Story ID: 041March17
Textron Cuts Legacy Production Rates
By: Kerry Lynch
Caption: Latitude production will be up 30 percent, offsetting drop off in legacy models.
Word Count: 429
Textron Aviation expects to boost Citation Latitude output by nearly 30 percent this year, but at the same time is planning to cut production rates by almost as much throughout the rest of the Citation line, company executives told analysts during the company's fourth-quarter earnings call last month. Textron expects revenue for Textron Aviation this year will remain flat at roughly $5 billion.

The forecast comes on the heels of a fourth quarter in which deliveries of both business jets and turboprops slid for the Wichita-based manufacturer, causing revenue to dip by $52 million and profit to slip by $3 million. Textron Aviation delivered 58 Citations and 28 King Airs in the fourth quarter of last year, down from the 60 jets and 33 King Airs it shipped in the fourth quarter of 2015. As a result, revenue dropped to $1.436 billion and profit to $135 million in the fourth quarter of the year. For all of last year, revenue was up by $99 million to $4.921 billion, but profit was down by $11 million to $389 million. Backlog also inched downward in the quarter by $73 million, to $1 billion.

Scott Donnelly, chairman, CEO and president of Textron Aviation parent Textron, attributed the decision to adjust production of legacy Citations to pricing pressures that escalated in the fourth quarter. Donnelly did not break down cuts for the individual models but said the total would be about the same as the gains in Latitude production.

Noting that demand is “not there” for aircraft at higher prices, Donnelly said, “it just reached pricing where it doesn’t make sense for us to build the aircraft.” Latitude sales have remained strong, he added, and he expects the greater production there to be split evenly between NetJets and other customers.

However, Latitude pricing also has been “very difficult,” Donnelly said. “It has been improving but…we’re clearly not happy with it.”

Textron Aviation saw turboprop sales diminish as the Joint Primary Aircraft Training System (Jpats) program winds down. The company's Beechcraft sector supplied the T-6 Texan II turboprop single for the program.

While the market remains soft, Textron continues to invest in new programsand plans to bring the Longitude to market by year-end. It expects to certify the aircraft, which would be its largest yet, by the end of the year and deliver the first few to customers, Donnelly said. Production ramp-up will follow.

Textron Aviation continues to develop the Hemisphere under a strategy to move into the large-cabin sector as market preferences have shifted in that direction.

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