Dot-Coms Propel Business Jets
Monday, July 3rd 2000, 12:00 am
By: News On 6
SAVANNAH, Ga. (AP) â€” Among cars, it might be a Ferrari or a Porsche. Lovers of exotic stereo equipment might turn to McIntosh or Nakamichi. For the well-heeled in search of a private airplane, the top choice is likely to be a Gulfstream V.
In a country where branding and consumption have achieved new extremes, owning a luxury airplane remains perhaps the most opulent form of displaying financial success. And the GV â€” pronounced ``G-five'' â€” has become the jet of choice for those with $40 million to spend on a mode of transportation that makes flying first-class look paltry by comparison.
Many recent Gulfstream buyers are technology billionaires who benefited from the high-flying dot-com economy: Dallas Mavericks owner Mark Cuban, who co-founded Broadcast.com and later sold it to Yahoo! for around $5 billion; Apple Computer CEO Steve Jobs and Nathan Myhrvold, Microsoft's former chief technology officer.
Cuban bought his GV through Gulfstream's Web site as a Hanukkah gift for himself in December. Apple's board of directors voted in January to give Jobs a GV to complement his $1 annual salary. The world's second richest man, Larry Ellison, chairman of software maker Oracle Inc., also travels in a GV.
Golfer Greg Norman is another Gulfstream owner. His white and navy GV â€” decorated with his shark logo â€” got its finishing touches in March at Gulfstream's Savannah finishing center.
Despite those high-profile individual sales, large corporations account for about 85 percent of the sales by Gulfstream Aerospace Corp., a Savannah-based subsidiary of General Dynamics, the defense contractor based in Falls Church, Va. Government and military orders account for another significant portion of sales; the company has sold its planes in 50 countries and to 34 governments.
``It's always been designed to be a business aircraft,'' Gulfstream spokesman Keith Mordoff said, grimacing at the suggestion that a GV could be considered a toy for some. The company â€” which charges a nonrefundable $2 million fee on every order â€” does not disclose its customers' identities.
Gulfstream also makes the $30 million Gulfstream IV, which is slightly smaller and has a shorter range than the $40 million GV. But the GV, which can hold up to 19 people, is popular for its ability to reach Asia nonstop from the East Coast and Europe nonstop from the West Coast.
In the ultra-long-range market, Gulfstream faces a stiff challenge from Canada's Bombardier Aerospace. Bombardier says its Global Express, which costs about $100,000 more than the GV, flies farther.
Boeing also offers a business jet version of its commercial 737 model, and Airbus makes a business version of its A319. The much larger Boeing and Airbus jets do not have quite the same speed as the GV, but they can haul up to 50 people.
General Dynamics doesn't release production figures for Gulfstream, but its output is estimated at 65 to 75 planes a year. Annual revenues are estimated at more than $2 billion.
Gulfstreams roll off the assembly line with a pallid, pale green coating to prevent corrosion â€” the company calls them ``greenies'' â€” ready to fly, but far from completed. Each jet is finished to the customer's specifications, either by Gulfstream or by an outfitter hired by the plane's owner.
Finishing â€” which includes such things as fabrics, furniture and stereo and communications equipment â€” can add millions to the final cost. Special lightweight materials, built to meet federal specifications, are required. A gleaming credenza top sitting in the company's wood shop, for example, weighs less than a deck of cards.
The GV also offers passengers all fresh air, unlike the recycled air found in most commercial jets.
``It may not sound like a big deal, but for those people who fly a lot, it is,'' Mordoff said.
A private jet's interior can easily surpass the luxury found in the most stunning apartments. Myrhvold, the former Microsoft technology officer, spent $2 million on his GIII's refurbishment â€” $7,600 per square foot.
Myhrvold, who bought a Gulfstream III model and has appeared in Gulfstream ads, wrote an essay anonymously in the October 1998 issue of Vanity Fair about the joys and travails of jet ownership.
``You cannot really talk about your jet to non-jet owners, unless you want to come off as some kind of braggart,'' he wrote.
Gulfstream traces its roots to 1958, when it launched its first plane, the twin prop GI. The GII, introduced eight years later, was Gulfstream's first jet. To date, it has delivered 1,160 planes.
That longevity is key to the company's brand success, said Cai von Rumohr, an aerospace analyst with SG Cowen Securities in Boston.
``They were kind of the first ... they got the Mercedes-Benz market,'' von Rumohr said.
Since it was bought by defense contractor General Dynamics in May 1999, Gulfstream has worked to reduce its 110-plane, $3.5 billion backlog of orders. Two months ago, the company delivered its 100th GV and its 400th GIV.
Gulfstream is expected to capture additional military orders in the future because of General Dynamics' marketing experience and defense relationships around the world, von Rumohr said.