the Chinese market, and has appointed an exclusive dealer in 2014, SkyView Aircraft (Jiangsu), and then like all Chinese companies, SkyView wants to buy partially assembled aircraft kits for final assembly in China, and then to fully manufacture the Kodiak in China by 2019.

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The politics of a US OEM owned by the Japanese assembling aircraft in China, could be a problem, Chinese-Japanese relations are not the very best these days, memories of WWII over played by Beijing and dispute over the Senkaku Islands (Japanese name) versus Diaoyu Islands (Chinese name) will blow up when China chooses to rev up anti-Japanese feelings.

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This Chinese manufacturing strategy being followed by Textron and its Caravan and Citation products, as well as Pilatus and its PC-6 and PC-12, Pacific Aerospace (NZ) also has such ambitions for it’s PAC 750XL, and the same for many other OEM’s from Embraer, Piaggio, Flight Design, Diamond Aircraft, Mooney, etc. With very limited success so far by anyone, show me one big success story in China by a western GA OEM ? (other than Airbus in Tianjin).

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China is a big market, but I have seen the struggles of western OEM’s in China and I think this “holy grail” attitude is overly optimistic about the GA market in China, which is now showing it is not as resilient as believed. I get it that it requires a local dealer, but manufacturing ? come on people, the Embraer builds 6 x Legacy 650’s a year, and others struggle with low volumes they do not make economical sense.

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How many Textron Caravans, Quest Kodiak 100’s and PAC 750 XStol will China buy and build a year ? given the that globally this segment had its best year ever this year at 143 units in 2015, I cannot see China taking more than 25% of the global market in this segment, and that’s at the very best 35 aircraft per year, for 4 assembly lines ? at some point someone has to say “the emperor wears no clothes” (the obvious truth denied by the majority, despite evidence of their eyes).

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* Pilatus Aircraft (Switzerland), the company is the only one for now to serve the single engine utility market and the single engine pressurized market. In this single engine utility market, the company offers the PC-6 Turbo Porter, which dates back to 1959 then under Fairchild Hiller. This is a true STOL aircraft (195 meters for takeoff and 130 meters for landing. The company delivered 4 x PC-6’s last year valued at $US 7.6 million, and this was down on 2014 deliveries of 10 (mostly to China) valued at $12.3 million.

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The past 5 years, 29 x PC-6’s have been delivered, while it is a small business for Pilatus Aircraft (revenue $US +1.0 billion), it generates extra business on an aircraft written off a long time ago with 585 built over 56 years. The aircraft has a ‘niche’ for very short runway performance that none of the other 3 competitors can match, and many are heading for China these days.

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* Pacific Aerospace Corporation (New Zealand), this company has struggled with sales for many years, in the past 5 years it has only delivered 35 units (ave. 7.0/year), not enough to be a commercial success, though it has delivered 108 units since 2003, and even hit a high of 15 units in 2008, but now struggling to even hit double digits. In 2015, the company delivered 5 of it’s $US 1.9 million PAC750 XStol (X for extreme) aircraft worth $9.5 million, slightly better than the 4 delivered in 2014 and $US 7.2 million in delivery value.

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The history of the aircraft goes back to the piston powered Ag plane, the Fletcher FU-24 designed by John Thorp and 297 were built. Later the aircraft became the PAC Cresco 600 with a 470 USG hopper and power from an odd Lycoming LTP-101-700A 600 shp turboprop, which did not sell well and was terminated after only 39 were built, but its internal space and high rate of climb made it popular with Skydivers.

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It seems, the Skydiving business is has been the aircraft’ biggest success, but you cannot build success on Skydiving alone. I like this aircraft, and my analysis shows it is a competitor to the Kodiak 100 and C208 Caravan. The company has a true STOL aircraft here with 220 meter takeoff roll and 166 meters for landing roll, 240 ft3 cabin, 70 ft3 pod, 1,905 Kg useful load and built like a tank as most Ag planes are, only the 140 kts cruise speed is it’s negative.

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Pacific Aerospace is owned by a young New Zealander entrepreneur, Damian Camp who has a big vision for the aircraft, but so far not delivering on it. I tried to talk to Mr. Camp last year about why his aircraft does not sell well, as deliveries of any aircraft over an extended period of years, reflect demand, and obviously there is a problem with demand, 35 units in 5 years sucks.

