Textron Aviation continued its strong contribution to its parent company’s financial performance during the second quarter despite “unfavorable” labor conditions and supply-chain disruptions, Textron Inc. CEO Scott Donnelly reported during a quarterly earnings call this morning.
Donnelly attributed Textron Aviation’s $78 million revenue improvement over the same period last year, to $1.4 billion, to strong demand and beneficial pricing conditions, even while deliveries proved “light” due to production inefficiencies due to continuing supply-chain issues. He noted that the company won’t meet its guidance for 200 deliveries this year, as some will move into 2024 because of supply-chain problems.
Textron Aviation’s production constraints led to a decrease in Citation business jet deliveries from 48 in second-quarter 2022 to 44 this year, while the company saw a modest increase in turboprop deliveries—from 35 to 37. During the period, the backlog grew by $315 million, thanks partly to the sale of 11 special-mission King Air 360s and the lighter-than-expected delivery performance.
Although revenues increased by $270 million over last year’s second quarter, to $3.4 billion, Donnelly again characterized the measure as relatively light.
“The guys are working through challenges that we certainly hope will abate,” he remarked. “Obviously, there’s inflation that’s baked into the numbers at this stage of the game.”
Some long-term supply contracts have added to inflation pressures, according to Textron CFO Frank Conner, who explained that Textron “did a nice job” of responding to the conditions. “But there is some lag effect associated with our contracts and just the flowing in of inflation. But we feel very good about where we are…but there is a lagging impact on some of those costs.”
Donnelly said he felt good about airplane demand in general. “I think [during] the Covid years, a lot of people got exposed to this market that had not in the past,” he noted. “And [private aircraft are] turning out to be a great tool. And so I think that's what continues to fuel a lot of the demand in this marketplace.”
Asked about the prospect of introducing a large-cabin business jet, Donnelly expressed satisfaction with the breadth of the current product lineup. “I think that part of the market now, particularly as you go larger in that market, which is kind of the choice we were faced with, is a very well-served market,” he said. “So I think we're better off focusing all of our R&D and our energy and our investments up to that sort of super-midsize [segment] and the Longitude.”