“"How many leaders actively seek out and encourage views alien and at odds with their own? All too few...Who in your organization serves as your Challenger In Chief? Interrogating the choices you are considering making? Making you consider the uncontemplated, the unimaginable and that which contradicts or refutes your position? And also challenging you?"”
Cessna, Beechcraft and You
In 1924, Clyde Cessna and Walter Beech started the Travel Air Manufacturing Company in Wichita, Kansas. Within four years it was the largest maker of commercial airplanes in the U.S. Cessna left to start his own company in 1927 and Beech did likewise in 1932, forming what we now know as Beechcraft. Both companies prospered, thanks largely to World War II and the civil aviation boom that followed.
Over the last few years, however, each of these businesses was struggling. Beech went through a bankruptcy while Cessna was greatly diminished due to anemic sales of its métier: entry- and mid-level Citation jets.
Through some strange act of aviation karma, the two corporations were united earlier this year. Textron, the conglomerate that owns Cessna and other companies that make everything from golf carts to helicopters, bought what remained of Beechcraft for $1.4 billion. Cessna, Beechcraft and Hawker will remain separate brands within a newly formed Textron division called Textron Aviation.
The move makes sense. Though Beechcraft ended production of Hawker jets, it still has many customers who need parts and service. Last year, provision of such support generated revenues estimated at $403 million. Textron thinks it can eventually wring another $85 million annually from synergies between Beechcraft and Cessna and is hoping to flip Beechcraft customers into Cessna products. And let’s not forget that Beechcraft continues to sell its turboprops into civil and military markets worldwide, activities that brought in nearly $900 million last year. So the $1.4 billion buyout price equates roughly to one year’s sales, making the transaction look like a pretty good deal for Textron.
But if you own a Cessna or a Beechcraft, is it a good deal for you? Let’s start with Beechcraft owners.
To paraphrase President Gerald Ford on Watergate, your long national nightmare is over. Beechcraft support was never best in class for any of its products, and prices for some replacement components were simply usurious. A string of company owners who encouraged senior executives to beat up on suppliers exacerbated the problem, so when Beechcraft hit the financial skids, these suppliers either went away or learned how to wave with one finger. An already-strained supply chain imploded and customers suffered delays, expense and frustration.
Conversely, Cessna has always delivered solid product support and Beechcraft owners can only benefit from the application of this culture. Beyond that, Cessna and Beech aircraft share many components: Williams engines power both Cessna CJs and Beech Premiers; Beech King Airs and Cessna Caravan turboprops each have Pratt & Whitney Canada PT6 engines; and you can find Pratt engines on several models of Hawkers and larger Citations. Avionics, too, are often common across both product lines. So while the service network of the combined companies will undoubtedly shrink and some service centers may be combined, the tooling and technicians are already in place to work on either brand. This should give customers more convenient and comprehensive service choices. And perhaps the increased economies of scale of the blended companies will produce some savings for customers.
While Beech has historically struggled with new-product development, certification and delivery, few companies launch models better than Cessna. So Beech customers in the market for a new aircraft should be able to get it faster and with fewer complications.
Bottom line: the combined company should be stronger than either standing alone. So, cake and champagne all around. Still, I wonder what Clyde and Walter would think about all this.