Textron to manufacture fewer Cessna Citation jets in 2017
Jan 31, 2017
Textron Aviation has announced plans to manufacture fewer units of the Cessna Citation aircraft in 2017 due to pricing challenge in its target markets. According to Alud Davies’ news article published at the Corporate Jet Investor website on 26 January 2017, the company “says it will adjust production rates of some of its Cessna business jets as it faces pricing pressure from prospective customers.”
The company made this decision after potential clients offered to purchase the business jet at prices that are considered to be too low for such as advanced aircraft. Davies quotes Scott Donnelly, the chairman, president and CEO of Textron Inc, as saying: “While we will still have continued growth on the Latitude side based on its demand, we are pulling back on the production volumes and unit volumes for 2017 for a lot of these other aircraft because again, we are not willing to go to the price levels where people seem to want to go.”
However, Textron Aviation’s management is quick to signal that this decision is not permanent. The company is willing to make incremental adjustments in future relative to growth demand for the Citation. Davies further quotes Donnelly as adding: “If the market changes and we see demand coming back, then obviously, we can react to that. And we’re certainly hopeful that will be the case, but it needs to be at a price level that makes sense for us to sell the aircraft.”
Clearly, Textron Aviation’s management is leaving its options open while betting that market factors and pricing dynamics will eventually swing in its favour. However, the pricing setback is a signal of intensifying market competition from other manufacturers of business jets.
On the positive front, Textron Aviation reported growth in its annual deliveries of the Citation aircraft in 2016. “During the year, Cessna delivered 178 Citation business jets, up 7.2% on the 166 aircraft delivered in 2016,” according to Davies.