Cessna's profit drops 87 percent in third quarter

Cessna's third-quarter profit was down 87 percent and revenue dropped 42 percent from the same period in 2008, its parent company reported today.

Textron reported that Cessna had a profit of $32 million in the quarter, a drop from $238 million a year ago. It recorded $825 million in revenue, down from $1.4 billion.

Cessna delivered 68 Citation jets in the third quarter compared with 124 last year. Its backlog at the end of the quarter was $6.9 billion, a decline of $1.3 billion from the second quarter.

Cessna is on track to deliver its target of 275 jets this year and might beat the number modestly, said Scott Donnelly, Textron's president and CEO-elect.

Delivering 275 jets this year will leave the company with 30 "white tails," planes that are built but not sold, he said.

Textron officials declined to say saying how many jets Cessna expects to deliver in 2010, although it will be lower than 2009 deliveries.

"We need a couple more months" to see how 2009 will wind up and get a more credible view of next year before making those predictions, Donnelly said.

But there are signs of improvement, he said. The market has been strengthening in the last few months.

And there are signs the used aircraft market is getting better. Used aircraft pricing is stabilizing and beginning to increase, Donnelly said.

"That's a good sign," he said.

When asked how the company will prepare for the next upturn, Donnelly said the fundamentals remain in place.

While Cessna cut half of its work force in the past year to scale down to meet lower demand, the capital equipment, such as metal bonding, paint shops and assembly capacity is still there, he said.

"The physical capacity is in place," Donnelly said.

Still, "we think we're a long way until we ever get to the point we're testing what we have in place," he said.

Textron, which also makes Bell helicopters and EZ-Go golf carts, said its profit fell 98 percent to $4 million, or 1 cent per share, for the period ended Oct. 3. That's down sharply from $206 million, or 83 cents per share, a year ago.

Textron's third-quarter revenue was down 27 percent, dropping to $2.5 billion from $3.5 billion.

Donnelly said demand for its products "continues to show signs of stabilization," but that recovery "likely will be slow and modest."

Textron shares were trading higher this morning, up $1.49 to $19.85, an increase of 8.1 percent. It has traded between $3.57 and $20.99 in the past year.

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