Cessna Aircraft Co. says the Shenyang Aircraft Corp. will build the company's newest model airplane, the 162 Skycatcher light sport aircraft.
Cessna Chairman, President and CEO Jack Pelton says light sport aircraft need the latest avionics, light-weight equipment, must be safe and reliable and be competitively priced.
"Our solution is to partner with SAC, a company with excellent facilities, state-of-the-art technologies and a workforce highly experienced in aircraft manufacturing," Pelton says.
Cessna is a subsidiary of the Textron Co. (NYSE: TXT). SAC is a subsidiary of China Aviation Industry Corp. 1. It is a government-owned group of aviation manufacturers.
Cessna will design the Skycatcher. It will also conduct testing and send employees to the SAC plant to oversee the manufacturing process. The airplanes will be assembled at the SAC plant in China.
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The decision to purchase the 162 from China is Cessna’s and only Cessna’s. The fact is their American customer base seems to be divided into three groups:
1. irritated by the decision,
2. don’t really care, no opinion
3. Happy for the decision.
As somewhat of a student of American life, I just can’t imagine group 3 being as large as group 2 or 1.
Jack Pelton the president and CEO of Cessna has this to say about the project.
Jack Pelton Says and I am quoting
“SAC will be responsible for the fabrication and assembly of the SkyCatcher. Cessna will be responsible for all customer-facing elements including sales, distribution, customer service and warranty administration.”
“we have specifically engineered it for the flight training environment.”
“It is essential to maintaining competitiveness and extending the Cessna brand to emerging markets.”
Now lets examine the facts, after all, they didn’t’ decide to buy the plane in China just so they could go visit the Pandas!
1.Cessna will develop the complete plane and sales mission with a budget of two million dollars.
2.Cessna will have ZERO invested in the project after that, they have no position on brick or mortar, their agreement is to purchase finished airplanes from SAC.
3.Estimated 10 year sales revenue are in excess of 670 million dollars
4.Estimated pre tax profit 10 years are to excess 350 million dollars
I am sorry, I can’t even compute the return on the investment that $670,000,000 is on a 2,000,000.
As far as flight training in the USA is concerned, today 172’s, are the most popular, and the reason is both economic and comfort.
1. Hundreds of people have their Cessna 172’s on leaseback to the FBO for flight school and rental club use.
2. It serves the FBO to keep those planes in the air, to generate more Cessna sales and revenue.
3. CFI’s have it tough enough spending all day cramped up in planes, the 172 offers some level of comfort for both the student and the instructor, as a bonus, most of these planes have very current stacks, with GPS.
4. There are currently part 23 certified two seat all aluminum trainers, and they only cost $10/11,000 more than the 162 will sell for, and there is not much of a market for them, in fact I believe many of those are exported.
5. There are pretty good examples of aluminum 0200 Teledyne powered LSA planes currently in production for less than $80000, made in USA.
Cessna’s plan has little to do with the GA flight training industry in the U.S. There are an abundance of good used planes priced from $13, 000 for a serviceable 150, to perhaps $45,000for a nice example of a 172. Cessna 152s’ can be rented from as little as $60 per hour wet in some areas. Where the 162 is intended to fly, there are no used airplanes, China only has a few hundred civil aircraft in a country of 1.3 Billion residents, and India has 1.1 Billion people. It is now easy to see why Cessna is not overly concerned with American 162 sales, although we may guess the public relations team for the 182s and 172s are not sleeping well lately.
Cessna has developed a business plan that will be studied at the Wharton School for the next 15 years! They have the greatest name in private aviation, took it global, with no money down will make a fortune, and not rob sales from any of their current models!
One of the things that disappoints some Americans, it seems the procument from a Chinese manufacture, was 100% of the original plan, at Air venture 07
when the 162 was Unveiled, foreign production was promised, but the mention of Chinese manufacture was avoided.
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