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The company like all the other in this segment is betting heavily on China, it has apparently 53 orders from China (Shangdong General Aviation x 30, Beijing General Aviation x 20, and 2 other local operators x 3), sadly a lot of the interest and orders from China are speculative, no business plan of how, where, who, why in regard to their operation.

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IF the orders are real, then PAC should have delivered more than 5 units in 2015. Beijing General Aviation is part of the Beijing Automotive, the 4th largest car manufacturer in China, which is a big deal, but then you have to ask yourself, what the heck do they want to do with 2- x PAC750XStol aircraft ? it would be crazy for GM to buy 20 Kodiak 100’s in the USA no ? focus on your business and not some fantasy air operation is what, any experienced business executive would say, but that is China, they are all over the place with ideas, and western GA OEM’s are drooling for their business.

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Back in 2014, Mr. Camp said this new JV in China could sell 30 to 50 aircraft in 2015, I have yet to hear anything, again another example of this speculative nature of the GA business in China. Seems always big numbers are ordered, 50 x Viking Series 400’s from Reignwood Group (2015), 50 x Adam A700’s (2007), and so many other orders of 20/30 units at once, always a sign of speculative orders.

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Anyway, back to the PAC750XStol, the aircraft in my opinion has not done well for several reasons, mainly poor product positioning, lack of a value proposition and clear competitive advantage explained. I remember the DHC-7 (50 seater), a great aircraft, but only 113 were built, as sales were poor, while Fokker delivered 586 F-27’s and Bae delivered 380 HS748’s and even 182 NAMC YS-11 were delivered. The problem ? the DHC-7 was marketed as a STOL aircraft, which it was, but airlines felt if I don’t need STOL then I don’t need the DHC-7 ! Anyway, it is what it is, PAC needs to stop doing the same thing over and over again and needs to change how it sells the aircraft, or it won’t be around for too long.

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3. Single Engine Pressurized Turboprop Market (152 units, 27.3% of deliveries, $US $600.1 million)

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There are 3 OEM’s today in this market, Daher (Socata) of France, Pilatus Aircraft of Switzerland and Piper Aircraft, USA based owned by Brunei Darussalam, and no USA OEM for now, but Textron Aviation will enter this market with it’s new single engine turboprop (SETP) by 2017, and things will heat up for sure.

1 SE PRESSURIZED TURBOPROP ANALYSIS

THE ABOVE SHOWS THE SE PRESSURIZED MARKET DELIVERIES, PEAK WAS 2008 AND LITTLE ROOM FOR NEW OEM’S HERE.

 

1 SE PRESSURIZED TURBOPROP ANALYSIS2

ABOVE SHOWS CUSTOMER VALUE = (RELATIVE PERFORMANCE > RELATIVE PRICE), *Note: Best CV is PA46 worst is TB900.

 

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* Pilatus Aircraft (Switzerland), This market has been very well segmented for years, $US 4.71 million Pilatus PC-12NG/47E has 10 seats and a large cargo door with long range and has delivered over 1,436 units in commercial and business markets, which is the key to its success. The $US 4.64 million PC-12/47NG aircraft flies at 280 kts and has a range of 1,573 nm. In 2015 Pilatus delivered 70 x PC-12’s (46% of this segment) valued at $US 329.9 million, while in 2014 it delivered 66 x PC-12’s valued at $US 306.3 million. In the past 5 years 326 units have been delivered (eve. 65.2/year).

pilatus PC-12NG

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On the back of it’s success, Pilatus Aircraft launched the PC-24 jet which should be certified by late 2017, and claims to be a another short field performer, able to go into un-improved short strips in the middle of no where ? READ MY BLOG on what I think of the PC-24. In Europe, EASA is about to allow single engine commercial IFR flights (SEIFR), which will help all OEM’s, but Pilatus the most.

