Cessna Aircraft, a subsidiary of Textron Aviation (NYSE:TXT), is a leading manufacturer of business jets, turboprops, and single-engine planes. The company's private jet deliveries took a beating after the financial crisis when the business jet market ran out of steam. In 2010, Cessna's shipments were down nearly 62% from 2008 levels, and continued to remain weak thereafter.
Although deliveries for the business jet industry in 2013 rose for the first time since 2008, Cessna has yet to witness an uptick in sales, as it largely focuses on light jets, which remain out of favor. To boost sales, the company has shuffled its portfolio by introducing newer models, especially in the midsize category. Here's the lowdown on the jets that will decide the future of this company.
Early indicators such as higher corporate profits and a recovering U.S. economy suggest the $21 billion business jet market could be looking at better times. Though Cessna light jets largely have not done well, even in the first half of 2014, there is one exception: The Citation M2, which entered service in December 2013, put up a good show with 19 shipments in that six-month period.
Cessna Senior Vice President of Sales Brad Thress said repeat customers account for about 70% of orders with the company. Customers that purchase the five- or seven-seat Citation Mustang or M2 mostly move on to Cessna's bigger jets. Banking on this trend, and aiming to capitalize on the demand for bigger jets, the company is upping the ante in the midsize category with four new planes: Citation Sovereign+ entered service in 2013 and Citation X+ this year, while the Latitude is scheduled to enter service in 2015 and Longitude in 2017.
Cowen Group aviation analyst Cai von Rumohr forecasts that demand for Cessna jets could rise more than 10% to reach 182 units by 2015 (excluding deliveries of the Mustang and Latitude). Considering the newbies are all in the midsize category, Cessna might be looking at a new period of growth.
The upgraded Sovereign, hailed as Sovereign+, sports new Pratt & Whitney engines with a maximum range of 3,188 nautical miles, or nm, touting a top speed of 529 miles per hour and a thrust of 5,907 pounds. The jet might not be the fastest in its class, but it's definitely one of the best with speed when fully loaded. It can carry up to 12 passengers to a maximum altitude of 45,000. Chris Hearne, Cessna vice president for jets, said Sovereign+ is a fantastic fit for Europe where customers are already lined up for the deliveries.
The first delivery of the Cessna Citation X+ went to Gerry Buchheit of New York almost immediately after certification. Cessna launched the midsized jet, an upgraded version of the Citation X, in 2010 at the National Business Aviation Association convention in Atlanta. It can seat 12 passengers and fly up to an altitude of 51,000 feet, with a top speed of Mach 0.935, overtaking the Gulfstream G650's speed of Mach 0.925. With this, the jet reclaims the title of the world's fastest business plane from its Georgia-based rival. The jet has a range of 3,408 nm.
Cessna has given it quite a makeover -- the winglets are from Winglet Technology, and glass cockpit from Garmin International. The jet sports the improved Rolls-Royce Allison engine that adds to the runway performance and higher payload.
Cessna launched the Latitude in 2011 at the NBAA convention. NetJets became the launch customer of the Pratt & Whitney PW306D engine-powered jet in 2012 after announcing orders for 150 Latitudes. The Latitude will be Cessna's most spacious offering in the mid-sized category. The plane is derived from the Citation Sovereign's design, with key alterations being a larger cabin and shorter fuselage.
Priced at about $15 million, the Latitude is scheduled to enter service in mid-2015. The jet has a passenger capacity of nine and a range of 2,500 nm. It will compete with Embraer's Legacy 450, which is priced at $15.25 million, holds eight passengers, and has a flying range of 2,300 nm. The Latitude beats the Legacy on all fronts: price, passenger capacity, and flying range. However it should be noted that the Legacy 450 flaunts the sophisticated fly-by-wire technology, which is otherwise available in costly large cabin jets.
The Longitude is Cessna's clean-sheet long-range private jet, offering flying range of 4,000 nm and a maximum altitude of 45,000 feet. The aircraft maker unveiled this super midsized jet in 2012 at the European business aviation show EBACE.
The Longitude will compete with the Embraer Legacy 650, the Dassault Falcon 2000LX, and the Bombardier Challenger 605. Competitively priced at less than $26 million and powered by a highly regarded engine made by Snecma, the Longitude can cruise along at a speed of Mach 0.86 and carry eight passengers in its 31-feet long cabin with adjustable seats.
Cessna knows that if it doesn't develop newer jets, growth might stagnate as competitors introduce fresh offerings. To keep itself competitive and go back to pre-recession sales volumes, the Sovereign+, Citation X+, Latitude, and Longitude are Cessna's game plan.
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