Interview with Brad Thress, Senior VP, Business Jets, Cessna
The recession of 2008 and the prolonged economic weakness that followed did Cessna few favours. As Brad Thress, Senior Vice President, Business Jets at Cessna notes, the company went from a work force of 17,000 just before the demise of Lehman Brothers, to around 7,000 at its lowest point. “The whole business aviation industry suffered. Instead of the 480 jets sold in 2008, the industry level for the three years prior to 2012 ran at around 180, with that number improving to 295 in 2012,” he says. Moreover, the light jets market has in particular has continued to deteriorate, with each of the last three years seeing declining sales year on year.
However, those days are now behind the company. Cessna kept development going through the downturn and today it has some five publicly announced products. The first of these, at the very light jets end, is the M2. Thress says that the M2 is progressing to certification, with the expectation being that it will certify in the fourth quarter of 2013. “This is a tremendous “move-up-to” airplane for the over 400 Mustang owners out there, plus we are still capturing the typical piston and turboprop owner/pilot transitioning to jets. They account for about half of the advance sales of the M2,” he comments. Cessna will be shipping the M2 as soon as certification is complete and the M2 will come with the Garmin 3000 glass cockpit avionics suite.
“We have been very pleased with customer response to the Garmin avionics. They like the interactivity of Garmin, and the functionality. We have opted to go with Garmin not just for the light jets but for our high end jets as well, with the Garmin 5000,” he comments. Cessna’s second new announcement since the downturn, the new Citation Sovereign, has Garmin 5000 avionics, plus an all new interior, a new wing and winglet, and upgraded Pratt & Whitney PW306 engines. The third announcement concerns the new Citation X which has a slightly larger cabin than its predecessor, and an all-new interior plus winglets. Both the new Sovereign and the new Citation X are in the final stages of certification. Then there is the Latitude, which is due to certify in 2015. Thress points out that Cessna finished the first fuselage for the Latitude in August. The fact that the Latitude has a 72 inch floor to ceiling height and a width of 77 inches with seating for nine, is generating considerable interest.
Pride of place among the new additions to Cessna’s portfolio, however, goes to the Longitude, Cessna’s first venture into the 4000 nautical mile range. “The Longitude comes with the new Snecma Silvercrest engine, so that is a very exciting project for us,” Thress says. Silvercrest is a radically new departure for both Cessna and the French jet engine and aerospace manufacturer, Snecma, which until now has been best known in the business aviation space for its CFM56 engines, the result of a decades-long joint venture between Snecma and GE Aviation. The CFM56 powers ACJ and BBJ corporate jets but Silvercrest is Snecma’s first solo venture into the mid-range business jet market. The fact that it was conceived from scratch to be the best performing engine in its class for the mid-size long-range business jet market, made it a perfect fit for the Longitude, Thress says.
According to Laurence Finet, Snecma’s Silvercrest Program Director, the company anticipates some 5,000 jets being sold in the mid to long-range, large cabin segment of the business jet market over the next 20 years and would be “delighted”, as Finet puts it, to find itself capturing 50% of that market with Silvercrest. A successful debut on the Longitude will go a long way to helping the company achieve that goal. Silvercrest’s advantages are a 15% lower fuel burn than equivalent thrust engines, lower NOX emissions, a better power to weight ratio, low noise levels and ease of maintenance. Being the launch engine on the Longitude is a tremendous success for the Silvercrest project.
“We are very excited about the Longitude. This is a big airplane, at 50,000lb, and it is a clean sheet airplane, having been designed from scratch. It is the fastest airplane in the 4000 nautical mile class, with a cabin that is 77 inches wide and 28 foot long, as opposed to the Latitude’s 21 foot cabin, plus there is a walk-in baggage area. However, what is particularly good about the Longitude, from our point of view at Cessna, is that we have around 700 Sovereign and X customers today and until the Longitude, we did not have a longer range airplane to offer as part of our portfolio. So if customers grew to the point where they wanted a long-range jet, we lost them. With the Longitude, we have an airplane with a purchase price of US$28 million that offers the best value, in terms of acquisition costs and direct operating costs, of any 4000 nautical mile machine,” Thress comments. Certification for the Longitude is still some way off, and is expected in 2017.
Above all, the appearance of new aircraft like the Latitude and Longitude demonstrates Cessna’s commitment to keeping the Citation portfolio exciting and fresh. “What all this shows is that despite the downturn, we have worked hard to have fresh new products to bring to market as the market recovers,” Thress says.
One of the biggest competitors to Cessna as an OEM is not so much other OEMs as the pre-owned market, so this is where the necessity for refreshing the product line and stimulating owner appetite for new airplanes over pre-owned, becomes so important. “Last year there were some 2,300 pre-owned business jet transactions and time and again, when we are selling a new airplane, we find ourselves competing with our own, older pre-owned models as well as against equivalent aircraft from other OEMs. Owners need a strong reason to prefer new to old, and that is what we seek to give them with our new line-up,” Thress comments.
Undoubtedly the segment that got hit hardest in the downturn was light jets. Thress points out that by comparison with the 384 light jets sold in calendar year 2008, there were just 60 sold in 2012, representing a pretty dramatic contraction. By comparison the ultra-large market, where Gulfstream’s 650 and 550 play, didn’t contract at all and in fact saw some growth. “Between the two extremes the level of market contraction was inversely proportional to the size of the airplane. So this bodes well for a move-up product such as our new Citation X and Sovereign products,” he says.
Cessna does all its own interiors with customers free to choose between a range of pre-packaged interiors that offer the best combination of features in the eyes of its designers, or they can customise their aircraft with a bespoke interior in discussion with Cessna. Thress says that he is confident that Cessna can create a bespoke interior for a customer and be substantially more competitive on price than a completions house would be outfitting another OEM’s green aircraft. “Doing our own interiors is an overhead, because we have to bear the cost of all the specialist skills required, but you either take this overhead yourself or you let someone else have both the overhead and the profit margin. We like being vertically integrated, and we take this approach beyond interior completions. For example, we do all our own landing gear and bonding and welding. The real heavy work of interior completions is in direct labour, and the more interiors you do, the more work hours you have to liquidate your overhead across. We can do 500 units of something, not just a handful of units, so that gives us the ability to deliver to the highest quality product and to be cost-competitive at the same time,” he comments.
Cessna also has its own cabin management system and in-flight entertainment system, called Clairity. “We had a development partner on Clairity, but most of the deal is in-house,” he comments.
The average passenger load across Cessna’s portfolio of executive jets is between three and four, with the average trip duration being about seven tenths of an hour. This rises to around 1.6 hours in a CitationX, for example, and shrinks to half an hour in the Mustang.
Thress is confident that investing in new product while the market remains in a fairly flat state is the best approach. “It is not a matter of if the business aviation market will recover, but when. Human beings like mobility and as business strength recovers, business aviation as a corporate tool will once again come to the fore,” he comments.