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* Daher (Socata) of France, has its new TMB 900 out that can top 330 kts and a certified ceiling of FL310, yet able to operate out of airfields as short as 2,840 feet (over 50’ obstacle), and is just 9 kts shy of the Textron Citation Mustang jet’s 339 kts, and faster than the Cirrus Vision SF-50 single engine jet by 30 kts (so why buy a jet ?). The $US 3.8 million TBM 900 had 55 deliveries (36% of this segment) in 2015 worth $US 208.7 million, it’s best year since 2008. In the past 5 years 222 units have been delivered (ave. 44.4/year) with 2014 deliveries at 51.

TBM-900-1

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The TBM for those that don’t know the history comes from Tarbes France where Socata is based and the M comes from Mooney, which was an initial partner in TBM International but pulled out due to financial problems in 1991, only 1 year after the TBM 700 was certified.

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The TBM’s are mainly for business and pilot owners, a small cabin limits seating to just 1+ 5 seating, little commercial application, and 768 have been delivered since 1991.

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*Piper Aircraft (USA based owned by Brunei Darussalam) has a rough year in 2015, with only 27 deliveries of its PA46-500 Meridians (now re-branded as M500), worth $US $US 61.5 million (51.9% of Piper’s totall revenue is derived from the M500 today). In 2014, Piper delivered 36 x PA46-500’s worth $US 66.5 million, or 43.6% of total revenue in 2014. Last 5 years, a total of 161 PA45-500’s (ave. 32.2/year).

Piper M500piper M600

ABOVE LEFT PHOTO IS THE M500 (PIPER’S CURRENT “cash cow”) AND TO THE RIGHT IS THE DELAYED M600 ON WHOSE WINGS PIPER’S FUTURE IS BEING CARRIED, as the company struggles to be competitive, and now has to deal with the Textron SETP on top of it all.

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It is clear that the M500 is Piper’s “cash cow” these days, as piston deliveries dropped to 111 aircraft, its lowest since 2011 as it struggles with an old product line, desperately needing a “revamp” of some sort.

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The company launched the “M-class” line, the Mirage is now the M350 (piston), the enhanced M500 with a M600 to follow. The future of Piper today lies in the new M600 which is its new flagship, since the launch of the M500 in 2000.

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The company struggles in 3rd place in this segment, as the M500 is priced at only $US 2.276 million, well below the $US 4.7 million PC-12 and $US 3.8 million TBM 900, but then offers less speed, less range, same cabin as TBM, and same payload as TBM, the M600 will help a little, what they need is a 300 kts aircraft with a bigger cabin, maybe the new M600 wing will allow that, if not look for Piper to continue it’s struggle as it is slowly being marginalized in the turboprop market.

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The M600 must be a success, a lot is riding on it’s ability to attract new buyers, but with existing pressurized turboprops all above 280 kts, the M600 is still relatively slow at 260 kts, look at the success of the TBM line, now 330 kts with a cabin the size of the M500 (123 ft3 vs 120 ft3)and it delivers 55 at $US 3.8 million, and the same sized M500 delivers 50% less (27 units) at $US 2.276 million (40% less than TBM 900), YES speed sells, as Daher gets $US 1.524 million (+67%) more per aircraft because it’s TBM900 is 27% faster and flies 58% farter (1,582 nm vs 1,000 nm) than the M500.

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The M600 is to up that performance with the same PT6A-42A flat rated to 600 shp (same engine as M500 but flat rated to 500 shp) and able to carry 6 people at 260 kts with a range of 1,300nm. The key to the M600 is the new wing, no more vortex generators and swept back leading edges at the roots with new twisted mini-winglets.

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The M600 was to receive certification in 4Q/2015, and something has gone wrong. Given the minor changes to the M600, it has to be the new wing, causing the delays. Piper needs to up the M500 offering, and needs the new wing to most likely put a bigger cabin on a possible M700 in the future to better compete with the TBM, Pilatus, Textron’s new SETP and the likes of new turboprops like the EPIC 1000 and possibly Kestrel K-350, without a new aircraft, Piper Aircraft is looking tough years ahead.

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The piston line needs new products or be dumped, the PA28R-201 Arrow IV delivery was 5 in 2015, and only 16 in the past 5 years, the whole old PA28 line is getting very tired indeed. The future is the M350, M500 and M600 and they better start coming clean about the delays with the M600, being quiet about the problems is not good, people talk and people get worried there is big trouble at Piper, very poor PR for sure.

