King Air Sales Remain Strong

Notwithstanding an “unfavorable” labor market and chronic supply-chain disruptions, Textron Aviation—the Wichita, Kansas-based general aviation business unit of American industrial conglomerate Textron Incorporated has furthered its meaningful contribution to the Textron marque’s strong financial performance by dint of a favorable Q2 2023 earnings report.

Even in the face of light deliveries resultant of the aforementioned labor and supply-chain woes, Textron Inc. CEO Scott Donnelly ascribed Textron Aviation’s $1.4-billion Q2 earnings—a $78-million improvement on the company’s Q2 2022 haul—to strong demand for business aircraft and a prevailing seller’s market.

The production constraints with which Textron Aviation has been saddled of late led to a decrease in Citation business jet deliveries from 48 units in 2022’s second-quarter to 44 units in Q2 2023. The plane-maker saw a modest increase in turboprop deliveries over the same time period, however—from 35 to 37. During the interval spanning Q2 2022 and Q2 2023, Textron Aviation’s backlog grew by $315-million, thanks in part to the sale of 11 special-mission King Air 360s.

Though year-over-year revenues increased to $3.2-billion—$270-million more than 2022’s second-quarter earnings, Donnelly persisted in characterizing earnings as relatively light, stating: “The guys are working through challenges that we certainly hope will abate. Obviously, there’s inflation that’s baked into the numbers at this stage of the game.”

Textron Inc. CFO Frank Conner set forth a number of long-term supply contracts exacerbated inflation pressures, but conceded the company’s aviation division “did a nice job” of responding to such. Conner remarked: “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.”

Mr. Donnelly spoke favorably of airplane demand in general, opining: “I think [during] the COVID years, a lot of people got exposed to this market that had not in the past. 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.”

Queried vis-à-vis the addition of a large-cabin business jet to Textron Aviation’s aircraft offerings, Donnelly intimated satisfaction with the company’s extant product lineup, confiding: “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. 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.”

FMI: www.txtav.com