Jet Deliveries Halved, Profits Plunge in Textron's Q1

 - April 30, 2020, 10:00 AM
A "revised demand outlook" from NetJets during the first quarter of 2020 was the reason behind a nearly $300 million decline in Textron Aviation's backlog. (Photo: Textron Aviation)

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.

Deliveries, revenue, and profit plunged in the first quarter at Textron Aviation as the Wichita airframer wrestled with the effects of the Covid-19 pandemic and, to a lesser degree, the December accident at its composite manufacturing plant. The manufacturer of Beechcraft and Cessna aircraft delivered 23 Citation jets and 16 turboprops, compared with 44 jets and 44 turboprops in the same quarter last year, leading to a $262 million decline in revenue to $872 million and an even sharper fall of $100 million in profit to $3 million.

Backlog at the end of the quarter was down to $1.4 billion from $1.7 billion at the end of fourth-quarter 2019, which Scott Donnelly, president and CEO of parent company Textron Inc., largely attributed to “a revised demand outlook” from fractional operator NetJets. “They’re still taking quite a few deliveries this year on both Latitude and Longitude,” Donnelly explained during an earnings call this morning, “but they also said, ‘Look, until we see the sales turn back on [for] other aircraft that we expected to take delivery of this year, we’re going to take [those] out of the book.’”

Textron Aviation’s financial results were impacted partly from $12 million in costs from temporary plant closings and employee furloughs—which were initially planned for four weeks but have since been extended to eight weeks—as a result of the pandemic. The pandemic also affected deliveries that couldn’t be made to customers in the quarter because of travel restrictions. Deliveries in the period were interrupted as well by an explosion in late December at its composite manufacturing facility. The company has temporarily worked out an arrangement with Wichita-based aircraft supplier Spirit AeroSystems to use its autoclaves until Textron Aviation can bring in new equipment, Donnelly added.

Looking ahead, Donnelly said there’s still a great deal of uncertainty about demand for the remainder of the year because Textron Aviation is unable to get its salesforce out to talk with customers. “We just don’t have good visibility into what that production rate needs to be for the balance of the year,” he said. “We always gauge that based on looking at our sales teams and understanding order flow and what’s going on in terms of the normal progression of customers moving from query to taking an order. And we don’t have that right now. We’re basically doing furloughs to buy time, to see the economy start to pick back up for people, to be able to travel, and to understand where they are so we can gauge what do we need to set that production run rate for the balance of the year.”