Deliveries of Cessna’s new Citation Longitude helped the company’s fourth-quarter 2019 deliveries jump up by 12.7%, compared with the same period last year.
Cessna delivered a total of 71 business jets during the quarter, versus 63 in the fourth quarter of 2018.
A total of 12 Citation Longitudes were delivered in the quarter, including the first delivery to NetJets, which has ordered up to 175 of the jets.
The Longitude deliveries made up for a fall in deliveries of other Citation models. If Cessna had not delivered any Longitudes during the quarter, then it would have seen a 7.9% decline in deliveries.
During its year-end investor relations call, Scott Donnelly, CEO of Cessna’s parent company Textron Aviation, said that demand for Cessna’s ‘legacy’ (older) aircraft was currently “flat to down”.
To combat that, Donnelly says that the company will lower its production of older models: “… our approach here is that we would lower our volumes, bring back some of our production capacity, and make sure that we don’t have to get into a situation where we’ve got a bunch of excess aircraft and start to drive pricing activity.”
Excess aircraft are commonly referred to in the industry as whitetails – aircraft that have been built but not sold. Although the temptation for a manufacturer would be to sell the aircraft for a lower price, that has a negative effect on the values of other new aircraft, as well as pre-owned aircraft.
“I think we have fought to get pricing back to a reasonable level, which represents the value of the product,” said Donnelly.” And I think we got that back over that 2017, 2018-time frame. So, we just want to make sure that we hold pricing and get the increases that are reflective of inflation going on.”
Speaking about the market for smaller Cessna business aircraft in 2020, Donnelly says that the market is currently experiencing a “pause”, which he says is largely due to lower capital expenditure spending. Although he sees some political uncertainty in the US, he predicts the market will settle down soon, adding that he doesn’t see much direct effect from the UK finally making its departure from the European Union on January 31.
“…. we’re in the middle of a very political cycle right now. So, I think as we work our way through the year and the politics and where things are going to land become more clearer, then I’d be optimistic that businesses would get back to a more aggressive move in terms of willingness to spend CapEx and invest in their businesses,” says Donnelly.