What should Cessna do?

Discussion in 'Hangar Talk' started by StevieTimes, May 14, 2018.

  1. StevieTimes

    StevieTimes Line Up and Wait

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    I'm referring to the avweb article here:
    https://www.avweb.com/blogs/insider/GA-Sales-Barely-Above-a-Flat-Line-230813-1.html

    Here's where I think Cessna is at; Cirrus has a better product. It is safer, faster, and more modern in appearance. The used market offers more value. That leaves Cessna duking it out with Piper for some training airplanes, and let's be honest, most FBOs are going to buy used, right?

    So the question is; who is buying a BRAND NEW 172 or 182? Why would you possibly want to do that? The used market will give you so much more for your money. I know that is likely true many places, but seriously, who here would spend close to $400,000 for a 172?

    reference: https://www.planeandpilotmag.com/article/2017-cessna-172-skyhawk/#.WvoDDogvy70

    So Ford decided to cut bait, and ditched most of the car production they were doing. How long before Cessna does the same? I don't think it makes sense to keep doing what they're doing.

    So you are now the CEO of Cessna; what's the plan? Do you try to breathe some life into the venerable 172 and 182 models (faster, sleeker, "new Mustang" feel, maybe a 'chute), or do you cease production and focus on your real moneymakers?
     
  2. wsuffa

    wsuffa Touchdown! Greaser!

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    Is it still profitable? Can the capital be deployed elsewhere to deliver better value? Would someone else (China, Inc?) buy the assets? What is the long-term strategy.

    The fact that it's a commonly used trainer is immaterial to a financial decision.

    Textron owns Beechcraft because it went bankrupt - and it wasn't (still isn't) building any small training aircraft. It cut bait a long time ago. Raytheon got rid of it, and Hawker went under after they bought it.

    I don't have all the numbers to make the call. I do note that part - maybe most - of the overhead is covered by the larger aircraft it sells. And parts. But I wouldn't be spending a dime on development given the trends in number of pilots.
     
  3. dmspilot

    dmspilot En-Route

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    I think spinning off (or selling) the piston division to a separate company would warrant serious consideration.
     
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  4. kyleb

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    I would evaluate the cashflow/profitability on the parts business and value the business on that. I can't imagine there is any profit in today's new airplane volumes.
     
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  5. cowman

    cowman En-Route

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    If they want to be more than that company that does ok selling a few trainer aircraft they're going to have to innovate.

    I'm not sure what room there is for that in the current market... the bases seem fairly well covered for what people are looking for and there's no great demand. What we need is some modern certified engines that aren't stuck at the technology level of the 1950s. Get past that hurdle and there should be quite a few opportunities.
     
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  6. Ryanb

    Ryanb Final Approach PoA Supporter

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    Cessna has been behind the innovation curve for awhile now. Products like the Skycatcher and soon to be released Denali are just unimpressive compared to the competition. Still, Cessna’s biggest success is through continued support from pilot-mill flight schools in new aircraft purchases. As for the individual looking for a new aircraft, it would solely depend on what their needs were. I wouldn’t buy a ‘new’ Cessna but I might look at the used market. Cirrus definitely would win me over between the two, so Cessna may have to look into some deeper innovation to keep itself afloat.
     
  7. GRG55

    GRG55 Final Approach

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    Cessna's success is the Citation jet line.
     
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  8. Clark1961

    Clark1961 Touchdown! Greaser!

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    Not sure at all where you're coming from on this. Cessna survived by building and supporting jets for many years. The piston market is a bolt on thing that they can take or leave and still remain profitable. Yes, they tried a few things and have shut them down. With the jets they've built too much overhead into their products and evidently fail at managing third party quality.
     
  9. Ryanb

    Ryanb Final Approach PoA Supporter

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    That too. I was just referring to the 172 as their flagship product.
     
  10. asicer

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    Like the diesels that everyone is dumping on?
     
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  11. SkyDog58

    SkyDog58 Touchdown! Greaser!

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    Shutting down the TTx was dumb. They should have added BRS and convinced people that it was better than Cirrus which it really was.

