Textron Aviation Posts Loss, Delivery Drop During Covid

Textron Aviation posted a $66 million loss and a 50 percent drop in Citation deliveries in the second quarter as the Covid-19 pandemic spurred production stoppages, slower sales activity, and delivery delays. However, Scott Donnelly—chairman, CEO, and president of parent Textron Inc.—told analysts this morning that he expects improved results moving forward, noting that sales activity has picked up and production has resumed.

Textron Aviation delivered 23 jets in the second quarter, down from 46 in the same period a year ago, and 15 commercial turboprops, compared with 34 last year.

The segment loss marks a significant turn from the $105 million profit last year, reflecting a lower Citation volume of $178 million and a lower aftermarket volume of $120 million, more than a 30 percent decline as flight utilization plummeted. Further erasing profit was $53 million of “idle facility” costs. Backlog, meanwhile, eroded by $500 million from the end of the second half of 2019, to $1.4 billion.

However, Donnelly expects improvement in results as the year progresses. “The sales team is back in the field meeting with customers and arranging demonstration flights,” he said. “We saw a pick-up in business jet flight activity in the latter part of Q2, and we expect to see higher new aircraft deliveries and aftermarket revenue in the second half of the year.”

FAA Striving For Balance in Supersonic Regs

The FAA is placing a priority on supporting the emergence of supersonic technologies, but the agency must apply appropriate regulatory and environmental safeguards, said a key agency official. “Our focus…has been how we can support the reemergence of supersonic aircraft from a regulatory perspective to ensure that..the FAA is putting in place the necessary regulatory changes,” Kevin Welsch, executive director of the FAA’s Office of Environment and Energy, said during a recent AIAA Aviation Forum. 

Welsch pointed to the two primary regulatory activities underway on supersonic, one involved with enabling certification fight testing and another establishing certification noise landing and takeoff standards. “The challenge was to both provide enough flexibility to this emerging industry and market to allow continued development while also addressing considerations about noise exposure,” Welsch said. “We spend a lot of resources in modeling those impacts and assessing them.” However, the FAA is hoping to communicate that what is proposed from a noise standpoint is consistent with the majority of aircraft currently in production.

“On emissions, it’s going to be very difficult,” he conceded, adding it's something that both industry and government must address. However, there are options, Welsch added, such as carbon offsets and sustainable fuel use. Those rules must be harmonized, Welsch added, noting the agency is working intensively with ICAO.

Swiss Air Traffic Down Nearly 60 Percent in 1H 2020

Switzerland’s air navigation service provider, Skyguide, revealed the impact of the Covid-19 pandemic on the country’s aviation traffic in its first-half 2020 statistics released today.

During the first six months of the year, it monitored and managed 270,610 IFR flights, representing a year-over-year decline of more than 57 percent. While the agency saw an increase in flights in January and February, it noted a 47.2 percent collapse from mid-March onward. According to Skyguide, traffic reached a nadir in April, down 93 percent from the same month in 2019, but began to slowly recover in May (-91 percent) and June (-83 percent) following the lifting of some local travel restrictions and closures.

Aside from cargo flights, which were only slightly affected, business aviation traffic suffered the least erosion during the first half of the year, down by 37.8 percent, followed by the charter segment at 39.2 percent.

At major airports such as Zurich and Geneva, IFR movements were down by 56.6 percent and 50.9 percent, respectively, during the first half of the year. Skyguide noted that traffic declines at many of the country’s regional airports were less severe due to their higher percentage of unscheduled flights.

Oshkosh Airport Breaks Ground on New GA Terminal

Wittman Regional Airport in Wisconsin held a ceremonial groundbreaking last week for its new general aviation terminal after the Winnebago county board approved its construction in December. The Oshkosh airport is home to EAA’s annual AirVenture weeklong fly-in, billed as the world’s largest aviation gathering, and the groundbreaking ceremony would have taken place during this year’s event if it weren't canceled due to the Covid-19 pandemic.

The $6.8 million project will replace two structures: the 33,000-sq-ft commercial terminal that was built in 1971 (the airport has been without commercial airline service since 2003) and existing 6,254-sq-ft general aviation terminal that was built in 1958. The total investment includes demolition of both existing facilities, site work and paving for a new parking lot, construction of the new terminal, and an improved access road.

The single-story, 12,500-sq-ft building will be home to Basler Flight Service, the airport’s sole FBO, along with airport administration offices, car rental, and public-use conference rooms. The facility is expected to be completed in the third quarter of next year.

