Textron Aviation Posts Loss, Delivery Drop During Covid

 - July 30, 2020, 12:18 PM
Despite seeing deliveries cut in half in the second quarter of 2020, Textron Aviation began to see improved sales dialogue, particularly with the M2 and King Air 250, Textron chief Scott Donnelly told analysts.

Textron Aviation posted a $66 million loss and a 50 percent drop in Citation deliveries in the second quarter as the Covid-19 pandemic spurred production stoppages, slower sales activity, and delivery delays. However, Scott Donnelly—chairman, CEO, and president of parent Textron Inc.—told analysts on Thursday that he expects improved results moving forward, noting that sales activity has picked up and production has resumed.

Textron Aviation delivered 23 Citation jets in the second quarter, down from 46 in the same period in 2019, and 15 commercial turboprops, compared with 34 last year.

The segment loss marks a significant turn from the $105 million profit last year, reflecting a lower private jet volume of $178 million and a lower aftermarket volume of $120 million, more than a 30 percent decline as flight utilization plummeted. Further erasing profit was $53 million of “idle facility” costs. Backlog, meanwhile, eroded by $500 million from the end of the second half of 2019, to $1.4 billion.

For the first half, Textron Aviation revenues dropped to $1.62 billion, compared with $2.26 billion in the first six months of 2019. The Wichita-based manufacturer posted a $63 million loss through the first six months, compared with a $211 million profit a year earlier. Citation deliveries totaled 46 in the first six months, down from the 90 shipped in the first half of 2019. Commercial turboprop deliveries similarly fell from 78 in the first half of 2019 to 31 in the most recent period.

Donnelly conceded “We know we’re going to be off considerably this year, given the fact that the factories were shut for several months” and production adjustments were made. However, he said he expects improvement in results as the year progresses.

“The sales team is back in the field meeting with customers and arranging demonstration flights,” Donnelly said. “We saw a pick-up in business jet flight activity in the latter part of Q2, and we expect to see higher new aircraft deliveries and aftermarket revenue in the second half of the year.”

Most of the manufacturing operations are back up, and sales activity is picking up in particular for turboprops and light jets, he said, adding this activity has been encouraging. “There’s a lot of dialog going on,” he said.

He specified strong activity for the King Air 250 and Citation M2, saying interest is coming more from private businesses and high-net-worth individuals.

Also encouraging, Donnelly added, was increased interest in private aviation in general. “Lots of customers that have not been in the private aviation space before are inquiring and looking at using private aviation,” he said. While it might not translate into immediate sales—he noted there’s typically a progression from charter and membership programs before reaching whole aircraft sales—the interest bodes well for the future. “In the mid- to long-term, this is a very healthy thing.”