January 25, 2012
By Alton K. Marsh
Cessna finally turned a long-awaited corner in the current economic recession, but has firmly identified itself as a small- and medium-sized jet manufacturer for the future. Piston-engine aircraft not only survived in the fourth quarter of 2011, but helped lead the way to higher revenues.
Textron Chairman and CEO Scott C. Donnelly predicted it is very unlikely that the huge Cessna Columbus business jet will ever be resurrected. The project was well into design and construction had started on a factory when the project was shelved. While the big-jet market survived the economic downturn well, that end of the market is already well served, he said. Recovery will come as well for the small- and medium-sized jets, and Cessna will be well-positioned when it arrives, he added.
(A conference room on the second floor of Cessna headquarters in Wichita had been named Columbus when the project started. Does this mean it may need to be renamed the “Small and Mid-Sized Room?”)
Cessna last year tweaked its small- and mid-sized models with the introduction of the M2 and Latitude. Those models are aimed at competition from Embraer, specifically the Phenom 100 and the Legacy 450. Donnelly said there will be additional upgraded Cessna jet models announced in the future.
If you think most jet sales are made to foreign customers, think again. Donnelly said there is a 70-30 split, with 70 percent going to U.S. customers. The remaining 30 percent is dispersed among Latin America, Indonesia, Southeast Asia (particularly for Caravan sales), and Eastern Europe. The Western Europe market is quiet for the moment.
And if you think Textron looks askance at Cessna’s piston-engine division there may be hope that you are wrong. Revenues for the fourth quarter at Cessna increased $51 million, and the piston- and Caravan models helped in a big way. Only 67 Citation jets were delivered, compared with 79 in the fourth quarter of 2010. The lower jet deliveries were “more than offset by higher volumes of used jets, single-engine aircraft and Caravans,” Textron officials said in a press release.
It marks the first January in three years that Cessna can say it has increased revenues, and doesn’t have to dig itself out of an economic hole at the start of a new year. It can even brag that it surpassed the revenues of Bell Helicopter, which had revenues of $35 million in the fourth quarter but has performed well through the recession. Donnelly said Bell will also have announcements of new products as soon as next month. Bell now faces a shrinking Department of Defense budget that could hurt sales of its military rotorcraft.
Production costs of the CJ4 are now back to reasonable, healthy margins. Efforts to control costs have been in progress for more than two years.
Overall, Donnelly indicated Cessna has turned the corner in a recession that, for Cessna, bottomed out in 2009. So are the good times here at last? No one can accurately predict such things in a volatile economy, but Textron officials think jet deliveries will be “up modestly” in 2012, with better things to come in 2013. Total deliveries were down by a few jets in 2011, compared to 2010.
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