Airbus to Dassault See Plane Sales Stall in U.S. Shutdown
Eni SPA (ENI), Italy’s biggest energy company, has a group of 10 Houston business people waiting to buy its Dassault Aviation SA (AM) Falcon 2000 jet. What it doesn’t have is the U.S. paperwork needed to sell the plane.
The partial government shutdown entering its 11th day today is keeping the purchasers from closing on a deal with Rome-based Eni valued at about $5 million, said Bob Nygren, a founder of aircraft broker AeroSmith Penny II LLC in Houston. Eni has stashed the twin-engine Falcon at a suburban Dallas airport.
Executive jets aren’t the only ones being sidelined. Hundreds of sales from vendors as varied as Airbus SAS and individuals are stalled as the Federal Aviation Administration’s aircraft-registration office remains shuttered. Titles for $2.5 billion of jetliners, small planes and helicopters may be in limbo if the shutdown runs into next week.
“This is a mess,” said William King, a vice president at Cirrus Aircraft Corp., which installs parachutes on its planes so they float to the ground in an engine failure. “Even if they settle this out quickly in the next 10 days, we could still be in a position of not meeting our delivery numbers by Jan. 1.”
The snags are part of the economic ripple effects from the first government shutdown in 17 years. Five U.S. senators urged FAA Administrator Michael Huerta in a letter this week to reopen the Oklahoma City-based registry because it’s “inflicting unnecessary hardship on aviation industries.”
None of the about 800 officials now being recalled to ensure air safety will be assigned to the registry, according to the FAA. During the shutdown, U.S. law prohibits the FAA from running the registry and other operations that aren’t protecting “life and property,” the agency said in a statement this week.
Title work for planes of all sizes flows through the office, which is tucked within a sprawling FAA campus and usually operates “locked down like Fort Knox,” said Clay Healey, owner of AIC Title Service LLC in Oklahoma City, referring to the U.S. gold reserves stored in Kentucky.
Seated at rows of desks in a documents room, title-company workers download aircraft information unavailable outside the registry’s walls, Healey said in an interview. A bank-teller-type window allows users to slide in paperwork for time-stamping by an FAA official, he said.
“This is a very unfortunate situation,” Maryanne Greczyn, a U.S. spokeswoman for Toulouse, France-based Airbus, said by e-mail. “We are hopeful for a rapid-as-possible solution.”
More than 30 companies, including Airbus, Boeing Co. and units of General Electric Co. (GE) and Bank of America Corp., sent a letter today to Secretary of Transportation Anthony Foxx, requesting the registry be reopened on security concerns. The FAA, among other things, provides the Transportation Security Administration and law enforcement agencies with aircraft-related information, they said in the letter.
The companies also said they’re concerned that the increase in an already large backlog for new registration applications, combined with the expiration of temporary authorizations, will cause “enormous delivery delays.”
Planes in Limbo
At least two planes from Canada’s Bombardier Inc. (BBD/B) with a list value of about $75 million, one of them for Delta Air Lines Inc. (DAL), are also in limbo, and Brazil’s Embraer SA (EMBR3) said this week that its U.S. regional-jet deliveries may be affected “in the coming weeks” if FAA offices stay shuttered.
Boeing has been making deliveries to U.S. customers that submitted registry paperwork before the shutdown and to international airlines that list planes with regulators in their home markets, said Doug Alder, a spokesman for the Chicago-based planemaker. U.S. carriers also can take planes using temporary registration forms, he said.
Cirrus, based in Duluth, Minnesota, had to put delivery on hold this week for one of its single-engine planes because of the shutdown, executive King said in an interview.
Eni is selling its used Falcon to upgrade to a G550 from General Dynamics Corp. (GD)’s Gulfstream, according to Nygren, the Houston-based aircraft broker. He declined to identify his buyer group, and Eni didn’t respond to telephone and e-mailed requests for comment about the sale.
Dassault has delayed handing over three new jets completed at its facility in Little Rock, Arkansas, said Andrew Ponzoni, a spokesman. If the shutdown drags on more than two weeks, the Paris-based planemaker won’t have authorization to fly in planes from France to be finished in the U.S., he said, without identifying the buyers. Falcon operators include NetJets, the aviation business of Warren Buffett’s Berkshire Hathaway Inc.
“The fourth quarter is traditionally our busiest time of year for Falcon completions and deliveries,” Ponzoni said in an e-mailed response to questions, in which he declined to identify the planes’ customers. “The longer the FAA Registry Office remains closed, the deeper the impact will be on our business.”
The Washington-based General Aviation Manufacturers Association, which represents makers of small aircraft and their suppliers, estimated that a shutdown dragging into next week would put $1.9 billion of light planes and helicopters on hold.
The FAA “intensely” regulates the aircraft industry for safety reasons, resulting in companies and airplane operators requiring approval on everything from maintenance to medical certificates for pilots, said Ed Bolen, president of the Washington-based National Business Aviation Association.
“The effects of this shutdown are growing exponentially,” Bolen said.
For now, employees at Healey’s AIC Title in Oklahoma City are keeping busy cleaning up and fine-tuning their computer system. The company normally processes paperwork on 75 planes a day, Healey said. On Oct. 9, it handled five, all from deals in the works before the shutdown.
“Transactions have stopped,” Healey said. “It’s a real problem.”
Also stuck is the Falcon being sold by Italy’s Eni. The plane is outside Dallas at Addison Airport, a facility bustling with corporate and private aircraft -- it’s billed by the town of Addison as the country’s third-busiest general-aviation airport -- and located near the headquarters of J.C. Penney Co. (JCP)
About $1 million of refurbishing work on the Falcon was set to begin this week, after being scheduled months ago because the job was so big, Nygren said. Workers at a Bethany, Oklahoma, repair facility were left idle waiting for the plane, he said.
“We need to get registration first and we’re on hold because of that,” Nygren said. “It’s stupid. This is a simple title transfer.”