By Nathan Gomes and Mike Stone
(Reuters) -Gulfstream jet maker General Dynamics Corp (NYSE:GD) on Wednesday posted a 3.1% rise in first-quarter profit, as demand for private air travel during the COVID-19 pandemic remained high.
Shares were up 3.5% in morning trading to $245.16.
Cautious passengers who opted for private flights instead of commercial flights due to fears of contracting COVID-19 have helped drive U.S. private air traffic higher than pre-pandemic levels.
Business jet makers, eager to capitalize on that demand from wealthy travelers opting to fly private, have been ramping up production of their jets. The profit increase comes after the pandemic crippled many aerospace companies' ability to procure as well as supply parts needed to produce products, creating shortages, reducing inventories and hammering profits amid a period of rising inflation.
In the quarter the company delivered 25 Gulfstream business jets versus 28 a year ago. In March the company told the J.P. Morgan Industrials conference that its jet aviation business would likely be impacted by Western sanctions on Moscow after its invasion of Ukraine.
Sales in the company's aerospace unit marginally rose to $1.9 billion from $1.89 billion a year earlier, while overall revenue remained at $9.39 billion.
Defense contractors such as General Dynamics, Lockheed Martin (NYSE:LMT) and Northrop Grumman Corp (NYSE:NOC) are expected to benefit from higher spending after U.S. President Joe Biden's record peacetime national defense budget request of $813 billion was unveiled in March and the conflict in Ukraine has spurred demand for more military spending globally.
Chief executive Phebe Novakovic said on a post-earnings conference call that interest in Abrams tanks has increased in the wake of Russia's invasion of Ukraine. "One of the interesting things that we have not quite seen at the same level is the Abrams interest from multiple U.S. allies."
Net earnings rose to $730 million, or $2.61 per share, in the first quarter, from $708 million or $2.48 per share, a year earlier.
General Dynamics' reported earnings per share of $2.61 beat Wall Street analyst consensus of $2.51. The company's revenue of $9.4 billion also beat Wall Street analyst estimates of $9 billion.