While the GA industry is seeing signs of stabilization, it looks like 2010 will be a bleak year, with low production rates, low order rates and no hiring on the horizon.
That was the message from some of the industry’s leaders at the Wichita Aero Club’s first online summit Dec. 15. Bringing together top executives from Cessna, Hawker Beechcraft, Bombardier Learjet, Boeing and Spirit Aerosystems, the summit tackled the key issues facing the industry today, with uncertainty topping the list.
“It’s like when you jumped into a lake as a kid and you feel around the mud and sand, trying to find the rocks,” said Bill Boisture, chairman and CEO of Hawker Beechcraft. “We’re feeling for the rocks right now, but we’re not sure how wide the lake is. Snorkels may be required.”
While all were reluctant to say we’ve hit the bottom, most agree with Cessna’s Jack Pelton that it looks like the GA industry is stabilizing. “But I don’t like where we’re stabilizing at, with low order rates and low production rates,” he said, noting he doesn’t foresee any growth for at least 12 to 18 months.
That scenario could change, however, if the banking industry steps up to the plate. Banks aren’t lending money now, creating problems for the entire industry from manufacturers to would-be airplane owners. “The banks are going to have to lead this recovery by providing some liquidity,” Boisture said.
Meanwhile the manufacturers spent the last year cutting costs, including layoffs, to prepare for the continuing recession.
“We’ve taken the approach of getting our production capacity in balance with the market,” Boisture said. “We’ve ended the year in good shape in terms of being in balance, but it’s hard to know what next year will bring. We’ve worked hard to get our cost structure to the point where we can weather the storm, no matter how long it lasts. We want to be sure we are here no matter what the recovery looks like.”
Over at Cessna, executives also spent most of 2009 getting the company to the size it needs to be to meeting the expected demand in 2010 and 2011.
“What we have now is a much smaller company with lower production rates than in 2009,” he said, noting the company’s revenue has been cut in half.
But bright spots are around the corner, including the ramping up of production of the C4 business jet in 2011, which has a strong backlog, he said. And while he didn’t mention it, Cessna’s LSA entry, the SkyCatcher, also is set to begin deliveries next year. There are about 1,000 orders for the LSA on the books.
“When the growth comes, we’ll be ready for it,” he said. “We’re looking forward to that day — we just don’t know when it is.”
Tomorrow: Is Wichita the next Detroit?