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Piper Aircraft is the last old time brand left, Beechcraft is gone, Cessna is now Textron Aviation, Socata is Daher, Commander is gone, Mooney is Chinese now and Maul Air is hanging on with its fabric covered aircraft, the industry is changing for sure.

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4. Twin Engine Turboprop Market (120 units, 21.5% of deliveries, $US 815.9 million)

textron ka350textron KA250Textron C90GTx

ABOVE LEFT IS KING AIR 350, CENTER IS KING AIR B250 AND TO THE RIGHT IS KING AIR C90GTx, this trio combined for $793.7 million in revenue for Textron Aviation. The Piaggio Aerospace P.180 Avanti is a disaster, with only 26 deliveries in the past 5 years ! deliveries do equate to demand over and extended period of time.

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The final segment is the twin turboprop market, which is really about the King Air line (C90, B250, 350’s), which delivered 117 units in 2015 worth $US 793.7 million, while Piaggio Aerospace now owned 100% by Abu Dhabi’s Mubadala Development Corporation, delivered 3 x P.180 Avanti EVO’s worth $US 22.2 million, there is no contest here.

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*Textron Aviation (USA), delivered 117 King Air’s in 2015 (15 x C90GTx’s, 28 x B250’s and 74 x 350’s) worth $US 793.7 million slightly off from 2014 when 127 King Air’s (21 x C90’s, 35 x B250’s, 71 x 350’s) were delivered with a value of $US 863.2 million).

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The domination of the King Air line is all but total with the last 5 years delivery of 560 units vs 26 x P.180 Avanti aircraft, a 21.5 to 1 ratio. Not since the 1980’s has the King Air had any real competition, from Cessna Conquest II, Conquest I and Aero Commanders.

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In fact, let’s take a quick look at the Top 10 Business pressurized turboprops (does not include government and military) service today (by % of type built and % in service today) which is estimated at 8,992 units:

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#1. King Air 90 (A/B/C/E/F/G), roughly 2,288 built and 1,816 service (79% of built and 20% in service).
#2 King Air 200 (A/B), roughly 2,734 built and 1,678 in service (61% of built and 19% in service).
#3 Pilatus PC-12, roughly 1,436 built and 1,074 in service (75% of built and 12% in service).
#4 King Air 350, roughly 1,020 built and 723 in service (71% of built and 8% in service).
#5 Daher TBM (700/850/900), roughly 768 built and 666 in service (87% of built and 7% in service)
#6 Piper PA46-500 (M500), roughly 609 built and 560 in service (92% of built and 6% in service).
#7 Piper PA-31T Cheyenne (I/II/III/IV), roughly 823 built and 559 in service (68% of built and 6% in service).
#8 Aero Commander (690/840/900/980/1000), roughly 964 built and 541 in service (56% of built and 6% in service).
#9 Cessna 441 Conquest II, roughly 362 built and 255 in service (70% of built and 3% in service).
#10 King Air 100 (A/B), roughly 383 built and 222 in service (58% of built and 2% in service).
OTHER: Merlins, MU-2’s, Cessna Conquest I, etc. with 898 in service (10% in service).

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The above shows the domination of the King Air line in the business turboprop fleet today, where 4,439 units are in service (49% of the whole pressurized turboprop business market). Worth noting that single engine turboprops are 25% of the total, the single engine turboprop market is very popular today, which back when the PC-12 showed up was not the story as for years customers avoided the single engine concept until they saw their safety was no worse than the twins.

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* Piaggio Aerospace (Abu Dhabi), has literally never taken off with its P.180 Avanti and only 230 have been delivered since certification, October, 1990, and in those 25 years has averaged only 9.2 per year, NOT a commercial success by any stretch of the imagination. In 2015, just 3 were delivered and only 2 min 2014, last 5 years 26 were delivered, this a disaster, and the new $US 7.4 million P.180 Avanti EVO has not captured anyone’s fancy even though lots of big orders have been announced.

piaggio evo2piaggio MPAPiaggio-P.1HH HammerHead UAV ISR platform

ABOVE LEFT, A BEAUTIFUL P.180 AVANTI EVO, NICE BUT FEW TAKERS, IN THE MIDDLE IS THE NEW MPA VERSION AND ON THE RIGHT THE UAV VERSION, HOPEFULLY PIAGGIO WILL FIND MORE SUCCESS WITH THEIR MPA AND UAV VERSIONS, AS THE MARKET IS JUST NOT BUYING THE AVANTI EVO REBRAND.

