Textron Aviation hit by strike impact as Q4 2024 revenues slump
Textron Aviation service centre
Textron Aviation reported a significant decline in fourth-quarter 2024 performance, with revenues dropping to $1.3bn, down $242m from the same period last year, primarily due to labour disruption at its Wichita facilities.
CEO Scott C. Donnelly acknowledged the challenges of 2024.
“2024 was a challenging year with a strike at Aviation and difficult end markets in our industrial segment. Our 2025 outlook of higher revenue and margin reflects a stabilised production line with improved productivity at Textron Aviation, growth across our aerospace and defense businesses driven by new product development, and an improved cost structure at our Industrial segment,” said Scott C. Donnelly, chairman and CEO Textron in comments accompanying the results.
The aviation segment’s challenges stemmed from a strike by the International Association of Machinists and Aerospace Workers following the expiration of their labour agreement. This disruption severely impacted both aircraft production and services, resulting in the segment’s profits in Q4 halving to $100m from $193m in Q4 2023.
Delivery numbers reflected the operational challenges, with jet deliveries falling to 32 units, a sharp decrease from 50 in the same quarter last year and nine lower on a sequential basis from the third quarter of 2024. Delivery breakdown showed the company delivered 32 business jets, incl five Longitudes.
In addition, the company delivered eight Latitudes, down five from 13 last year. Deliveries of King Airs declined sharply to four compared to 15 last year with remainder being SkyCouriers.
Analyst estimate the strike pushed the cumulative deliveries in the quarter down by 15. On a cumulative basis, 2024 deliveries ended at 151 with 2025 outlook of 190 jets.
Commercial turboprop deliveries also declined, dropping to 38 from 42 units. On a sequential basis, the company delivered 13 more units compared to 3Q 2024. The reduced volume, combined with manufacturing inefficiencies, idle facilities costs, and higher strike-related expenses, contributed to margin compression, with the aviation segment’s margin declining to 7.8%.
Despite these headwinds, the aviation segment showed some resilience in its order book. The backlog grew by $219m to reach $7.8bn by quarter’s end, with a book-to-bill ratio of 1.2x.
However, analysts note this ratio was inflated by the lower delivery numbers rather than exceptional order strength.
Textron’s broader financial performance was also affected, with overall company revenues reaching $3.6bn, representing a 7% year-over-year decline. However, the company maintained strong cash generation, reporting net cash flow of $1bn from the manufacturing group.
Shareholder returns remained robust, with $232m allocated to share repurchases in the quarter, bringing full-year repurchases to $1bn.
Looking ahead to 2025, Textron’s management presents an optimistic outlook despite facing market uncertainties. The company projects total revenues to reach $14.7bn, up from $13.7bn in 2024. Of this, revenue from aviation segment is expected at $6.1bn (15% year-over-year) with margins ranging from 12-13%.
This guidance reflects expectations of a stabilised production line and improved productivity at Textron Aviation, alongside growth across aerospace and defense businesses driven by new product development.
According to Robert Stallard of Vertical Research Partners, Textron’s fourth-quarter results contain significant “noise” due to the strike, industrial charge, and abnormal tax rate. The focus now shifts to the 2025 guidance and questions about potential contingencies built into the forecast, given uncertainties in various end markets.
