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The Jet Set

CEOs and Entrepreneurs Queue Up To Buy the Ultimate in Private UltraLong- Distance Jet Travel
Barry Rosenberg
From the Print Edition:
Ernest Hemingway, Jul/Aug 99

(continued from page 2)

It was Forstmann Little's deep pockets that led to the development of the Gulfstream V, commonly called the GV (pronounced gee five). The aircraft was conceived, developed, certified and brought to market in just over three years-- about two years ahead of the competition--and cost $800 million to develop. Approximately 20 have already been delivered and another 80 are on order. Seagram Co. was the first customer for the GV. To celebrate reaching the 100-sale milestone, Gulfstream awarded its 5,500 full-time, nonexecutive employees the option of purchasing 100 shares of company common stock at $43 a share. Gulfstream was trading at $49.50 at the time of the offer. Employees can exercise the option any time over the next 10 years.

Gulfstream had the large business jet market to itself until 1980, when Montreal-based Canadair introduced its own wide-cabin aircraft--the Challenger. Canadair remained independent until 1986, when it became part of the widening aerospace holdings of Bombardier, the Montreal-based manufacturer of subway cars and Skido snowmobiles.

The acquisition of Canadair kicked off a worldwide aerospace buying spree. In the early 1990s, Bombardier purchased Wichita's famous Learjet Corp., as well as two of aviation's oldest aircraft manufacturers-- de Havilland of Toronto and Short Brothers of Belfast, Northern Ireland. The resultant company has been one of the aerospace industry's most successful over the past several years. With the development of the 50-seat Canadair Regional Jet (CRJ), which is quickly becoming the aircraft of choice for many commuter operators, replacing propeller-driven aircraft on their longer routes, Bombardier has become one of only two builders of commercial jets in North America. (Boeing is the other.)

In 1993, Bombardier launched its own ultralong-range business jet. Called the Global Express, this aircraft matches the GV in range and price, but has a larger cabin and higher top speed.

The Boeing Business Jet program is a joint venture between Boeing and General Electric. The aircraft is based on a derivative of Boeing's popular 737 airliner. The BBJ combines the size of the fuselage of the next-generation 737-700 with the strengthened wings and landing gear from the larger and heavier next-generation 737-800.

Risk-sharing partner General Electric is providing the BBJ's engines through its GE Aircraft Engine subsidiary, which is working on the Boeing project in conjunction with France's top engine builder, Snecma.

After two years of development, the BBJ flew for the first time in September 1998. Boeskov says the BBJ has widely outperformed Boeing's initial predictions for the aircraft, and the market has responded. The company had originally hoped to sell six to eight a year. Instead, 46 orders have been confirmed since its mid-1996 launch, and Boeing plans to build 29 aircraft in 1999.

Boeing pegs the market for ultralong-range business jets at 600 aircraft--a bit higher than the Gulfstream estimate. It now believes it can capture 40 percent of that market, or 240 planes.

"Two years ago, people doubted that Boeing was serious about getting into business aircraft," says Boeskov. "Now we have a real airplane for those who are doubters." Announced customers for the BBJ include, not surprisingly, General Electric chairman Jack Welch, who has ordered two, and Florida Marlins owner Wayne Huizenga.

The last to enter the market for long-range business jets, in mid-1997, was Toulouse, France-based Airbus Industrie--a consortium of France's Aerospatiale, Germany's Daimler-Chrysler Aerospace Airbus, the U.K.'s British Aerospace and Spain's Construcciones Aeronaticas S.A. In recent years, Airbus has become a powerful number two to industry leader Boeing in the world market for commercial airliners, now selling more than 40 percent of the world's commercial aircraft.


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