News
Analysts: Gulfstream will by OK following deadly crash

April 5, 2011, Savannah, Ga. – As Gulfstream employees in Savannah
gathered Monday to observe a moment of silence for four crew members
killed Saturday during the flight-test crash of a G650 in Roswell,
N.M., federal investigators remained on the scene, piecing together the
minutes leading up to and following the deadly accident.

Meanwhile, Jay Johnson, chairman and CEO of Gulfstream’s parent company, General Dynamics, issued a statement regarding the fallen employees and reiterating the company’s confidence in the G650 aircraft and program.

“Our thoughts and prayers are with the families, friends and co-workers of our four Gulfstream employees — experimental test pilots Kent Crenshaw and Vivan Ragusa and technical specialists David McCollum and Reece Ollenburg — who died Saturday,” Johnson said.

“Our sorrow from the loss of these four great men is very deep,” Johnson said.

General Dynamics (NYSE: GD) and Savannah-based Gulfstream Aerospace remain committed to the G650 program, Johnson said.

“I am confident that as Gulfstream assists aviation authorities in the accident investigation, the cause of this terrible tragedy will be determined,” he said. “We look forward to continuing the rigorous testing required to achieve flight certification of the aircraft.”

Flights of the other four test aircraft in the G650 program have been temporarily suspended, said Gulfstream spokesman Jeff Miller. All other activities related to the program are continuing as normal, he said.

Aerospace analysts also reiterated their faith in Gulfstream and the program, which was expecting certification before the end of this year.

General Dynamics shares remained at “Buy” at Jefferies, a global securities and investment banking firm specializing in aerospace.

“The crash is a setback for what has been a model development program, but our belief is the accident will not disrupt the demand for the jet,” Jefferies’ aerospace analyst team told The Economy, a British publication, Monday.

“Gulfstream has a highly experienced and well-managed engineering department. The accident is extremely unusual and should be viewed as a one-off event.”

Until Saturday, Gulfstream had never lost an aircraft in test.

Veteran RBC Capital Markets analyst Robert Stallard said it was premature to speculate on the cause of the crash, but he does expect investors to be concerned about Gulfstream’s ability to get its first G650 into service as early as planned.

That said, Stallard doubted demand for the plane would be hurt.

General Dynamics spokesman Rob Doolittle said the company only comments on backlogs during its quarterly financial reports. The next report, on the first quarter of 2011, is expected to be released April 27.

Morgan Stanley, in a report issued Monday, said it is holding to its “overweight” rating of General Dynamics, an indication the firm still expects the stock to outperform either its industry sector or the market altogether.

“It’s likely the G650 test plane crash will weigh on the stock (prices) until the extent of the setback can be understood,” the firm said.

Shares of General Dynamics dropped $4.05, or 5.2 percent, to close at $73.37 Monday.

Finding the cause

Some answers could come as early as next week, according to Tom Latson, investigator-in-charge with the National Transportation Safety Board.

Latson, an air safety investigator based in NTSB’s Texas office, has been joined by two other investigators from Washington, D.C.

Also participating in the on-site investigation is the Federal Aviation Administration, Gulfstream Aerospace, Rolls Royce Engines and Parker Aerospace, which designs and manufactures the G650’s fly-by-wire flight control system.

While a factual report is expected to take nine months to a year, with a probable cause determination coming in a year to 18 months, a preliminary report should be posted on the NTSB website within 10 business days, Latson said.

He said he and his team expect to remain on scene in Roswell for several days.

The G650 — the second of five test aircraft to go into service — was reportedly conducting performance tests at the Roswell airport when the plane’s right wingtip suddenly dipped on takeoff, scraping the runway.

According to the NTSB, witnesses close to the scene saw the airplane sliding on the ground with sparks and smoke and subsequent full involvement with fire while it was still moving.

“The airplane came to rest upright and fully involved in flames approximately 200 feet from the base of the airport control tower,” the report continued.

“Airport rescue and firefighting teams responded quickly and continued to fight the fire for more than 15 minutes.”

WHY ROSWELL?

The Roswell International Air Center in New Mexico is not a major airport, but it has two things that make it ideal for test flights, said Jennifer Brady, air center manager.

“We have a very long runway — 13,000 feet — and a lot of open air space,” she said.

“For that reason, we’re used a lot by Gulfstream. We also see Boeing and Cessna, Bombardier and Lear Jet.

“The test flight crews are like family to us,” she said. “We know these folks, and our hearts go out to their families.”

Saturday’s crash was the first at Roswell in at least 20 years.

“I’ve been here 28 years, and I’ve seen a lot of bumps and bruises in that time,” Brady said. “But nothing like this.”

Prior to 1967, the air center’s 4,600 acres were home to Walker Air Force Base, one of the largest installations operated by the U.S. Air Force Strategic Air Command.