    There is a definite need and market for high wing aircraft both in the training world and in the personal transport world. However the 172 and 182 are dated and so is the 206. Cessna should do a clean sheet new design of all of their high wing sizes. Roomier cabins, sleeker designs, increased payload, while still maintaining their ruggedness and ease of flying. They could even just keep the 182 and 206 sizes while dropping the 172 in favor of a new two seat trainer larger than the 152. Add BRS to all of them at least as an option.

    Cessna is still innovative but it is limited to their jet & turboprop lines. They need to extend that effort to the pistons.
     
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  12. James331

    James331 Touchdown! Greaser!

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    Well Cessna does makes some other great airframes like the 208, citation, etc.

    As far as "safety" cirrus is not more or less "safe" that's on the pilots, heck I bet more cirrus crash than citations or 208s or 206 per year.

    Overall Cessna I'm not too worried about, maybe a new small and affordable plane that has enough balls to fly with 2 humans and a little gas.
     
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  13. Ryanb

    Ryanb Final Approach PoA Supporter

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    +1. That was a missed opportunity on their part.
     
  14. Art Rose

    Art Rose Pre-Flight

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    Why would a flight school want, or need to buy used equipment? Why does a new Cessna cost nearly a half million dollars? Compared to decades past, why are there so few new pilots today? Why do we continue to refurbish so many 40 and 50 year old airframes? Why has Experimental become so popular? Why does it cost exorbitant amounts of money to bring any aviation related product to the consumer? And this list of relevant questions can certainly continue, can't it?
    The steady and continued decline of GA is predictable. And we all know the root cause. What should Cessna do? Same as the rest of us should do.
     
  15. wilkersk

    wilkersk Cleared for Takeoff

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    I think CessBeech is geared to handle production needs no matter what the market does. Discontinuing the models that just didn't plan out, sales-wise, is just good fiscal management. I think they're taking a wait & see attitude for now in the small end of the GA market, while capitalizing on their strong product lines, like King Air, Citation, and some government contracts and overseas sales.
     
  16. Ryanb

    Ryanb Final Approach PoA Supporter

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    Why? Unless you’re a big pilot mill flight school, money doesn’t grow on trees, so new equipment is far too expensive. That seems like a brainless question to me.
     
  17. SoonerAviator

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    Don’t ignore the tax benefit of depreciation on new aircraft purchases.


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  18. jkgoblue

    jkgoblue Pre-takeoff checklist

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    I think when Cessna decided to balk on the NGP, they kind of sealed their fate. That was their chance to modernize their fleet and really jump start their product line. Too bad, I really like the looks of it.

    [​IMG]
     
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  19. SoonerAviator

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    The costs of certification for those new high-wing variants would likely prove fruitless. You’d likely end up with a C172/C182 that look like the C177 or P2010. All so you can deal with plastic construction for the sake of modernization. Cessna doesn’t likely care about any of that because they can’t manage to make a current 172 at a price under $300K. Cessna likely continues as-is until they decide to abandon the single piston models entirely.


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  20. kyleb

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    Wouldn't any new airplane be saddled with the expense and hassle of certifying under Part 23, as opposed to whatever it takes to upgrade the existing products by amending the TC? Given the low volumes and high costs involved, I cannot see anyone who understands the market going down that path.
     
  21. denverpilot

    denverpilot Taxi to Parking

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    Cessna will do whatever they need to, in order to sell entire fleets to large institutional customers and commercial operators. That’s all they’ve been doing for a long time now.

    You can see it in all of the larger manufacturers really. Piper, Cirrus, ForeFlight.

    There isn’t any big GA name that isn’t chasing big fleet contracts.

    The TTX was killed because you could never sell them to a fleet buyer. The diesel 172, same deal. Skycatcher even.

    Cessna’s strategy has been clear for a long time. Until you get well above $2M, they want fleet sales.
     
  22. Pilawt

    Pilawt Final Approach

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    Cessna is building 172s, 182s and 206s because (1) they're certified, (2) the production jigs and tooling were amortized sometime back in the LBJ Administration, and (3) they're reasonably good, marketable products. R&D, flight test and certification expenses on clean-sheet-of-paper designs are insane. We'll not likely see many new designs ever again in the light-single class outside of E-AB or S-LSA.