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The aircraft can perform (402 kts, FL 410, 1,720nm) and looks good, but just not getting customers. Another case of a good aircraft not sold and marketed properly. This aviation market can be cruel, good aircraft are not automatically commercially successful. It is about value proposition, positioning and sales and marketing know how.

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The company is now trying it as a UAV, the P1.HH Hammerhead and as a MPA (maritime patrol aircraft) but it just has little appeal in the business aviation market. Resale values on older models are below $US 2.0 million, as owners are desperate to dump them. I understand Mubadala is working on a light jet, sounds interesting, but that market is struggling, and HondaJet will find that out soon.

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5. New Turboprop Aircraft in Progress – UPDATE

There are several new market entrants looking to enter the GA turboprop market in the next 3 years, and I will examine these in brief.

* Mahindra Aerospace (Australian based, Indian owned), is way over due for its certification of the 10 seat GA-10 a multi-role single engine un-pressurized utility stretch of the $US 760k existing piston powered GA-8 Airvan, which has been produced since 2003, with mediocre results. In fact, only 14 were delivered in 2015 and since 2003 only 179 units have been delivered in 13 years (ave. 13.8/year).

MAHINDRAGAF N24A-5

THE GA10 AIRVAN ABOVE LEFT AND THE GA18 AIRVAN ABOVE RIGHT

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The aircraft will be powered by the rolls Royce 250-B17 and in 2014 was priced at $US 1.3 million, which would make it the lowest priced option in the utility market, with useful load of 2,250 lbs, 145 kts cruise and 550 nm IFR range,1,600 foot takeoff over 50 feet, 1654 ft3 cabin, and it should do very well at its price point, as it is less capable than the Kodiak 100, PAC 750XStol and the C208/C208B, terms of speed, useful load, cabin volume but $600,000 less than the competition.

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The GA10’s probability of certification is 99% and it could see 15 to 25 sold per year, better than the existing GA8 Airvan sales today (only 188 deliveries since 2013, or an average of 14.4 per year).

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It is disheartening to see the program struggle with the industrial might of India’s Mahindra behind it, as it is also holding up the ‘re-birth’ of the GA-18 now Airvan 18 (GAF N24A Nomad) twin RR250 powered 16 passenger unpressurized airliner, of which only 40 were built (132 of the smaller N22B were built). This program could be good, if they clean the aircraft up and reduce weight and once again market is a Maritime/Coastal Patrol aircraft. It will cruise at 173 kts, have 1,080nm range with 2,190 lbs of payload and useful load of 4,405 lbs based on a MTOW of 9,400 lbs.

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The Airvan 18 probability of certification is at this time only 40% and it could see 12-16 units per year sold. Mahindra is a large Indian conglomerate and yet struggles to turn former GippsAero into a real competitor with a solid product line.

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*EPIC Aircraft (USA based, Russian owned), is looking to certify its E1000 single engine pressurized single, and will be aimed at the TBM 900’s market segment, a fast, 325 kts, 6 seat aircraft with a range of 1,650 nm, powered by a powerful PT6A-67A (1,200 shp de-rated from 1,825 shp). The road from building kit planes to Part 23 certified aircraft is and has been a long one for EPIC and it will not be easy to take on the likes of Piper, Daher and Pilatus from scratch, like support, maintenance centers, etc.

EPIC E1000 XX

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I am not big on this plane, but I can see it will sell some in the initial phase, innovators who want something unique, but it will not last too long, I also have issue with the Russian Engineering LLC (MRO company with ties to S7 a large Russian airline) that owns EPIC Aircraft.

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But politics aside I am not convinced the E1000 will be very successful, the probability of certification is at this time at 50% and it could do 10-15 units per year, as Textron Aviation is coming into this segment and then you have the 3 other OEM’s that have the roughly 150 orders per year between themselves, and I cannot see that pie getting much bigger, just more slices out of the same pie between 5 OEM’s.

