Nov. 26--Demand and pricing for Cessna Aircraft business jets remain weak, but Cessna seems poised for an upturn over the next two years, according to an analyst's report released Monday.
Leading key indicators for future demand look good, wrote Cowen and Co. analyst Cai von Rumohr in the report.
Corporate profits, the stock market and consumer confidence are trending up and the used aircraft market for Cessna jets is improving, he wrote.
Von Rumohr estimates that Cessna will deliver 139 business jets this year, a 68 percent drop from a peak in 2008 and a decline from 2012.
Still, Cessna may be able to hit its target of a "near breakeven" year, if it receives certification of the Citation M2 and Citation Sovereign and begins deliveries in December as expected, von Rumohr wrote in an analyst report.
The company turned in a $81 million loss for the first nine months of 2013, compared to a profit of $59 million for the same time a year ago.
Demand for small and midsize business jets fell during the economic downturn and continues to be weak, von Rumohr wrote.
For Cessna, the downturn and other factors created a "perfect storm," he said.
Besides demand, Cessna also was affected by an extended transition in product upgrades, certification delays, previous price cuts on upcoming new models, a drop in demand from the foreign market, anti-business jet rhetoric from President Obama, and Cessna's exit from its fractional ownership business, he said.
"Recovery from (the) 'perfect storm' low offers big Cessna upside in 2014 to 2015," von Rumohr wrote.
In 2014, Cessna will benefit from full-year deliveries of its Citation M2 and upgraded models of its Citation Sovereign and Citation X, he wrote.
"Assuming a gradual lift in the economy, we look for 2014 to recover to 187 (business jets) or comparable to 2012's level," von Rumohr wrote. "We project a further rebound to 248 (business jets) in 2015."
Reach Molly McMillin at 316-269-6708 or [email protected]. Follow her on Twitter: @mmcmillin.
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