Cessna's Whyte Predicts No Major Market Upturn Before
2005
The world economy is starting to show signs of recovery, but business
aircraft sales won't rebound until 2005, according to Roger Whyte,
Cessna's svp sales and marketing. "The business aircraft
market is a growth business, but it still has plenty of upswings
and down swings," Whyte said. "We're seeing early signs
in the market and the economy that things are improving, a start
of a surge in new demand and new job creation," Whyte explained.
But, the demand for business aircraft historically has lagged
the economy by eight quarters.
This means that demand will remain flat in 2003 and 2004, after
which Whyte predicts a "steady climb upwards". He said
that Cessna has six aircraft in current production, all of which
are less than ten years old. "This is the newest line of
any business aircraft manufacturer," he claimed. Citation
Sovereign and CJ3 customer deliveries are scheduled to begin in
2004, boosting the current number of models to eight.
Whyte claims that Cessna's wide range of models and young designs
will help the firm come out of the current economic slump with
more momentum than in previous years.
Some improvement already is occurring, Whyte said. Cessna has
28 % more orders this year than in 2002, but he declined to cite
hard numbers for competitive reasons. Bonus depreciation rules
in effect until the end of 2004 are helping to spur purchases
of new business aircraft that otherwise might be deferred until
2005. Cessna plans to deliver between 180 to 195 Citations this
year, along with 60 Caravans and 600 single-engine piston aircraft.
Cessna's Mustang, priced at $2.6-million, will bring down to cost
of owning a new turbofan business aircraft, making it more affordable
for a large number of business travelers. When asked if he thought
that less expensive twin turbine competitors were a threat to
Mustang sales, Whyte responded, "We watch the competition
closely. We believe we have an aircraft that has cabin size and
performance parameters (people want) at the right price."
As for Cessna's cost structure being too high to be competitive,
Whyte said that Cessna already has factory tooling and manufacturing
facilities in place and that it has a comprehensive product support
infrastructure. He also said that any company has to recover its
non-recurring engineering costs, as well as paying for parts and
labor needed to make each aircraft. "How the other folks
are doing that, we don't know," Whyte said.