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* Textron Aviation (USA), is working on it’s new single engine turboprop (SETP) program, and while little is known is clear it will be powered by a new GE Aviation turboprop engine that is more fuel efficient than the PT6A, and will have a low wing design, T-tail, with a five bladed prop and winglets. It’s cruise will be around 280 kts and it will have a range of 1,500nm, with the length of the aircraft around 12% less than the PC-12.

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No matter what it looks like, it will be a competitor to the Pilatus PC-12, which has had the 10 seat single engine market all to itself with great success, but now that it has launched it’s own jet, the PC-24, Textron is moving in on Pilatus’s ‘cash cow’, and the segment will change from 3 OEM’s to possibly 5, if EPIC gets its act together and maybe 6 if One Aviation gets the Kestrel K-350 certified.

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The SETP will get certified, and I am sure that the relative low speed is because it does not want to cannibalize it’s CE-510 Mustang jet sales, which flies at 339 kts (High Speed) and is facing the 330 kts TBM 900 and possibly the 325 kts EPIC E1000 and the 320 kts Kestrel K-350.

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*Evektor Aircraft (Czech Republic), continuous to work on it’s $US 2.6 million EV-55 Outback, a 10-14 seat twin PT6A unpressurized STOL utility aircraft, a market segment not being contested by any other OEM at this time.

ev-55-5

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The niche is big enough to carve out a nice market replacing cabin class piston twins (e.g. PA31-350, C402, C404, BN2, A65, etc.) and offering a twin engine option for those operators needing twin engine aircraft. Offering 220 kts, 447 ft3 cabin, 4,021 lbs payload and ability to operate out of 1,700 foot un-prepared airfields in remote areas of the world, with a 18 passenger stretch version planned for later on, with float options available for both models.

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The $US 200 million deal with Malaysia’s Aspirasi Pertiwi has gone sour, as the Malaysians have not lived up to their part of the Agreement, and the company continuous to work on EASA CS-23 certification as it negotiates a new deal with another investor.

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This aircraft once certified, will do very well in the 10-14 seat Twin Engine un-pressurized Turboprop segment, which is not being served today, and I expect that the market will be anywhere between 35-55 units per year (up to $US 143 million/year).

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Well, that is about it for the promising new turboprop options, the other new entrants I do not believe will reach certification or production:

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1. Dornier Seastar (Germany and China), a 2+12 amphibian on it’s 3 attempt at production since 1984, READ MY BLOG on the SEASTAR.

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2. One Aviation Kestrel K-350 (USA) been around now for 8+ years, and I just do not see the market potential in the single engine pressurized market. Meanwhile One Aviation is struggling to sell and produce the Eclipse EA550 light jet which had 7 deliveries in 2015 and 2014 it had 12, just little interest out there for it and with the 320 kts K-350, they will compete with each other ?

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3. Privateer Industries Privateer (USA) 7 seat amphibian with a 714 shp Walter turboprop, won’t happen, the market is not there.

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4. Mallard Aircraft (USA), the revival of the 17 passenger G-73T Turbo Mallard, will not happen, great aircraft for its time, and needed by the industry but too old of design.

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5. Caiga AG300 (China), based on EPIC Escape, 352 kts and 1,410 nm range wow ! on 850 shp GE H85 ? Chinese are collecting old western aircraft, but doing little them, have no idea how to revive old designs and commercialize them, they just disappear in the Chinese “black hole” that swallows up many western out of production aircraft, READ my BLOG on that.

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6. Diamond DA50-JP7 (Austria), a 7 seater single powered by Motor Sich AI450S (465 shp), 230 kts and 650 feet for takeoff roll, sounds great, but the engine is not going to be accepted by operators in the west, great for Russia/Ukraine, but forget it in the west, it’s waste of time building and designing things that have no or little market appeal.

 

Thanks it, thank you for reading this far down, hope you learned something ! till next time, cheers.

