Cessna profits plunge......OT (or is it?)

"Dan Luke" wrote in message
...
| C J Campbell wrote:
| In every sector of aviation there appears to be bunch
| of losers that are barely able to tie their own shoes, and a
| couple of performers that seem to make money despite
| all the excuses the losers have.
|
| And why is this so? Because aviation businesses are almost all terribly
| difficult to be successful in:

Every field of business is terribly difficult. No excuse. If you can't stand
the heat, get out of the kitchen. What I said about aviation can be applied
to almost every other field of business. There may be exceptions, but I
can't think of any right now.

I have had just about enough of the idea that aviation is somehow different
than other businesses, that ordinary business principles don't apply to
aviation, that the only reason to get into aviation is that you love it,
etc. Well, here's a news flash: people succeed because they work hard, use
their imaginations, keep costs to a minimum, and charge enough for their
labor and capital to get a reasonable return. They try to sell a product
that people actually want. Loving your work makes all that a lot easier, but
it is not totally necessary. Nevertheless, I'll bet that Bill Gates loves
his job.

Now, there is no question that people want to fly. Look at what they put up
with in order to do it. The customer in this industry is generally treated
like crap. The whole message from the time he walks in the door is, "We
don't value our jobs very highly, and we think even less of you. At best,
you are an inconvenience. At worst, a dangerous criminal."

C J Campbell wrote:

"Nomen Nescio" ] wrote in message
...
| -----BEGIN PGP SIGNED MESSAGE-----
|
| BOSTON, Jan 29 (Reuters) - Textron Inc. TXT.N on Thursday
| said quarterly net income fell sharply as profit at its key
| Cessna aircraft division was cut more than 50 percent on slack
| demand for business jets.
|
| Revenue at Cessna plunged to $620 million from $896 million
| in the year-ago quarter. Profit fell to $43 million from $94
| million on lower sales of Citation business jets.
|
| Backlog for unfilled customer orders at Cessna was $4.4
| billion, or flat with the third quarter, Textron said.
|

Um, let's see. There is a backlog, meaning that they have more orders than
they can fill. So they cut production by 50%, tell their customers that no
planes will be available until 2006, then whine that their sales are down.

They said profit went down 50%, not production.

George Patterson
Love, n.: A form of temporary insanity afflicting the young. It is curable
either by marriage or by removal of the afflicted from the circumstances
under which he incurred the condition. It is sometimes fatal, but more
often to the physician than to the patient.

"C J Campbell" wrote:

I have had just about enough of the idea that aviation is somehow
different
than other businesses, that ordinary business principles don't apply
to
aviation, that the only reason to get into aviation is that you love
it,
etc.

But that's why Pattillo's book is so fascinating. Those are the
people who have formed the GA companies from day one, and when they
brought in talented nonflyer execs to try to turn things around, it
generally failed. Business principles do apply, namely a low
unit-demand, handmade product in a fickle market, where customer
demand can't be predicted until you've spent enormous money to show
them what it will be like is a big gamble. The fact that there's a
historical shortage of less romantic investors who may otherwise
determine that toilet plungers will be more profitable tells me there
have been many such people reaching an objective conclusion for a long
time now. To argue otherwise means GA is uniquely a profit
opportunity going unnoticed by nonflying investors and executives who
do know what they're doing.

Fred F.

"C J Campbell" wrote:
Every field of business is terribly difficult. No excuse. If you can't
stand
the heat, get out of the kitchen. What I said about aviation can be
applied
to almost every other field of business. There may be exceptions, but
I
can't think of any right now.

Then why is it that there is currently only one innovative, successful
American company building piston GA airplanes? Lancair may make it two,
but they're not there yet. How far is the market from the end of pent up
demand?

If it's no worse than any other businesses, building light aircraft must
be a deep secret from entrepreneurs. IMO only lovesick dreamers would
ignore other opportunities and invest the money necessary to turn
Cessna's piston business into a real winner. Such people may exist, but
putting them together with a talented, similarly driven CEO who could
pull it off would be little short of a miracle.
--
Dan
C172RG at BFM
(remove pants to reply by email)

"C J Campbell" wrote in message
...

"Michael" wrote in message
om...
| "C J Campbell" wrote
| Um, let's see. There is a backlog, meaning that they have more orders
than
| they can fill.
|
| Well, your first problem is that you clearly have no idea what a
| backlog is. Have you ever actually tried to run a business that
| manufactures anything at all, never mind limited-market high-ticket
| items? Do you know ANYTHING about manufacturing at all, or are you a
| bean counter? Since the answer seems to be the latter, let me explain
| the facts of life to you.
|
| Everything has a lead time.

Of course it does. Cessna has been underproducing for five years running,
now. Even those who are not bean counters should be able to expect that
some
of those parts should have been delivered by now.

Before you start telling me the facts of life, you would do well to do
them.
Have you ever had a position of responsibility higher than that of stock
boy
or janitor? I doubt it.

I notice, too, that he _assumed_ the cause of the backorder. Now there's a
good "fact of life" that Michael missed. He also missed several more, but
what's the use...

"Jay Honeck" wrote in message
news:gDASb.189493$xy6.974561@attbi_s02...
Revenue at Cessna plunged to $620 million from $896 million
in the year-ago quarter. Profit fell to $43 million from $94
million on lower sales of Citation business jets.

Gee, there's a surprise. I sure hope you didn't have a bunch of money
invested, cuz virtually anyone familiar with Cessna's product-line
predicted
a severe downturn.

