Cessna Aircraft third quarter results reflected a stubbornly unpredictable business jet market, with revenues down $185 million and profit a negative $23 million. Textron chief Scott Donnelly told stock analysts in a phone call Oct. 18 that the light to midsize jet market remains soft, later saying in answer to questions that the turnaround is "virtually unknowable." But one will come, Donnelly said, and he wants all the resources of Cessna's sales, servicing, and marketing to be ready when it does.
There's hope on the immediate horizon that the fourth quarter will improve, with deliveries of the new Citation M2 and Sovereign set to begin, followed by deliveries of the Citation X in the first quarter of 2014. The M2 has a 1,300-nautical-mile range, seats for seven, a 400 knot cruise speed, and a price of $4.39 million. The Sovereign has a 3,000-nm range, nine seats, a 458 knot cruise speed, and a price of $17.89 million. The Citation X has a range of 3,242-nm, seats for nine, a 527 knot cruise speed, and a price of $22.92 million. The monster of the fleet, the new super midsize, widebody Longitude, will first fly in 2014 with deliveries in 2015. It has a 4,000-nm range, seats for eight, a 490 knot cruise speed, and a price of $25.99 million. The Sovereign is making demo flights for potential customers.
As aerospace analyst Brian Foley points out, jets will be the last general aviation aircraft to reflect an economic recovery. A turnaround may already have started at the lower end of the industry. General Aviation Manufacturers Association numbers appear to reflect his view. In the first six months of 2013, piston airplane deliveries worldwide are up 16 percent, single-engine turboprops are up 3.8 percent, and multiengine turboprops are up more than 70 percent, from 34 deliveries in 2012 to 58 so far this year. Jet deliveries are down 4.1 percent. That doesn't mean a recovery in the jet market is imminent, but rather that some sort of recovery has begun that will reach the jet world on its own schedule. Check back in a year.
Cessna delivered 25 new Citations in the third quarter, down from 41 aircraft for the same period of 2012. Financial numbers went from a profit of $30 million in 2012 for the third quarter to a loss of $23 million in the most recent quarter. The Cessna backlog is up $61 million to a total of $1.07 billion, a number that includes orders for some of the new jets. Despite much concern about the small jet market, there have been "strong orders" for the M2 because, Donnelly said, there is nothing like it in the used market. The used market is a leading indicator of how new jet sales will go, he said. The M2, Cessna insists, is not to be associated with the Mustang, despite the "M" in its name and the fact that a horse was painted on the first M2 mockup. It looked like a Mustang horse.