Cessna to ‘muscle through’ credit crisis

October 6, 2008

Cessna expects to “muscle through” the current credit crisis with a record $16 billion backlog of firm aircraft orders.

The backlog is about four times larger than the 16,000-employee company had in place during the last economic shock in 2001, but Cessna CEO Jack Pelton said the aviation industry is in “uncharted waters.”

“We’re in a different time than we’ve ever been in before regarding the economic uncertainty,” he said. "But our backlog gives us the ability to work through the storm in front of us.”

Cessna, based in Wichita, Kan., plans to continue expanding its broad line of aircraft ranging from the SkyCatcher light sport aircraft to the Columbus, a top-end business jet, and adding service centers around the world. Cessna builds 10 types of jets, eight single-engine aircraft, and four utility turbo-props.

Unlike most other aircraft firms, Cessna has its own financing arm, Cessna Finance Corp., that may be able to extend credit to aircraft customers on more favorable terms than other lending institutions.

Cessna brought in $5 billion in revenue last year and delivered 387 jets. This year, the company is on track to deliver 470 jets—and next year is likely to be slightly higher despite the broad economic turmoil.

The company has steadily ramped up production of its Mustang very light jet and plans to deliver 150 a year beginning in 2009. The company has about 600 Mustangs on order. Cessna also has sold 70 Columbus jets that carry a retail price tag of $27 million each. Columbus deliveries are scheduled to begin in 2014.

Pelton said there’s been a “softening and slowing” in the business jet market recently, and the industry is “faced with hard times economically.”

But Cessna will continue to invest in anticipation of an improved business climate.

“We’re going to continue our existing development programs,” he said. “From 2011 out, the business jet market looks very strong with lots of future growth.”