After all, other than jets, all they have to offer is a bunch of 50
year-old
designs, albeit with new electronics in 'em. And with used jets virtually
a
dime a dozen now in "Executive Controller," who's going to buy a new one?

Cessna put all their eggs in one basket -- the jet market. When that fell
apart, they had little to fall back on. Meanwhile, Cirrus churns out
three
new airplanes a day, every day...

The market is efficient, but ruthless...

Whadaya wanna bet that when they go back to full production, a "large
portion" is done off-shore?

You mean they don't have positions like the other folks?

I don't understand why they would do this to someone.


"C J Campbell" wrote in message
...

"Mike Rapoport" wrote in message
nk.net...
| You have to size the company to the current market. What would you have
| them do? Run flat out until they have no backlog and then go out of
| business? Keep in mind that a lot of their backlog is for airplanes that
| they couldn't ship (new models). .I don't know about Textron's
management,
| perhaps they are terrible but I don't see anything here that
demonstrates
| that they are.

It may be that I am just mad at Cessna because they keep promising stuff
that they don't deliver. We have a customer who ordered a 182 with the
G1000
Nav III package back in November. Cessna promised him May delivery. Now
they
are saying that their entire production line has been sold out, but maybe
they can get him a plane in December. They do this time and again,
constantly. They toyed with the idea of doing a second production run this
year, but instead they laid off all the workers. Smart, real smart.

It seems to me that there must be a lot of risk in the small piston plane
market.

This means that a company without a high degree of ability to accept risk
will eventually fail a critical gut check. The question is - Can a public
company stand the risks it takes to be number one?

I believe Cessna simply will not do what it takes to win in this business
because it has become too risk averse. It may survive, but I don't see it
thriving. Strangely, its the same attitudes that kept them in business all
this time, that may now be their downfall. Until the recent entries of new
players, Cessna was king.

Cirrus has done well, and much of it is due to the passion of the founders.
I may be mistaken, but I believe that the investors are likewise passionate.
They are not presently trading the stock on an exchange, are they? If not,
then the company is still reasonably closely held.

What about the rest?

Also, someone mentioned American companies. I understand that the Canadians
are all about tax incentives to attract manufacturing companies, and they
have grabbed a few that way.




"C J Campbell" wrote in message
...

"Dan Luke" wrote in message
...
| C J Campbell wrote:
| In every sector of aviation there appears to be bunch
| of losers that are barely able to tie their own shoes, and a
| couple of performers that seem to make money despite
| all the excuses the losers have.
|
| And why is this so? Because aviation businesses are almost all terribly
| difficult to be successful in:

Every field of business is terribly difficult. No excuse. If you can't
stand
the heat, get out of the kitchen. What I said about aviation can be
applied
to almost every other field of business. There may be exceptions, but I
can't think of any right now.

I have had just about enough of the idea that aviation is somehow
different
than other businesses, that ordinary business principles don't apply to
aviation, that the only reason to get into aviation is that you love it,
etc. Well, here's a news flash: people succeed because they work hard, use
their imaginations, keep costs to a minimum, and charge enough for their
labor and capital to get a reasonable return. They try to sell a product
that people actually want. Loving your work makes all that a lot easier,
but
it is not totally necessary. Nevertheless, I'll bet that Bill Gates loves
his job.

Now, there is no question that people want to fly. Look at what they put
up
with in order to do it. The customer in this industry is generally treated
like crap. The whole message from the time he walks in the door is, "We
don't value our jobs very highly, and we think even less of you. At best,
you are an inconvenience. At worst, a dangerous criminal."

On Mon, 02 Feb 2004 07:21:54 GMT, "Dude" wrote:


Cirrus has done well, and much of it is due to the passion of the founders.
I may be mistaken, but I believe that the investors are likewise passionate.
They are not presently trading the stock on an exchange, are they? If not,
then the company is still reasonably closely held.

Cirrus has done well by taking risks with the customers. The basic
design is great but the devil is in the details. They lack good detail
design, testing, and quality control. While the COPA web site
indicates the quality control is improving, the early users are
swinging in the breeze with high maintenance and planes that lost 50%
of their value in 2 years.

The stock is publicly traded, it is not on the NYSE because the
company cannot meed the financial requirements for being listed.

Dude wrote:
...
I believe Cessna simply will not do what it takes to win in this
business
because it has become too risk averse. It may survive, but I don't
see it
thriving. Strangely, its the same attitudes that kept them in
business all
this time, that may now be their downfall. Until the recent entries
of new
players, Cessna was king.

Cirrus has done well, and much of it is due to the passion of the
founders.
I may be mistaken, but I believe that the investors are likewise
passionate.
They are not presently trading the stock on an exchange, are they?
If not,
then the company is still reasonably closely held.
....

We can't look at Cessna single production as a financial entity by
itself. The profit is in the jets, the singles are likely a division
of a corporation which is a subsidiary of the big parent company.
Money is no controlling factor. If they want a full product line,
then 172/182s make sense, and some auto mfrs lose money on each
compact they sell.

Cirrus doesn't enjoy that luxury, and capital is from private
investors and lenders. The recent infusion of $100 million was mostly
to pay debts, and a recent local news article hints they still have
liquidity problems. So if Cirrus is still losing money, as quite
possible, it really matters. If Cessna loses on a 172 (bet in most
years not), it's just like a Dodge Neon in a full product line.

Cessna may not even view themselves in substantial competition with
Cirrus. Beyond flight schools, there may be a significant number of
buyers loyal to the high-wing brand and/or those who think a plastic
airplane is just wrong. Marketing strategy is a matter of judgment in
what they may view as a niche market. Are flight schools buying SR-20s
much at all?

Fred F.