EBACE 2011: Cessna Upbeat About Citation Prospects

EBACE Convention News » 2011
May 16, 2011, 11:30 AM

Cessna Aircraft yesterday offered an upbeat assessment of the future prospects for its Citation jets and reported ongoing progress with the new CJ4 and Citation Ten models.

The first flight of the Citation Ten, announced last year at the NBAA convention in Atlanta, is planned by the end of this year. The Citation CJ4, which made its European debut at EBACE last year, is nearing type certification from the European Aviation Safety Agency (EASA). “We expect imminent certification with EASA–if we’re lucky, even as this show is going on,” said Mark Paolucci, Cessna senior vice president for sales and marketing. 

The airframer offered no new information on the surprise announcement May 2 that chairman, president and CEO Jack Pelton had retired after 11 years at Cessna, and that Scott Donnelly, chairman and CEO of parent company Textron, will run the business until a successor is named.

“The only thing that we can really say about the management is that Jack [Pelton] did retire; Textron issued a press release on that,” said Paolucci. “Scott Donnelly is actively managing the business today and he is going to find a replacement for Jack. He doesn’t have anybody specifically in mind at the moment, but we believe that there are qualified individuals out there and that Scott will do an active, rapid search without sacrificing the quality of the individual.”

Wichita, Kansas-based Cessna delivered 535 aircraft last year, including 179 Citation jets, for revenue of $2.6 billion. Its aftermarket business, after declining in 2009, saw 14 percent growth in 2010, for $667 million in revenue, said Brad Thress, senior vice president, customer service.

The company reported first-quarter 2011 revenues of $556 million, up $123 million from the same period last year. However, the division posted an operating loss of $38 million versus $24 million last year.

Paolucci said Cessna anticipates the business jet industry will be flat again this year, but will see incremental improvement thereafter. The company bases its forecast on trends in corporate after-tax profits, the size of the used aircraft market and the metric of Citation average daily utilization. All three indicators are showing improvement, he added.

Corporate profits, which correlate closely with aircraft orders and deliveries, are increasing. Citation jets since mid-2009 have declined from 17 percent to 13.7 percent of the used aircraft market. Citation average daily utilization, which dropped off from May 2008 through 2009, is seeing a slight increase.

Trevor Esling, vice president of international sales, said Cessna is seeing improvement in the core European business jet market of Germany, France and the UK, although Greece and Italy remain “sluggish.” He reported “great success” for the two Citation jets now flying with charter operator Jetalliance East in Russia. Jetalliance East launched operations last November with a Citation CJ3 and Citation Sovereign at Moscow Sheremetyevo International Airport. Each is being flown for charter 70 to 80 hours a month.

On the single-engine aircraft market, Cessna is to deliver three 208B Grand Caravans this year to an unidentified operator in Vicenza, Italy, and 10 Model 172 Skyhawk piston-powered airplanes to the Turkish Aeronautical Association.

China and India represent an increasing proportion of Citation deliveries. Paolucci said China currently is lacking in terms of its infrastructure and regulatory environment for general aviation, but he expects the Chinese market to take off. “One of the key elements of their twelfth five-year plan is to develop general aviation,” he said. “We’ve all seen that when the Chinese elect to do something, they do it rapidly. We would expect over the coming years to really see an advancement in general aviation.”

Gulfstream and Dassault currently have a commanding presence in China, he said, mainly because they build larger business jets.

“I would quote the buying behavior in China as being irrational,” Paolucci said. “They don’t buy aircraft the way we are accustomed to selling aircraft. We’re accustomed to selling aircraft because they make you more efficient, they provide a great business tool, they save you money in the long run. [The Chinese] are buying business aircraft more as a trophy. That’s not how we advertise; that’s not how we sell. There’s a learning curve we have to go through to adjust to the requirements of the upcoming market.”

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