Textron says industry at bottom of recession
While it’s hard to celebrate being at the bottom of a recession valley, Textron senior management says indicators show things aren’t getting any worse and the downward plunge has stopped.
Textron Chairman and CEO Lewis Campbell said, “Cessna is fighting through the most difficult down cycle in the history of the business jet industry.” He added he is confident in his analysis that this is the worst ever. “2010 will be a tough year for Cessna,” he said later. That said, Cessna revenues are expected to grow by six to eight percent between 2009 and 2013. Money saved by canceling the Columbus large cabin Cessna jet was reinvested in light and midsize jet development.
Bell Helicopter is a much more positive story, with defense orders boosting revenues while civilian business helicopter sales are off slightly.
Cessna has reduced its workforce by half and consolidated 10 facilities including the Bend, Ore., plant used to build the Corvalis single-piston-engine aircraft. The Corvalis production has been moved to Independence, Kan., and Chihuahua, Mexico.
Prior to the economic downturn, Cessna had hoped to deliver 535 jets in 2009 but will instead deliver slightly more than 275. Deliveries will continue to decline in 2010. A positive sign in future jet orders is the utilization of the current fleet, which after an 18-month decline now shows a “flattening out.” Jet orders closely track corporate profits, which currently show an upward trend. Aiding business jet demand is an airline industry that is not improving service, Textron officials said.
Demand for the Cessna Citation CJ4 and Mustang remain strong. The $8.8 million CJ4 is powered by Williams FJ44-4A engines and features a moderately swept wing. Cessna jets are 60 percent of the company’s business. The breakdown includes: single-engine sales, five percent; Caravan sales, seven percent; used aircraft, two percent; parts and service, 19 percent; and CitationShares, seven percent. CitationShares offers jet fractional ownership. Textron figures show Cessna has 49 percent of the total jet market, with Hawker Beechcraft having 21 percent, Gulfstream Aerospace with five percent, Bombardier with 17 percent, and Dassault Falcon Aircraft with 1.2 percent.
September 9, 2009