Avionics issues snag three Cessna jet programmes

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Textron has lowered its revenue outlook for subsidiary Cessna to account for new delays on several business jet development programmes that will reduce expected deliveries this year.

Textron chief executive Scott Donnelly blamed the delays on struggles by Garmin to certificate a common flight deck that is shared between the new M2, Longitude and X business jets.

"The guys are very bullish that we think it has the things that it needs to have in it for the final [certification], and so it's a matter of just taking those now and getting them into the actual aircraft," says Donnelly, speaking to analysts on a third quarter earnings teleconference call on 17 July.

The delays will push back entry into service for the M2 an the new Sovereign from the third quarter to the fourth quarter. The effort to complete certification on those two aircraft means that the delay on the Citation X will be longer, stretching from the third quarter to the first quarter of 2014, Donnelly says.

"In the grand scheme of things, I don't like having a certification date slip out, but this is a relatively mild, modest slip," Donnelly says.

Cessna continues to develop the Latitude and Longitude jets for service entry in 2015 and 2017, and is "making good progress", Donnelly says.

In the second quarter, Textron announced that Cessna would slow production of light jets, such as the M2, CJ2, CJ3 and CJ4, as potential customers were demanding steeper discounts than the corporate parent was willing to allow to complete deals. Market demand for such aircraft has not changed since that announcement in May.

"There's obviously some activity, but it's still pretty soft," Donnelly says.

In Textron's view, the light jet market remains depressed because the target customer are owners of small and mid-size businesses, and that community has not regained confidence levels from before the 2008 financial crisis. As a result, instead of buying replacement aircraft in roughly seven-year cycles, they're holding back longer and accepting a penalty on the used aircraft's residual value.

"Eventually they will come, but I think a lot of it just has to do with where the residual values are," Donnelly says. "I think the biggest challenge is that we haven't really seen, for sure, have not seen a price recovery in terms of used aircraft values."