Supply-chain issues weighed on Textron Aviation’s deliveries of Cessna Citation business jets and Beechcraft King Air turboprops in the third quarter, leading to lower revenue in the three-month period. According to parent company Textron’s third-quarter earnings report released today, Textron Aviation delivered 39 jets and 33 turboprops in the quarter, down from 49 jets and 35 turboprops in the same period a year ago.
Revenues of $1.2 billion in the quarter are also $14 million below third-quarter 2021, with this erosion partially offset by an 18 percent year-over-year increase in aftermarket volume. Quarterly profit, however, swung higher at $139 million, up $41 million from a year ago.
Backlog as of September 30 was $6.4 billion thanks to a book-to-bill ratio of 1.5:1. This is nearly double the $3.5 billion backlog from a year earlier.
“We delivered strong performance even as we continued to experience supply-chain disruptions throughout the year that have impacted production schedules,” Textron CEO Scott Donnelly said on an earnings call with analysts this morning. He added that demand for aircraft continues to be robust with “a lot of order activity,” including from individuals new to business aviation, fractional companies, and corporate flight departments that are refreshing their fleets.
He admitted that the supply-chain challenges have affected the number of aircraft it was able to hand over to customers during the quarter. “As you know we’ve been sort of ramping up our production volumes through the course of the year,” Donnelly explained. “We continue to do that but…for sure we’re continuing to see some difficulties around just getting parts. Labor ramp is picking up and doing reasonably well, but we’ve had some critical parts impacts.”
When asked what parts or components are constrained, Donnelly identified engines as one. “Engines are strained and as everybody knows there’s one particular model that’s important to us that had an issue that stems back to this Russian-Ukrainian [conflict] but I think that’s in recovery mode,” he said. “I think the frustrating part for our folks is that it’s kind of everywhere. That’s the problem in this business. Every part is important.”
Donnelly emphasized that, despite the supply-chain issues, the airframer is continuing to increase its production through higher labor hours and activity in the factory, yet “we’re clearly not going to be able to get to the number of jets that we were originally hoping to. But we’re going to keep that ramping activity going through 2023.”
In a lighter moment during the earnings call, analyst George Shapiro noted the supply chain seemed to be affecting Textron Aviation more than other higher-end business jet OEMs such as Gulfstream and asked if there were any differentiation as to why. “I haven’t, George,” Donnelly said. “I have a list of all the parts we’re missing right now. I could call [Gulfstream president] Mark [Burns] I guess and see if he has some extra ones.”
“I think we’ll have a strong fourth quarter…I don’t know how to explain the difference between the commentary with some of the high-end stuff versus where we are but it’s something we’re going to manage our way through. It’ll be fine.”