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UPDATE 3-NetJets to buy 40 Gulfstream jets in $1.9 bln deal
June 20, 2008 / 9:22 PM / 9 years ago

UPDATE 3-NetJets to buy 40 Gulfstream jets in $1.9 bln deal

(Adds General Dynamics comment, stock price, byline)

By Chelsea Emery

NEW YORK, June 20 (Reuters) - NetJets, a provider of private planes, will buy 40 new Gulfstream aircraft from a unit of General Dynamics Corp (GD.N) in a deal worth about $1.9 billion, the companies said on Friday.

The purchase of new planes comes as U.S. commercial airlines are grounding planes and slashing routes amid skyrocketing fuel prices. Delta Air Lines Inc (DAL.N), for one, has said it will cut domestic capacity by about 13 percent in the second half of the year.

NetJets sells fractional aircraft ownership, an arrangement that allows individuals and corporations to buy a share of a private business jet for less than the cost of buying a plane. The Berkshire Hathaway Inc (BRKa.N) company is the world’s largest operator of Gulfstream aircraft.

Sales at the General Dynamics aerospace unit, which makes Gulfstream jets, soared 17 percent in the first quarter from the year-ago quarter.

“That suggests that demand continues to be strong,” said Rob Doolittle, a spokesman for General Dynamics, adding that demand from non-North American consumers for large-cabin business jets was climbing.

    The deal calls for four Gulfstream G450s and four Gulfstream G550s to be delivered each year from 2012 through 2016. The arrangement also includes more than $250 million in long-term maintenance support.

    “This contract recognizes the continued success of Gulfstream aircraft in the NetJets fractional ownership program and the strong partnership between the two companies,” Joe Lombardo, president of Gulfstream Aerospace, said in a statement.

    Oil prices are up about 40 percent so far this year.

    Shares of General Dynamics closed down $2.09 at $85.50 on the New York Stock Exchange on Friday. (Reporting by Chelsea Emery; Editing by Andre Grenon, Toni Reinhold)

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