CEO: Textron Aviation will continue to grow but only if it invests in new airplanes

Look inside the Global 7000 business jet

Bombardier's newest and biggest business jet features a four-zone cabin with a living and bedroom. Video by Jerry Siebenmark/Oct. 9, 2017
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Bombardier's newest and biggest business jet features a four-zone cabin with a living and bedroom. Video by Jerry Siebenmark/Oct. 9, 2017

With a slate of new business aircraft and some promising prospects for its military airplanes, Textron Aviation chief executive Scott Ernest is feeling pretty good about the future of the company.

That may not have appeared to be the message that people heard from Wichita’s largest airplane maker here at the National Business Aviation Association Convention in Las Vegas, which wraps up on Thursday.

Textron Aviation – whose Beechcraft and Cessna brands account for a significant portion of the world’s fleet of general aviation aircraft – had no blockbuster announcements about orders or new planes.

Instead, the 12,000-employee manufacturer of jets, turboprops and piston-engine planes gave progress updates on its three aircraft development programs: the $23.8 million Citation Longitude super-midsize jet, the $4.8 million single-engine turboprop Denali and the $35 million large cabin Citation Hemisphere jet.

None of the major business aircraft manufacturers had significant orders or new airplane announcements at NBAA this year. That left some feeling like it was a hum-drum show.

But that’s not how Ernest said he feels about his company and its opportunities.

“I feel like we’re seeing more energy around talking about planes,” he said. “I think that people are still a little cautious with, obviously, making the kind of purchases that are required with respect to the prices of these products.”

“But I do think that having new products is always good because you can continually have that discussion around new products, new introductions,” Ernest said. “We feel overall the market to be responding, one, to our products and two, I think that we’re cautiously optimistic that it will continue to go on in a positive direction for us.”

Latitude a winner

One positive development for Textron Aviation is the success of the Citation Latitude midsize business jet. That jet, the first new airplane under Ernest, who joined the company in 2011, marked its 100th delivery at NBAA’s opening day on Tuesday. The delivery comes just two years and two days after the $16.4 million jet entered service.

“Two-and-a-half years ago this business didn’t exist in … Textron and now, it’s a billion dollar business,” Ernest said. “In 2½ years the team has been able to build this product, that size of business.”

The Latitude now ranks as Textron’s top-selling business jet.

Textron Aviation is not sitting back, waiting for the business jet market to fully recover from a protracted downturn that began in 2009. The recovery has been hampered by a surplus of used business jets for sale that finally looks to be falling to a pre-recession level. Asking prices for those used business jets, however, have yet to return to pre-recession levels, putting manufacturers in the difficult position of deciding whether to lower prices on their new business jets in order to make a sale.

“We’re investing several hundred million dollars a year back into new products and that does afford you the opportunity to kind of look at the market a little differently with respect to where you think the next product line needs to be … one that might be an available market that people haven’t invested in a while,” he said. “So you … pop something new in there.”

“I think we have a big advantage, we have a strong service network and just a really good brand with respect to how our customers feel about us.”

Those investments are in the Longitude, Federal Aviation Administration certification of which is expected by the end of this year; the Denali, which is scheduled to make its first flight in 2018; and the Hemisphere, set to make its first flight in 2019.

“We’re excited about where we’re at as a company,” he said. “I think we’ve stayed true to the fundamentals of continuing to invest even though it’s been some pretty difficult times in the industry.”

Growing defense

The investments Ernest speaks of don’t stop with its Cessna aircraft.

They include the Scorpion tactical jet, which Textron Aviation set to the Light Attack Experiment, an evaluation of affordable, light-attack aircraft produced by companies such as Textron Aviation, Sierra Nevada Corp. and Air Tractor to augment the Air Force’s fleet of close-air-support aircraft. It was held in August at Holloman Air Force Base in New Mexico.

Both the Scorpion and the Beechcraft AT-6, an attack version of the T-6 turboprop military trainer, “performed exceptionally well,” Ernest said. “They met or exceeded all the expectations of what the Air Force was looking for.”

Textron Aviation Defense, the military division of Textron Aviation, is working with the Air Force on a request for proposal for the purchase of two AT-6s to be used and evaluated in combat, possibly in Afghanistan, Ernest said.

As for the Scorpion, Ernest said, “stay tuned.”

The company “got just tremendous feedback on different potential applications that they’re looking at for Scorpion” at the Air Force Association’s annual Air, Space & Cyber Conference, Ernest said.

Ernest’s optimism for Textron Aviation’s future is driven in large part by the company’s continued development programs, both for airplanes like the Longitude and military aircraft such as the AT-6 and Scorpion.

But given the state of the business aircraft market, he doesn’t expect the airplane maker to see anytime soon the kinds of order-taking and delivery records that the industry saw in 2006 and 2007.

For now, he’s not concerned about record-setting growth at Textron Aviation.

“We’re going to continue to invest,” he said. “I think that’s the message that I want to portray to the market. Yeah, we’ll probably incrementally grow but that’s OK.”

“I think as long as we’re comfortable to see some growth in our business and the new products, we’re going to continue to invest. That’s just the right methodology I think this team has, and we’re positioned to invest in a way that we can deliver product probably quicker to market than most of our competitors.”

Jerry Siebenmark: 316-268-6576, @jsiebenmark

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