Cessna's 29 April decision to shelve its new super-midsize Citation Columbus could be music to the ears of its competitors.
"The big winners are Dassault's Falcon 2000EX and Bombardier's Challenger 605, the nearest price point competitors to the Columbus," says Richard Aboulafia, analysis vice-president for the Teal Group.
The Wichita-based airframer say cutting the flagship $28 million business jet, a platform that was to launch the airframer into a higher and more lucrative sector of the market, is "critical" to sizing its business to the "realities" of the market.
The announcement came on the heels of a dismal first quarter earnings report by parent company, Textron, which revealed a 38% drop in Cessna revenues during the quarter due to "continued decline in global demand" for its aircraft.
"The least hopeful way to view the Columbus shelving is that it represents weak confidence in the business aircraft market's recovery prospect," Aboulafia says. "The more hopeful view is that the decision was made largely because Textron was desperate to save cash. But if that's the case, why didn't they simply defer it another six months?"
Companies with a more diversified portfolio, military work predominately, are showing less stress than Cessna. "Gulfstream is clearly the business jet player in the best position," says Aboulafia, noting that the General Dynamics subsidiary is "going full speed ahead" in developing its $60 million long-range G650.
"They've got the strongest access to US defence revenue and no finance arm to drag the company down," says Aboulafia. "By contrast, Textron has less defence revenue, and a large finance arm that nearly sank the company. Assuming the market recovers, Gulfstream is in a very strong position to grow its market share, either organically with the G650, or through acquisition."
Market indicators, led by action in the resale sector, are not showing much promise for a near-term recovery. First quarter results from the National Aircraft Resale Association confirm the extent to which the sector is ailing. The association reports that business jet resale retail transactions have dropped more than 25%, while the available inventory has increased more than 10% compared with the previous quarter, and the time it takes to sell a jet has nearly doubled, to an average of 29 months.
In the meantime, manufacturers with the wherewithal to continue development programmes without Cessna's competition could gain an advantage when sales return. For instance, Aboulafia notes that Cessna's action might encourage Dassault to launch its SMS, which he says has been delayed for similar reasons.
Although down, Cessna has not yet ruled out the Columbus. "We still feel this is a programme with great potential," Cessna president Jack Pelton says, "and one we will pursue when the market recovers."