As jet deliveries rise, Textron eyes new products for NBAA

Textron Aviation delivered its first four Citation Latitude business jets in a profitable third quarter of 2015, and the company expects to see its new Citation Longitude jet enter service in late 2017.

The Wichita-based company also will reveal more details about its plans for newer airplanes at next month’s National Business Aviation Association Convention & Exhibition in Las Vegas.

That’s according to Textron Inc. CEO Scott Donnelly in a conference call Tuesday with analysts to discuss quarterly results for the Rhode Island-based parent of Textron Aviation.

“We expect NBAA to be a positive catalyst for Textron Aviation as we look to 2016 and beyond,” Donnelly said on the call.

Cessna Citation jet deliveries and profits at Textron Aviation were higher in the third quarter of 2015. The general aviation airplane maker delivered 37 Citation business jets, compared with 33 in the same quarter a year ago. Profits also moved higher, to $107 million, compared with $62 million in the third quarter in 2014.

The company also delivered one fewer Beechcraft King Air turboprop planes – 29 – compared with 30 in third-quarter 2014.

The backlog at Textron Aviation was $1.4 billion, which was flat compared with the year-ago quarter.

Textron Inc. reported 7.3 percent lower revenue in the third quarter of 2015 – $3.2 billion compared with $3.4 billion in the year-ago quarter – which officials said was primarily due to lower V-22 military tiltrotor aircraft deliveries and reduced revenue at subsidiary Bell Helicopter.

Donnelly told analysts that deliveries of the $16.3 million midsize Latitude would “ramp up” in the fourth quarter of 2015 and into 2016. The airplane received its Federal Aviation Administration production certificate in June, allowing deliveries to begin.

While Latitude deliveries will begin to increase, profit margins will be thinner on those that are to be delivered to fractional aircraft operator NetJets, which in fall 2012 placed a firm order for 25 Latitudes with an option for 125 more. Donnelly said the Latitudes slated for NetJets won’t be sold at a “retail” price.

“We’ll have some lower margin deals in there, but I think it’s something we’ll be able to manage,” he said.

He said the Longitude will be Cessna’s next “new generation of larger-cabin Citations” and will make its public debut at the NBAA, set for Nov. 17-19.

“We believe the Longitude will be a significant game changer in the business jet world,” he said.

Donnelly also told analysts the company may have more information about its new single-engine turboprop and “other product developments to share” at the NBAA.

Wells Fargo analyst Sam Pearlstein – who last week speculated that sales of Textron Aviation piston and turboprop aircraft could be headed lower based on comments from avionics makers Rockwell Collins and Garmin – asked Donnelly about the sales performance of Textron Aviation’s “nonjet” aircraft.

Donnelly acknowledged being “a few aircraft lighter in each of the previous quarters” among the King Airs. But, he said, “The King Air, I think, is continuing to do fine.”

“Caravan deliveries will be, in my view … kind of flat on a year-over-year basis,” Donnelly added. “And frankly, I think we’ll be up, and we’re already up, in our piston product line.”

He said that overall the North American market has been “reasonably strong” for Textron Aviation, while the international market – particularly Europe and Asia – has been “probably tougher than we expected.” The international market has also been complicated by a stronger U.S. dollar, which Donnelly acknowledged has “put some pressure” on the company.

Still, Textron Aviation doesn’t expect a challenging international market being a drag on the company nor affecting its production activity next year.

“I would not expect to see a decline across any of our product lines,” he said on the call.

This story was originally published October 27, 2015 at 7:09 AM with the headline "As jet deliveries rise, Textron eyes new products for NBAA."