Cessna posts $23 million loss for third quarter
10/18/2013 8:32 AM
08/08/2014 10:19 AM
Cessna Aircraft recorded a loss of $23 million in the third quarter as revenue and delivery of Citation jets declined in a market for light and medium-size jets that remains soft.
The loss in the quarter compares to a profit of $30 million for the same time a year ago.
Cessna recorded revenue of $593 million for the quarter, down from $778 million a year ago.
The company delivered 25 new Citation jets, down from 41 jets a year ago.
“We continue to believe that the global light to midsize market is a growth market in the long term,” Scott Donnelly, chairman and CEO of Textron, Cessna’s parent company, told analysts on a conference call about Textron’s earnings. “And we remain committed to our strategy in investing in new products.”
Cessna is on track to certify and begin deliveries of the new Citation M2 business jet and a upgraded Sovereign during the fourth quarter this year. And it’s on track to deliver the upgraded Citation X in the first quarter of 2014, Donnelly said.
First flight for the new wide body Citation jet, the Latitude, is on track for next year as well, he said.
“We believe we’re doing the right things for the future and success of the business with respect to attractive new products, competitive cost structure, superior service network and expanded sales coverage,” Donnelly said.
Cessna stopped its deep discounts on pricing for new business jets during this year, which was reflected in the second and the third quarter deliveries, he said.
Cessna held those prices into the third quarter, Donnelly said.
Without the deep discounting, “we’re just seeing what’s the normal market out there as opposed to dragging people into it that aren’t ready to do upgrades or trade-in activity,” he said. “That’s reflecting in lower volumes, which I think in the long term is healthy for the market. We’ve got to let this cycle play through.”
In the meantime, the number of used aircraft available for sale continues to decline, although not as quickly as the company would like, Donnelly said.
Donnelly declined to comment on reports that Textron was interested in exploring a bid for Beechcraft Corp.
In a conference call in July 2012, Donnelly said some of Beechcraft’s assets would be a good fit for the company.
Asked by an analyst about the current interest, Donnelly said that he knows there are a lot of rumors going around.
Textron would have an interest in some of the assets, he said Friday.
“In terms of what’s going on with all the articles and the rumors, I guess at this point, I wouldn’t comment on any of that,” Donnelly told analysts.
Cessna ended the quarter with a backlog of $1.07 billion, up $61 million from the second quarter of the year.
For the first nine months of 2013, Cessna recorded revenue of $1.86 billion, down from $2.21 billion for the first nine months of 2012.
The company turned in a $81 million loss so far this year, compared to a profit of $59 million for the same time a year ago.
Textron, Cessna’s parent company, meanwhile, recorded third quarter revenue of $2.9 billion, down from $3.0 billion a year ago, and net income of $99 million, down from $151 million a year ago.
Textron said it is reducing its 2013 guidance for earnings per share from continuing operations to $1.75 to $1.85, down from $1.90 to $2.10.
“We are reducing our 2013 guidance to reflect lower margins at Bell due to manufacturing inefficiencies associated with the labor disruptions from negotiations with bargaining employees and implementation of a new enterprise resource planning system, and lower aircraft deliveries at Cessna,” Scott Donnelly, Textron chairman and CEO, said in a statement.