NBAA 2013: Wheels Up enthused by launch, founder says

10/21/2013 11:26 AM

08/08/2014 10:19 AM

Wheels Up, the membership-based private aviation company launched recently and a customer to Beechcraft Corp., is getting better-than-expected reception, said its founder, Kenny Dichter.

“It’s going strong,” Dichter said. “Our launch is going better than planned.”

At a ceremony Monday at the Henderson Executive Airport outside Las Vegas, Dichter took the keys to the first of up to 105 King Air 350i aircraft his new company has ordered. The company will take delivery of eight more King Airs this year.

“We could not be more excited about teaming up to do this,” Bill Boisture, Beechcraft’s CEO, said before handing Dichter the keys.

“I couldn’t be more excited about getting the keys to our first Wheels Up King Air 350i,” Dichter said. “It’s a true honor.”

He’s proud of the airplane and how it looks inside and outside, he said, standing in front of the white and blue King Air. The event was held on the eve of the National Business Aviation Association’s annual show, being held this year in Las Vegas.

In August, Wheels Up placed an order for 35 King Air 350i turboprops to be delivered between now and mid-2015 with an option for 70 more as the company expands. It was the largest general aviation propeller-driven airplane order in history, Beechcraft officials said.

“If early results are any indication of our long-term prospects, it’s good news for the options,” Dichter said.

The program is cost effective, which will help develop the market, he said.

If Wheels Up were to run an ad, it would say, “CEOs like us; CFOs love us,” Dichter said.

There is a “tremendous amount of latent demand out there in the marketplace for private aviation in North America and Western Europe,” he said. “The King Air 350i will allow us to service a marketplace that we’re developing.”

So far, Wheels Up officials have made presentations to 200 or more individuals and companies about its membership program.

By the end of the year, Dichter said, he expects to have more than 300 members. That’s 20 to 25 percent higher than what he had projected.

He expects to have 1,500 to 2,000 members by the end of 2014, a 30 to 35 percent upward revision from the original business plan.

So far, the Wheels Up program has resonated well with the sports and entertainment community, Dichter said.

Beechcraft Corp. has had a successful quarter, the company said, which continues the positive momentum it’s experienced since exiting bankruptcy early in 2013.

Beechcraft delivered 48 planes in July, August and September, including 38 commercial and 10 military trainer airplanes, the company announced at the show. Through the first nine months of 2013, Beechcraft delivered 163 aircraft, up from 111 for the same time a year ago, an increase of 47 percent.

The company expects to finish the year in a strong position.

The NBAA convention officially opens Tuesday and runs through Thursday, but planemakers and others in the aviation industry were busy Monday getting ready and spreading the word about their companies.

Cessna gets ready

Makers of business jets have been anticipating an industry recovery for the past two or three years.

But that recovery has been elusive.

Still, when it occurs – and it will – Cessna will be ready, said Cessna CEO and president Scott Ernest.

The company continues to make significant investments in new products such as the Citation M2, Sovereign, Citation X, Latitude and Longitude business jets.

“That’s a very challenging activity to do in these financial times,” Ernest said. But “it shows the commitment we have for the future.”

At the same time, Cessna engineers in the past two years secretly designed a military airplane called the Scorpion in a project with a new Textron division, Textron AirLand.

The airplane is designed for intelligence, surveillance, reconnaissance and attack.

The plane was designed and a protoype built from scratch. The first flight is scheduled for this year.

That shows the kind of talent the company has.

“When you get a group of engineers together and you kind of slide pizza under the door once a week, they can do exciting things,” Ernest joked during a news conference at the convention.

Cessna also is focused on talent development. It brought in 103 interns this past summer.

“You don’t do that if you’re not focused on the future,” Ernest said.

In Cessna’s product line, it appears that the future of Cessna’s light sport aircraft, the Model 162 Skycatcher, is in doubt.

When asked about its future, Ernest replied that “there is no future.”

The company has Skycatchers built and ready for sale at its Independence plant, Cessna’s head of its propeller products, Jodi Noah, said after the news conference.

While the company isn’t producing Skycatchers right now, it has them available for sale.

“We’re still continuing to sell planes,” Noah said.

In contrast, demand for the Cessna 172 Skyhawk has been good, she said. The company has increased production significantly for the next year, Noah said.

Cessna is poised for a healthy rebound based on its new products, the M2 and the upgraded Sovereign and Citation X, analyst Cai von Rumohr said in a note to investors.

Near term, business jet indicators are mixed, but Cessna should rebound in 2014 with the ramp up of new products and cost-cutting efforts and with the assumption that the economy will gradually lift.

“We see further strong recovery in 2015,” he wrote.

He estimates the company will deliver 248 business jets in 2015.

Von Rumohr said he thinks Textron, Cessna Aircraft’s parent company, will take a look at Beechcraft Corp. if it’s up for sale, as recent news reports have indicated.

With both companies located in Wichita, there are synergies between them and less competitive risk now that the company’s Hawker business jet production has ceased.

The Monday preceding the NBAA is filled with news conferences by companies looking to share their news with the media and others in the industry. Exhibitors spent the day putting the finishing touches on their displays on the convention floor at the Las Vegas Convention Center.

Pete Bunce, president of the General Aviation Manufacturers Association, said that the mood this year is optimistic. But there is still frustration with the economy in North America and what is happening in Washington.

Reopening the federal government is good news, but politicians “didn’t solve the overarching issues of the budgetary mess this country is in,” Bunce said. “They kicked the can down the road to Jan. 15.”

That presents uncertainty to businesses and to the general aviation market, he said.

Bombardier Learjet

Bombardier has received an additional 30 orders from fractional ownership company Flexjet for Wichita-assembled Learjet 85 business jets.

The company converted options for the midsized jet into firm orders last month. It also procured options for another 20 Learjet 85 airplanes.

That brings the total number of Learjet 85 planes bought by Flexjet to 60, with a value of about $1.2 billion based on 2013 list prices.

Flexjet is owned by Directional Aviation Capital and is an exclusive operator of Bombardier business aircraft.

On Sept. 5, Flexjet placed a firm order for 85 business aircraft – including 25 Learjet 75s, 30 Learjet 85s, 20 Challenger 350s and 10 Challenger 605 jets. The agreement included options for 160 additional planes.

Bombardier is making headway toward first flight of the Learjet 85, which is expected to take place this year, the company said.

The newly developed composite airplane is the largest and fastest Learjet to date.

Embraer’s timing

Embraer, a competitor to Wichita’s planemakers, remains bullish on the business jet market, said president Ernest Edwards.

“The cogs of our industry all focus around what we believe sells new business jets,” Edwards said.

Corporate profits are at a record, the numbers of high-net wealth individuals are up, business jet traffic in North America has increased, and the number of used jets on the market is flat, he said.

That bodes well for the sale of new jets, he said.

Embraer forecasts that the market for midsized and midlight jets will grow over the next five years.

“The timing is right,” Edwards said for sales. “The timing is perfect.”

What is missing is a lack of confidence in the markets, he said.

The two-week government shutdown heightens the sense of insecurity and uncertainty, he said.

Embraer forecasts demand for 9,250 business jets over the next 10 years, representing $250 billion in revenue. That’s $25 billion a year, Edwards said.

“That’s enough to keep us all employed in the next 10 years,” he said. “That’s good news. We’d like it to be better.

“But that’s not bad,” he said.

Edwards also announced his retirement as president of the company.

Marco Tulio Pellegrini, Embraer’s chief operating officer, will succeed him.

Embraer’s backlog totals $17.8 billion.

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