Cessna looks for sales to improve in '11

Cessna Aircraft officials expect sales to improve this year as they plan to deliver slightly more business jets in 2011 than last year.

The first nine months of 2010 were disappointing as the market failed to improve as expected.

But Cessna turned in a strong fourth quarter, buoyed by the passage of bonus depreciation and improvement of general business confidence, Scott Donnelly, chairman and CEO of Cessna parent Textron, said in a conference call Wednesday after the company reported fourth-quarter and year-end financial results.

Business jet deliveries for the year were down, from 289 in 2009 to 179.

But fourth-quarter deliveries were higher, 79 compared with 68 a year ago.

The mood of the sales force is positive, Donnelly said.

"They feel like they have some momentum coming out of a strong fourth quarter," Donnelly said.

Cessna won't be able to rely on its backlog to meet its expectations to deliver slightly more planes in 2011, Donnelly said.

That's a change from the years before the downturn when large buildups of order backlogs were the norm.

"It's going to be more of a flow business," he said.

Cessna's backlog at the end of the fourth quarter was $2.9 billion, down $495 million at the end of the third quarter.

The company reduced its inventory of white tails — aircraft built without buyers, during the year.

Cessna also has a high level of research and development activity to prepare for an eventual upturn.

The company has a number of projects in the works for aircraft upgrades along with a couple of brand-new aircraft programs, Donnelly said.

Those programs will ramp up into 2013 as construction of prototypes and flight testing begins, he said.

But when the company decides to introduce the products will depend on how many orders would be generated by the announcements.

"When we choose to make the commercial announcement in the marketplace will be based on our view of the receptiveness of the market rather than the state of the program," Donnelly said.

Cessna is focusing its strategy on the light and midsize market to compete with Brazil-based Embraer, which has introduced aircraft to compete with Cessna's products, he said.

Cessna recorded revenue of $960 million in the fourth quarter, an increase of $105 million, due to the higher jet deliveries.

Profit decreased $5 million in the quarter because of manufacturing inefficiencies related to low production levels, lower income from deposits forfeited from cancellations, and higher used-aircraft write-downs, the company said.

Cessna recorded a $29 million loss for 2010, compared with a $198 million profit for 2009. Revenue totaled $2.56 billion last year, down from $3.3 billion in 2009.

Textron, meanwhile, recorded $3.1 billion in revenue in the fourth quarter, up from $2.8 billion a year ago. Net income was $60 million, compared with a loss of $63 million a year ago.

Revenue for 2010 was $10.53 billion, compared with $10.5 billion in 2009. Net income was $86 million for the year, compared with a loss of $31 million the year before.

Shares of Textron ended Wednesday down slightly, losing 40 cents to close at $26.67. In the past year it has traded between $15.88 and $27.20.