    They tried it. The Cardinal, "The Plane of The '70s" did not survive its decade. It was too heavy and too expensive to build. How about a modern design in the C-182 class? They flew a prototype Model 187 that looked cool, much like a beefed-up Cardinal -- but its performance was not significantly better than the legacy 182. And like the 177, construction cost was higher. They also flew an experimental 182 with a 210-like cantilever wing. Same result. How about a centerline thrust twin, strutless and smaller than a 337, more in the Twin Comanche class? That was the experimental Model 327. Ditto.
     
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  23. Clark1961

    Clark1961 Touchdown! Greaser!

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    Cirrus brought not one but two new designs to the market. Diamond brought two designs to the market too. It can be done, just not by Cessna....or Piper...
     
  24. GRG55

    GRG55 Final Approach

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    Anything can be done if enough money is thrown at it. Look at Tesla.

    Does any of it come back? I doubt it. The total global new piston single aircraft market is what?...<1000 planes per annum? What makes anybody think there's a sufficient market to actually support a new piston airplane design? Even Cirrus, which currently sells half the number of piston airplanes it used to a decade ago, isn't wasting its money and time on that.

    Cirrus almost went bankrupt, and ended up selling to the Chinese. Diamond struggled and ended up selling out to the Chinese. Mooney went bankrupt how many times? Now Chinese owned.

    The Chinese think they have zero cost of capital and therefore don't have to generate any ROCE. Let's hope they keep thinking that. It might be the only way some of these companies survive.
     
  25. Clark1961

    Clark1961 Touchdown! Greaser!

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    As I said, Cirrus did it and Diamond did it. Do you think Cessna had a cakewalk startup? Do you think Boeing had an easy startup? Keep it in perspective.
     
  26. ktup-flyer

    ktup-flyer Pattern Altitude

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  27. denverpilot

    denverpilot Taxi to Parking

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    All three did that when their namesakes were still there, or in the case of Cirrus, Klapmeyer.

    Now that the boring MBAs run them, you’ll never see that kind of risk taking by a passionate owner ever again. Not at those companies. Even the C-Jet was planned long ago.

    Maybe see it at a startup, but those places are not going to innovate. As seen by the examples, when they do, they won’t stick it out, if they can’t sell large quantity numbers of something. TTX, Skycatcher, diesel 172.

    They won’t keep something going just to sell single digits of them because the owner loves flying his and it’s his baby that nobody will kill. These aren’t exactly the type of people who are itching to suck the marrow out of life and make great airplanes like the namesakes were.

    Nobody left like that at any of those three. Cirrus is done at the Jet.

    The MBAs have taken over. They’ll do what MBAs do now. Innovation is too much risk. It threatens the Land Rover payments parked in their driveway.
     
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  28. Clip4

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    If I were n the market for a new single engine airplane, there is not a model on the market I would purchase.
     
  29. Mooney Fan

    Mooney Fan Pre-takeoff checklist

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    One area where the FAA might be helping is here. Re-write of part 23 relative to certification


    Noting that the new rule represents a “fundamental shift in how the FAA approaches certification,” Huerta added that it “will allow American businesses to create good manufacturing jobs and to better compete in the global market.” The Part 23 rewrite—which was years in the making—will allow manufacturers of and suppliers for small airplanes to develop and deliver innovative products to their customers more quickly and to better leverage new technologies.

    https://gama.aero/wp-content/uploads/2016-GAMA-Databook_forWeb.pdf
     
  30. jspilot

    jspilot Cleared for Takeoff

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    I'd be curious to know what percentage of the cost to build a new 172 is avionics? Anyone have any idea the cost breakdown to build a 172?

    The reason I ask about avionics is it seems like most people have become enamored by the "latest and greatest" in avionics. I wonder though, if Cessna decided to make a more reasonably priced aircraft with standard 6 pack steam gauges if their would be a market for that. I imagine there would be especially in the trainer market. So if I was Cessna's CEO I'd seriously look into this idea. Maybe I'd also consider a merger with Garmin since Garmin appears to have a stranglehold on airplane avionics. I'd also look into a customizing type model in which Cessna would essentially build the airframe standard for everyone but then you let the client pick what "features" he or she wants in the plane and build to order. If you are building as few a year as Cessna currently is, you could make it customizable.
     
