Innovation Roadshow: Textron

Transcript

Lachlan Cullen:My name is Lachlan Cullen, and I'm the local sales director for the Cessna SkyCourier. My territory actually extends throughout Asia-Pacific, and I've been fortunate to call Singapore home for the last decade. I've worked for the parent company Textron for 18 years and 3 different continents in sales, engineering, and finance. My goal this afternoon is to introduce this brand new aircraft, the Cessna SkyCourier, and the company that manufactures it, Textron, in the 10 minutes that I have to work with. I found the last panel very interesting because the aircraft I'm going to introduce is a regional airline feeder aircraft, and where we've seen some initial traction in the market is in Latin America, where the panel kind of eloquently explained the regional airline market is more developed than in Asia-Pacific. So on my presentation, I'm going to start with the parent company. Textron is an NYSE-listed Fortune 500 industrial conglomerate. With a turnover of $12 billion. We have approximately 33,000 employees worldwide. Textron's focus is on the aviation and defense sectors with iconic brands like Bell, Cessna, and Beechcraft. Textron has a global presence in— with manufacturing facilities in 20 different countries. The company is split into 6 subsidiaries. During my own career, I've been fortunate to work for a couple of them. Bell Helicopter for 8 years, and 2 of those in sales and the rest as an engineer. And then most recently, I worked for Textron Financial Corporation leasing business jets, helicopters, and turboprops throughout Southeast Asia. Earlier this year in January, I took up a new role working for Textron Aviation launching the Cessna SkyCourier in Asia. That's in the top left corner. So Textron Aviation is the largest subsidiary and a market leader in general aviation with the Cessna and Beechcraft brands. It's headquartered in Wichita, Kansas. Which is in the geographic center of the United States. Its turnover last year was $4.5 billion, and we delivered over 540 aircraft, which is more than any other original equipment manufacturer, including Boeing and Airbus. Our customers operate hundreds of thousands of Textron aircraft in 170 different countries, which account for more than half of all the general aviation aircraft Textron today manufactures 20 different aircraft types, with over a quarter million aircraft delivered during the last century that have accumulated 150 million turbine flight hours. Today we have 20 company-owned service centres around the world, including 3 in Australia, and one here in Singapore with 12,000 employees. Textron Aviation products range from the iconic 4-seat piston trainer, the Cessna 172, which I learned to fly in and passed my instrument rating in, all the way up to a $25 million business jet like the Citation Longitude in the top left corner. Today, I want to concentrate on the central panel of 6 turboprop aircraft, including the Beech King Air and the Cessna Caravan and Grand Caravan, which have close to 3,000 units delivered to date. In particular, I want to focus on one of those aircraft, most recently certified in March of this year, the Cessna SkyCourier. The first customer deliveries have also started this year. The Cessna SkyCourier is a 19-passenger twin-engine turboprop. It's unpressurized and has fixed gear. It was designed to be simple, robust, and reliable with a very low operating cost. I'd like to point out the cabin cross-section. It's 1.8 meters tall by 1.9 meters wide. This makes for an extremely comfortable passenger experience. The aircraft is approximately 25% larger and carries 25% more payload than other legacy twin-engine turboprops. The SkyCourier has a large stand-up cabin with large windows providing unobstructed views and lots of natural light. The airplane can be configured with air conditioning that runs off ground power to cool the cabin down before passengers board. There's plenty of room in the rear baggage compartment to accommodate sports and 25 kg roller bags for passengers transferring from an international widebody onto a regional airline, for example. In the main cabin, passengers can stow their luggage in the overhead bins or under the seat in front. Passengers load through a rear— upper rear airstair, through a large door and upper rear airstair. The sill height is just over a meter off the ground, but the height of the doorway is 1.75 meters tall, which allows me to stand up in it to give you some sense of scale. There's no need for any ground infrastructure. 2 crew can easily load and unload passengers and baggage and then hop into the cockpit through separate pilot and copilot door and then take off. But the unique feature of this aircraft, of the Cessna SkyCourier, is the ability to transform from a passenger aircraft, passenger configuration, into a freighter or cargo configuration. This can be accomplished in 45 minutes in 8 easy steps that I'll show you now. The first step is to remove the rear baggage net. Then you remove the divider that separates the rear baggage compartment Then you can remove the seats and remove the overhead bins, remove the airstair, and then add a divider to separate the cockpit from the cabin and the cargo in the back. Then add a sidewall blanket to blank out the windows. And then finally, you add cargo nets. Okay. to separate the cargo zones. The aircraft can carry 19 passengers and all their luggage or 2.3 metric tons of cargo 400 nautical miles in 2 hours. It will carry a little more over a shorter distance or travel up to 1,000 nautical miles on a ferry flight. But the sweet spot is 19 passengers or 2.3 metric tons over that 2-hour sector. We anticipate that regional airlines will fly passengers during the day before switching to cargo at night to maximize productivity. This flexibility to quickly switch between cargo and passengers is a value proposition that we believe airlines and lessors will appreciate. Passenger sectors with very thin margins can be partially offset by carrying cargo, and vice versa— thin margin cargo or freight sectors can be partially subsidized by carrying passengers. During the global pandemic, there's been a surge in air cargo demand. Furthermore, we believe the ability to deliver passengers or cargo the last mile is a differentiator in an increasingly competitive market. Today, airlines compete principally on price. There's a race to the bottom on, quote, Red Sea sectors with ever more homogeneous equipment and service. Ever since the pandemic, There's been a move away from dense urban centers and mass transport. People aspire to live remote, but still appreciate seeing the livery or brand of their favorite airline deliver them the last mile to their new remote home. SkyCourier offers a less resource-intensive means to test new markets for airlines. The ability to operate without ground support or cabin crew allows for quick implementation of new destinations with little or no setup cost. SkyCourier was designed for high reliability and a very low operating cost of approximately $1,000 per hour. The combination of flexibility and operating cost will allow regional airlines to test new markets with a very low entry and exit cost. So the question remains, how to take advantage of this opportunity? How would you evaluate SkyCourier if SkyCourier would be a good addition to your network as a feeder? The first step would be for the airline to evaluate potential sectors or destination airports. Textron Aviation engineers will provide direct operating cost and payload for each sector. The airline estimates the overhead cost and the revenue for each new sector. The penultimate step is to evaluate which acquisition structure to adopt, either an asset-light CPA agreement or a lease agreement with the asset either on or off balance sheet with an operating or finance lease structure. The final step is to evaluate the profit and loss for the new feeder operation. Thank you for your attention. I think my time is nearly up. So I just want to let you know that myself and my colleagues will be available to take any questions you have throughout the remainder of the conference and that we have a stand in the hallway where you can pick up more detailed information about SkyCourier or any of our other aircraft. Thank you very much.

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