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About Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow

I am a Canadian and EU national with an MBA and 33+ years experience in aviation business development with 20 years overseas and work in 25+ countries. A former investment/merchant banker (mergers and acquisitions to corporate turnarounds). airline and OEM senior executive and past owner of 6 successful aviation companies in 3 countries (executive jet charter/management companies, aircraft sales, aircraft broker, airline/aerospace consulting to aircraft insurance). I have a very diverse aviation background with 75+ aviation companies (45+ airlines of all sizes, OEM's, airports, lessors, MRO to service providers) as consultant, executive management, business analyst and business development adviser. Excellent success track record in International Business Development. Most work with airlines is with new start-ups and restructuring of troubled carriers. I sold new business jets, turboprops and helicopters for Cessna, Raytheon, Gulfstream to Eurocopter as an ASR as well as undertaking sales and marketing of commercial aircraft for Boeing, de Havilland, Dornier, Saab and Beechcraft. Brokered everything from LET-410's to B747's and from piston PA31 to G550 business jets. I look beyond the headlines of the aviation news and analyze what the meaning and consequences of the new information really means. There is a story behind each headline that few go beyond. Picked the name Aviation Doctor, as much of my work has been with troubled companies or those that want and need to grow profitably. I fix problems be in the business, and help with restructuring for a better tomorrow. You can reach me with comments or suggestions at: Tomas.Aviation@gmail.com and I comment a lot on Google+, my Facebook and LinkedIN.

Discussion

2 thoughts on “SUMMARY: The 2015 General Aviation turboprop market numbers are out, with 557 aircraft (46 less than in 2014) worth $US 1.894 billion (equal to 2014 figure). Single engine turboprops were 78.5% of all deliveries (25.5% were Ag aircraft, 27.3% were pressurized singles and 25.7% were utility singles). The winners were Textron Aviation (USA) King Air line with 117 deliveries (inc. 74 x King Air 350’s), Daher (France) TBM 900 with 55 deliveries, Quest Aircraft’s (USA based, Japanese owned) Kodiak 100 with 32 deliveries. While the losers were Piaggio Aerospace (Italy based, Abu Dhabi owned) with only 3 Avanti Evo deliveries and Pacific Aerospace’s (New Zealand) PAC 750XStol with only 4 deliveries at a time the SE turboprop utility market had its best year ever with 143 deliveries worth $US 306.6 million ? New comer will be Textron Aviation’s SETP single, Mahindra Aerospace’s (Australia based, Indian owned) GA10 single utility and Evektor Aircraft (Czech Republic) EV-55 twin turbine utility. Overall a good year considering Exim Bank was shut down for awhile hurting some foreign export orders and the Euro/$US exchange has made US aircraft more expensive in Europe. Piper Aircraft (USA based, Brunei Darussalam owned) new M600 delays are worrying, its M500 deliveries are down as are it’s piston deliveries, and the ‘improvements’ to the M600 are not good enough to make it a close competitor to the likes of the TBM900, Textron’s SETP and possibly EPIC E1000. Mahindra Aerospace is struggling with its GA10 certification, 2 years behind on a rather simple stretch and Rolls Royce re-engine of it’s piston powered GA8. Meanwhile, “old” Type Certificate designs looking for a revival in their fortunes, like the Dornier Seastar (Germany/China), Turbo Mallard (USA) G-73T and Australian/Indian GA18 (ex-GAF N24A) are not looking very promising, few second chances in this business, though the Chinese continue to buy old Type Certificates in the “hopes” of reviving them, none so far have succeeded, and few if any will.

  1. Good pint Juergen,
    It has to do with GA numbers and they don’t cover those OEM’s, which I will in a future blog, but their numbers are very low Viking is doing 18 Series 400’s at best per year, RUAG will start production this year of the 228NG, but won’t be more than 6-8 per year, the LET-410 is at maybe 6 per year with new 410NG going to 18 at best, and Y-12E at 10-15 a year, so right now that market is producing/delivering 35-40 units a year at best. Thank you, Tomas

    Like

    Posted by Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow | February 17, 2016, 1:48 pm
  2. Thank you very much for this excellent analysis of the GA market! Is there a particular reason why OEM’s like Viking Air or RUAG’s Do228NG have not been mentioned in this analysis?

    Like

    Posted by Juergen Kuntner | February 17, 2016, 12:09 pm
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