"Matt Whiting" wrote in message
news
TaxSrv wrote:
"Matt Whiting" wrote:

...
My guess is that making light planes is a losing
proposition for Cessna. From a purely business standpoint,
they would probably me money ahead if they had never
re-entered the light plane market. This is sad, but I'm
guessing true.


It is possible they make money too, as the light singles can share
some of the infrastructure in place to make and market the
profitable lines. However, Cessna is a small part of a big company
(Textron), and their financial statements by segment suggest only
that building Citations is certainly worthwhile even in bad years.
At the unit volume of piston singles, they may make some, or lose
some, and it's possible the Board of Directors cares little one way
or the other if Cessna managers have a rationale for their biz
model. As an inconsequential part of a big picture, I think it
erroneous to compare Cessna decision-making on the singles to that
of competitors who I think are all standalone companies and
nonpublic.

Why? Most companies at least ostensibly exist to make a profit. Except
for the companies chartered specifically as not-for-profit, and even some
of them profit their managers quite nicely. :-)

Matt

Here are a few reasons Cessna might want to keep its piston single business:

1) Product support. As a seller of high end products (i.e. Citations), you
want your customers and prospective customers to believe you'll support them
down the road. So, you continue making and selling replacement parts for
"legacy" aircraft.

2) Since you're keeping the people, equipment, and facilities to manufacture
replacement parts, you might as well assemble some of those parts into
airplanes. After all, the guy who's gonna buy a Citation 10 years from now
needs a nice new airplane so he can get flight training.

3) Brand loyalty. The guy who learns to fly in a Cessna has a good chance of
moving up in the Cessna family of products. Hopefully to a Caravan or
Citation. So, sell him a new 182 as his first airplane, and sell him
something turbine driven after he makes it big with oil futures.

4) Maybe (maybe not) the piston single market will become *the hot thing*
one day. It's easier to capitalize on that opportunity if you're already in
the piston single business.