News
General Dynamics buys Switzerland’s Jet Aviation

Aug. 19, 2008, Washington, DC – General Dynamics Corp. said Tuesday it will buy
Switzerland's Jet Aviation for about US$2.25 billion in cash, part
of the U.S. defence contractor's push to expand its private civilian
jet business and tap into robust demand for luxury planes overseas.

With the purchase, General Dynamic's Gulfstream business jet unit
adds a worldwide network of aircraft maintenance and service centers
where wealthy individuals and cash-rich governments can outfit
private jets with plush interiors and custom features.

While General Dynamics is perhaps best known for its tanks,
ships, submarines and other military equipment, it has significantly
expanded its aerospace unit in recent years and now expects its
fleet of flying business jets to double in the next decade to
roughly 30,000 planes.

The Falls Church, Va.-based company has seen orders for its
Gulfstream jets grow in the past several years, as wealthy buyers
from burgeoning areas like the Middle East and China have helped
push international sales past those in North America, traditionally
the largest market for private jets.

Analyst Cai von Rumohr of Cowen and Co. said in an investor note
that the deal was a “great fit'' for General Dynamics and its
aerospace unit.

“Jet aviation brings GD a complementary portfolio of services,
global presence and 'trusted partner' image that should bolster
potential to hold/expand market share of its Gulfstream products,

International orders at Gulfstream topped U.S. sales for the
first time last year and the company recently introduced its largest
and widest-ranging jet, the G650. Orders have been strong for the
plane that costs roughly $60 million.

Jet Aviation, meanwhile, generates roughly 60 per cent of its
sales in Europe, the Middle East and Asia and has 25 service and
maintenance centres in Europe, the Middle East and North and South
America. By comparison, General Dynamic's aerospace unit, which
includes Gulfstream, has 12 service centres, with all but one
located in the United States.

The deal allows General Dynamics to take advantage of Jet
Aviation's strong presence in the rapidly growing Persian Gulf
region, which is in the midst of an aviation and infrastructure boom
fueled by soaring oil prices.

Three years ago, Jet Aviation opened a 24-hour executive jet
service centre at Dubai International Airport. The airport has grown
into a key transit hub in recent years thanks to the Gulf city's
growing prominence as a business center and strategic location for
flights traveling between Europe, Australia and the Far East. In
April, Jet Aviation announced an aircraft management and charter
partnership deal with Dubai-based private jet operator Elite Jets.

Many of the world's most ambitious aircraft interior retrofits in
recent years have emerged from the Middle East – Saudi Arabia's
Prince Alwaleed bin Talal is spending well over $300 million to
outfit an Airbus A380, the world's biggest passenger plane, as a
private flying palace.

Nicholas Chabraja, General Dynamics' chief executive, said Jet
Aviation's network is what drove the company's interest in the sale.

“This is a business for us that is blessed with opportunity,''
he said.

General Dynamics expects Jet Aviation to contribute sales of $1.5
billion in 2009 and post revenue growth of between 10 per cent to 12
per cent, Chabraja said. The company employs 5,600 employees
worldwide and has its U.S. headquarters in Teterboro, N.J.

General Dynamics will acquire all of Zurich-based Jet Aviation's
shares from current owner Dreamliner Lux S.a.r.l., which is
controlled by the British investment fund Permira Funds. The deal is
expected to close by the end of the year if it clears regulatory
scrutiny.

Chabraja said General Dynamics first tried to buy Jet Aviation
three years ago but lost out to Permira, which bought the company
for an undisclosed sum. General Dynamics “couldn't get in the
door'' on the first sale, Chabraja said.

Shares of General Dynamics rose 60 cents to US$92.84 in trading
Tuesday on the New York Stock Exchange. The stock's price has ranged
between $74.01 and $95.13 in the past year.

THE ASSOCIATED PRESS