The next step in the highly successful business model at the heart of Nextant Aerospace’s strategy, namely the announcement of a second remanufacturing effort to go alongside the Nextant 400XTi, is going smoothly despite being somewhat overshadowed by the enormity of the potential $5.2 billion order for Bombardier jets placed by Nextant CEO Kenneth Ricci’s Directional Aviation Capital (DAC).
Having bought Bombardier’s Flexjet for $185 million in September 2013, and then placed one of the biggest orders ever for 85 Bombardier business jets, worth $1.8 billion, plus options for another 160 jets, worth a further $3.4 billion, one might have supposed that Ricci would have his hands full. That Nextant has kept on track with its growth plans without missing a beat, while all the Flexjet hoopla hogged the limelight, goes to show how important and timely the arrival of Sean McGeough as Nextant’s new President has been.
It also shows how astute an entrepreneur Ricci is. His timing in bringing on board a top drawer, experienced professional like McGeough with a deep grasp of the global turboprop and light jets market, in order to free up time on his own schedule for an eye-wateringly large corporate deal on the scale of the Flexjet acquisition, was exquisite.
McGeough joined Nextant in January 2013, with the brief to lead the company through its next stage of growth, having been recruited by Ricci from Hawker Beechcraft where he served as President, Europe, the Middle East, Africa and Asia Pacific. “There’s no doubt that Nextant is very close to Kenneth’s heart. It’s his baby, but he gives his management team a lot of space to drive the business forward,” McGeough told EVA.
That forward momentum for Nextant is coming from a number of sources. McGeough is focused on internal efficiency improvements and the recruitment of key people, but at the same time he is looking to accelerate Nextant’s global reach and appeal. The big ‘next step’ though, undoubtedly, is the announcement at October’s NBAA Conference and Exhibition of Nextant’s second remodelling/rebuilding exercise, the transformation of the King Air C90 series into Nextant’s first turboprop aircraft, the G90XT.
There are two key things about this second string to Nextant’s remodelling strategy. The first is that the pool of C90 aircraft out there in the market is probably close to three times larger than the 600 or so Hawker 400s still in service, and which underpin Nextant’s 400TXi production run. The second is that for the C90 Nextant has forged a strong partnership with GE Aviation and will be replacing the C90-series Pratt & Whitney PT6 turboprop engines with the GE H75, a modernised version of the Walter M601. GE has done a huge amount to bring the M601 from the Czech manufacturer, Walter Aircraft Engines, into the 21st century. The M601 has a history that is almost as venerable as P&W’s PT6 but has been a flower that has bloomed largely unseen with sales completely dwarfed by the huge success of the PT6 turboprop engine over the decades. GE has integrated modern 3D aero design and advanced materials into the compressor stages and turbine of the engine’s gas generator. A blisk design, replacing individually bladed compressor disks, has been incorporated into the axial compressor stages and materials with higher temperature capabilities were introduced into the turbine nozzle guide vanes of both the gas generator and power turbines. These and other improvements have transformed the M601 into an engine that has excellent hot weather capabilities – critical for Nextant’s sales plans for the Middle East, India, Asia and Africa – and high altitude cruise speeds.
The original launch aircraft for the H75 was hardly high profile. GE secured a deal with Thrush Aircraft to have the H75 power the Thrush 510G single prop agricultural crop sprayer, with Thrush being attracted by the H75’s hot weather and overall performance characteristics, full payload capabilities and ability to deliver the agile handling required by agricultural aircraft. This deal was followed by one with the China Aviation Industry General Aircraft Company (CAIGA) for a variant, the H85, to power CAIGA’s Primus 150 five-seater single turboprop business aircraft. The Primus is, of course, the reincarnation of the Epic LT, from Epic Aircraft. Epic sold the international rights to the Epic LT to CAIGA but retained the rights for US construction and support. While this is a nice deal, its potential to deliver volume sales is pretty untested. The deal with Nextant for the G90XT is really, therefore, the first one struck by GE that has the potential to deliver volume sales, with the added benefit of bringing a twin engine turbo prop to the party, giving GE two engine sales for every G90XT sold by Nextant. It also gives GE a very high-profile US launch partner capable of giving the H75 both coast-to-coast exposure in the US and international exposure on a very interesting scale. P&W, of course, are so far ahead with the PT6 that the arrival of the H75 will hardly trouble them, but GE has to start somewhere. As far as one can see, the turboprop market is simply going to grow and grow for decades to come, so bumping P&W for a share of this lucrative market makes eminent sense. On that basis Nextant can expect a great deal of support and enthusiasm from GE for its efforts, and probably some very favourable pricing, though no one is talking about that! However, it all helps Nextant in its plans to bring the G90XT to market at a price that is in accordance with its strategy of offering its rebuilt ‘re-imagined’ aircraft at half the price of a new aircraft.