  31. Stewartb

    Stewartb Final Approach

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    Cessna needs to decide whether to build modern go-fast airplanes or stay with relatively slow utility airplanes. If it's the latter, they should lose the cushy appointments and maximize utility. They've carved a niche in between two ideologies and the market is leaving them behind. They have the ability to be kings of the industry. They lack direction to do so.
     
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  32. A1Topgun

    A1Topgun Pre-takeoff checklist

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    Niche market for float planes as the old ones disappear.
     
  33. mscard88

    mscard88 Touchdown! Greaser!

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    I think Cessna should modify their planes as low wingers. :popcorn:
     
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  34. Stewartb

    Stewartb Final Approach

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    Their new planes are too heavy to be good floatplanes. Anyone wanting a floatplane will be looking for an older model so they'll have some useful load.
     
  35. mscard88

    mscard88 Touchdown! Greaser!

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    Yup, small flight schools have low margins. The one where I instruct has 4 of 5 planes on lease back, and one C172 owned by the flight school owner. They range from a '69 Arrow, '76 140 to early 80s 152 &172s. Avionics on most are 430s, 650.
     
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  36. Art Rose

    Art Rose Pre-Flight

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    Why? Unless you’re a big pilot mill flight school, money doesn’t grow on trees, so new equipment is far too expensive. That seems like a brainless question to me.[/QUOTE]


    Seems to me, the "brainless" here is the failure of so many to understand the root cause of why those pieces of aviation equipment are "too expensive". Another one of those can't see the forest for the trees, I suppose. Regulation for the purpose of safety is important, but we've gone far beyond that original intent. There shouldn't be a need to spell it out should there? Or, maybe there is?
     
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  37. tspear

    tspear Cleared for Takeoff

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    I think Textron is just going to milk the existing piston line until there is a fundamental change that allows them to make money. Textron learned a long time ago that the profit margin to remain number one is very small, the profit margin to remain number 2 is generally much higher.
    How this applies is they can milk the piston line, keeping costs low. Chase the fleet sales and wait for a fundamental change in the industry, such as the eventual Part 23 rewrite in that may get approved in 2025.

    Tim
     
  38. SoonerAviator

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    Correct, that was my point. Cessna's clean re-design for the 172 was the 177, which had a short lifespan despite being better than the original. Cessna would have to move to all-composite construction of a 177/187 variant in order to compete with Diamond/Cirrus in the market. It wouldn't be cheap, and wouldn't likely be able to use much, if any, of the tooling they've long since depreciated for the 172/182. Lots of capital dollars tied up in re-tooling and certification of a new A/C in order to sell a few hundred a year if they were lucky. Since they can't seem to build a simple 172 without a price tag close to $400K, there's no telling how insane the pricing on a "Carbon Cardinal" would be.
     
  39. SoonerAviator

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    It's not likely much of an impact. I'm sure Cessna can work out a decent bargain price on whatever avionics panel they want to throw in there. Even if they're spending $40K on the flat-panel G1000 NXi and could put in a 6-pack and radio stack for $10K, it doesn't come close to making enough impact to drop the selling price out of the stratosphere.

    As far as a merger, Garmin would have to be crazy to consider it. They don't make aircraft, nor do they want to. I haven't ever looked at their financials, but I seriously doubt that aviation is their biggest market. Marine and consumer electronics may not fetch the same high prices, but they will have tons more volume. Cessna would just manage to screw up Garmin, too, lol.

    What needs to happen (but won't) is the Part 23 re-write should be extremely aggressive in reducing costs of certification and removing it where not necessary. It's about the only way anything significant will ever happen in the new piston-GA market. Until then, experimentals and LSAs are the way to go.
     
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  40. asicer

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    Back around 2005 or so when ordering a 172SP or 182T you had your choice of six pack with KLN94 or G1000. I vaguely remember hearing that the price delta was around $30k.