Dive Brief:
- Aerospace and defense giant General Dynamics’ Q3 aircraft deliveries were impacted by defective components late in the quarter, according to an Oct. 23 earnings call.
- The issue prompted the exchange of up to 16 components per aircraft planned for delivery, CEO Phebe Novakovic said on the call. However, the supplier responsible for the defective components is “fully cooperative” and providing the necessary replacement parts.
- “So the removal and replacement of these components has impacted labor costs and schedule adversely,” the CEO said. “We are nonetheless working our way nicely through this problem with the cooperation of the vendor.”
Dive Insight:
General Dynamics experienced yet another quarter of lower than expected aircraft deliveries due to supply chain troubles. In Q3, the aerospace and defense company delivered four Gulfstream G700s, despite planning to deliver up to 16 of the aircraft. In Q2, the company delivered 11 of a planned 15 units.
Novakovic said the company “still had a reasonable belief” three weeks before the end of Q3 that it could deliver at least 11 G700s during the quarter.
The company also delivered one less each of the G600, G500 and G280 models year over year in Q3, Novakovic told analysts.
Besides the vendor quality issues, timing on engine certifications led to late engine deliveries, further impacting the company’s aerospace sector. Since aircraft were painted prior to receiving the engines, there was a significant need for repaint, upping both time spent and costs, the CEO said. Hurricane Helene also hampered four days of productivity for the company.
Despite the disruptions, the CEO noted that the troubles are “largely behind us” and that the company still expects to deliver roughly 42 G700 aircraft this year, including nine in November and 13 in December.
“The real issue here is supply chain support during this critical period,” she said.
The recent component issues aren’t the first disruptions to plague General Dynamics’ supply chain. In 2023, the company called out supplier Honeywell for late shipments. While the aerospace and defense company did report supply chain improvements later that year, aircraft production was then disrupted by the Israel-Hamas war.
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