By mid-February Nextant had identified two C90s that it reckons will serve as its flight test aircraft and it plans to have the first flight of an upgraded G90XT take place in the second quarter of 2014. Meanwhile Nextant has been pushing on strongly with its 400XTi conversions. “We have so far completed 40 XTi’s and by the end of 2014 we will have close to 70 of our 600 possible targets completed. So far 40% of our deliveries of XTi’s have been domestic and 60% of the retail deliveries have been international. But the reality is that 60% of our order book is domestic, primarily driven by the large orders we received from our sister company, Flight Options, and from TMC,” McGeough says.
The company has been pushing on with expanding its international sales network, with key appointments in the Middle East, Asia and India. In January it appointed JetHQ as its exclusive sales agent for the Middle East, including Arabia, the UAE, Turkey and Lebanon, some of the most active private aviation markets in the region. Garett Jerde, JetHQ’s managing director, is a former top salesman for Hawker Beechcraft, twice being honoured as the company’s Salesman of the Year, and says he is looking forward to selling the G90XT at half the price of the competition.
The prospects for sales in India are particularly exciting, McGeough says. “India has the largest entry-level jet fleet in Asia, some 17% of a $1.7 billion market, with 350 airports serving the business aviation sector,” he comments. Arun Sharma, Managing Director of Aviators, Nextant’s exclusive sales agent in India, reckons that the Nextant value proposition is perfect for the cost conscious Indian market. Both the 400XTi and, as it becomes available, the G90XT are ideal for the particular conditions of flying and doing business in South Asia, with impressive hot and high performance and go-anywhere capabilities,” he comments.
“I have been to India over 30 times in the last 15 years,” McGeough says. “The window of opportunity for private aircraft sales closed pretty firmly after the 2008 global financial crash but it is now opening again and the 400XTi, with its low operating costs and mid-sized jet capabilities – it can do Bangalore to Singapore, for example – is attracting a lot of attention. I also know the Indian turboprop market pretty well and I am confident that the G90XT will be a great addition there and a tremendous value proposition.”
Nextant will be providing the G90XT in a number of configurations. The standard VIP configuration will be four club seats and a lounge seat and McGeough reckons that the club seats will be as good as anything out there. The avionics will be Garmin 1000. But Nextant is also going after the special mission market, with the aircraft configured to be an air ambulance.
Key to Nextant’s future is the fact that its ‘reimagine, rebuild’ business model will work for any aircraft model that has a sound fuselage that can be returned to a zero hour proposition and re-equipped with new wiring, engines and interior at half the price of a new model. “There is no reason why we can’t take this model all the way up the size scale to the ultra-heavies, but for the next few years we are going to be sticking to our knitting in the light jets market. We have a great proposition and the market is responding well,” McGeough concludes.
Nextant Aerospace announced a strategic partnership with an AVIC company for the Greater China region. AVIC (the Aviation Industry Corporation of China) is China’s largest aviation company with interests in manufacturing, charter operations, maintenance and general aviation. This partnership will allow AVIC and its subsidiaries to closely align with sales, marketing and customer support efforts in the region. “AVIC’s focus on aviation, their extensive customer network, their market and policy insights gives Nextant direct lines of communication with all of our target markets: corporations, entrepreneurs and charter operators,” said Nextant President Sean McGeough.