HeliValue$: ‘The Worst Helicopter Market in 40 Years’

“It’s the worst helicopter market in 40 years.” That’s the blunt appraisal of Jason Kmiecik, president of aircraft pricing specialist HeliValue$, who told AIN that second-quarter 2020 transactions were down “drastically” from the first quarter. The leader of the rotorcraft appraisal and consulting firm blamed the plunge on a terrible trifecta of industry troubles, including Covid-19, collapsing oil prices, and evaporating operator credit. “There’s just a lot of bad things going on. It’s a bad time for everybody,” he said.

Nevertheless, Kmiecik said there are some bright spots in a market that is otherwise a miasma of disappointment. Offshore operators could soon be saddled with fewer parked helicopters due to a series of new tenders floated by energy companies, a move that would benefit the values of large helicopters such as the Sikorsky S-92 and the Airbus EC225. 

From the perspective of HeliValue$, which publishes the Blue Book pricing guide, it firmly remains “a buyer’s market,” with purchasers in many instances offering depressed prices as they grapple with large unknowns. “Buyers are being very cautious because of the uncertainty of what could happen three years from now,” Kmiecik said. 

IRS NPRM To Clarify Aircraft Management Taxes

The IRS has released a much-anticipated proposed rule designed to update and clarify the treatment of aviation excise taxes surrounding aircraft management services. The proposal follows a directive from the Tax Cuts and Jobs Act, which essentially exempted certain management fees from the application of the commercial air transportation federal excise tax. While the Jobs Act measure was welcomed, subsequent IRS guidance left open many questions on the application of the taxes.

Slated for publication in the July 31 Federal Register and open to comments for 60 days, the notice of proposed rulemaking (NPRM) attempts to address the numerous requests for clarification and outlines definitions surrounding aircraft management as required by law. The NPRM focuses on questions surrounding five areas: use of a possession, command, and control test for amounts paid for aircraft management services; treatment of aircraft management services payments made by people closely related to the owner, but not the owner; the effect of the choice of flight rules (Part 91 versus Part 135); certain situations involving charter use; and the effects of how payment arrangements are made.

The NPRM outlines the legislative approach to services exempted, fractional ownership, and pro-rata share of taxes involving charter, among other issues. NATA, which has worked with Congress and the IRS on the issue, said it was reviewing the rules and expects to provide further analysis.

EHang Selects Main eVTOL Factory Site

Electric aircraft developer EHang has chosen the Chinese city of Yunfu as the location for the main factory to build its Autonomous Aerial Vehicles (AAVs). The China-based group said the facility will have an initial capacity to build 600 eVTOL aircraft each year, but in a July 30 statement did not reveal when production will begin.

The local city government is to invest $6 million in the new factory, which is located in China’s Guangdong province. It is not clear on what terms this investment is being made, or how much EHang itself is contributing to construction costs.

EHang intends to build both the single-seat 116 AAV and the two-seat 216 AAV at the Yunfu site. The facility is also due to include a research and development center, as well as space for operational and technical training.

Separately, on July 29 EHang announced that Transport Canada granted it a special flight operations certificate to conduct flight trials with the 216 AAV in the province of Quebec. The company has not indicated when the trials will begin or how they might contribute to efforts to achieve type certification. EHang has previously been granted permission to conduct flight trials for demonstration purposes in China, Norway, and the U.S.

Wysong Enterprises Keeps First Responders Airborne

Tennessee-based helicopter MRO Wysong Enterprises said it has worked on more than 20 aircraft during the Covid-19 pandemic in the last 12 weeks to keep essential law enforcement and air medical aircraft in operation. The company's work has included large-scale overhauls, completions, routine maintenance and repairs, and inspections on more than a dozen air medical ships, as well as six law enforcement and five government service aircraft.

Most recently, Wysong completed an MD 530 for the Kentucky state police, installing a Churchill mapping system, a Macro Blue display, an MX-10 EO/IR system, a Trakka Beam light, and an ASU night vision goggle cockpit modification. Air medical ship maintenance and modifications have included routine inspections, avionics and air conditioning troubleshooting, minor body repair, repainting with new color schemes, full refurbishment, and a green aircraft completion. The work involved an Airbus Helicopters H130T2 from Memphis-based Hospital Wing.

"We were short-handed and had some other inspections going on, so we needed our aircraft repair turned quickly,” said Hospital Wing director of maintenance, purchasing, and pilot Nick King. “The team at Wysong does an excellent job.”