Textron Boss Shrugs Off Aviation Loss in Third Quarter

 - October 29, 2020, 11:01 AM
Textron Aviation saw an increase in orders for its Citation light and midsize jets in the third quarter. (Photo: Textron Aviation)

Despite posting back-to-back quarterly losses for the first time in several years, Textron Inc. CEO Scott Donnelly is bullish on subsidiary Textron Aviation’s prospects in the next quarter which, based on order activity between July 1 and September 30, should soften the impact of the losses the Wichita-based airframer recorded in the second and third quarters. “While the pandemic impacted volume in the quarter we did see aircraft utilization levels continue to recover and we’re encouraged by new order flow,” Donnelly told analysts on a conference call following today’s release of financial results.

He added that a “nice pickup in light and midsize jet activity,” as well as “pretty strong order activity” for the Beechcraft King Air, increased its backlog in the third quarter by $400 million, to $1.8 billion. During the quarter, Textron Aviation delivered 25 Cessna Citations and 21 commercial turboprops. That was lower than the 45 jets and 39 turboprops the company delivered in the same quarter last year.

Fewer aircraft deliveries and lower aftermarket volume drove Textron Aviation to post a quarterly loss of $29 million on revenue of $795 million, compared with $104 million in profit on revenue of $1.20 billion in the third quarter of 2019. For the first nine months of the year, Textron Aviation recorded a loss of $92 million on revenue of $2.4 billion, compared with $315 million in profit on revenue of $3.45 billion in the same period a year ago.

Financial results notwithstanding, Donnelly said increased utilization, a robust used market, and new users of business jets are driving optimism for “a decent recovery coming out of” the pandemic. “Just as you’re seeing more people opting to use business aviation for personal reasons, you’re going to see more people choose to use business aviation for business reasons,” he explained. “That’s what I say drives a better macro environment than we’ve seen in a long time.”

Donnelly also told analysts that Textron Aviation’s newest aircraft, the SkyCourier, has accumulated more than 240 hours and that the twin-turboprop utility is on track for certification and entry-into-service in the second half of 2021.