Cessna expects delivery dip in 2010

Jan. 29, 2010


Jan. 29--The slide is expected to continue for Cessna Aircraft Co. in 2010 but at a slower rate, Textron executives told analysts during a conference call Thursday.

Cessna expects to deliver 22 percent fewer jets in 2010 than in 2009.

It expects to deliver 225 jets, including 105 Mustangs, Textron president Scott Donnelly said. Last year Cessna delivered 289 jets, 125 of them Mustangs. The Mustang is built in Independence.

The erosion of the company's once massive backlog of unfilled orders also continues. The backlog was $4.9 billion at the end of the year, a decline of $2 billion from the third quarter. The company has orders for 70 percent of the planes it plans to build this year.

The executives said Cessna will see revenue this year of about $3 billion -- down about 10 percent from 2009 -- and profitability of 0.5 percent to 2.5 percent, which would be less than half the $198 million profit it recorded in 2009.

Cessna will start commercial deliveries of the CJ4 in the second quarter and ramp up significantly through the end of the year.

Hints of better times were seen in the fourth quarter, typically the strongest of the year, Donnelly said.

The company recorded 32 new orders, almost as many as the previous three quarters combined, aided by generous bonus depreciation rules. The number of unsold Cessna aircraft, called white tails, declined, and the price of used aircraft is showing signs of rising, both positive indicators.

But 2009 as a whole was more sobering. Revenue fell 42.9 percent from 2008 to $3.3 billion.

Because of the surge of orders at the end of the year, Cessna expects orders to drop off in the first quarter.

Donnelly said the company expects improved cash flow because of deep cuts it has made and will continue to make.

In addition to thousands of layoffs, Donnelly noted that Cessna is moving its Columbus, Ga., operation to Independence and Mexico.

When asked about the company's outsourcing efforts, Donnelly said Cessna continues to look hard at costs.

"The things that we have announced are moving things out of some of our higher-cost facilities into our own facilities down in Mexico," he said. "So that's a significant move. And technically, it's not outsourcing, because it's a Cessna-run facility in Mexico, but we look at all avenues. If they can result in a better quality and lower cost, it's on the table."

Reach Dan Voorhis at 316-268-6577 or [email protected].