(Reuters) - Textron Inc (TXT.N) forecast 2019 profit above analysts’ estimates on Thursday, after reporting stronger-than-expected fourth-quarter results on higher demand for its Cessna business jets, sending its shares up as much as 8.7 percent.
Business jet demand is recovering in the United States, thanks to a strong economy and a tax windfall handed to Corporate America by President Donald Trump last year.
“A big chunk of the growth in revenue we’ll see year-over-year is tied into the Longitude (business jet),” Chief Executive Officer Scott Donnelly said on a post earnings call with analysts.
The Cessna Citation Longitude jet received a provisional certification in the fourth quarter, allowing operators to begin flight training for deliveries in 2019, Donnelly said.
It now awaits final certification from the Federal Aviation Administration that is pending due to U.S. government shutdown, the longest in the country’s history.
“The aircraft is in a very good place. Production line is rolling,” Donnelly said.
Textron is banking on its newest mid-sized business jet, Cessna Citation Longitude, to further bolster its luxury jet business.
NetJets, the luxury plane unit of Warren Buffett’s Berkshire Hathaway Inc (BRKa.N), announced a deal with Textron in October to buy up to 175 Longitudes and 150 Hemispheres jets. The company said it expects 2019 profit of $3.55 to $3.75 per share, surpassing the average analyst’ estimate of $3.49 per share, according to Refinitiv data.
In the fourth quarter, the company, which also makes Bell helicopters, said it delivered 63 business jets in the fourth quarter, up from 58 a year earlier. Turboprop aircraft deliveries also rose to 67 units from 45.
That helped drive a 12 percent rise in revenue at the company’s main aviation unit. Total revenue, however, fell 6.6 percent to $3.75 billion due to weak demand for its Bell helicopters.
The company reported net income of $246 million for the quarter ended Dec. 29, compared with a year-earlier loss when it booked a tax-related charge.
Excluding items, Textron earned $1.15 per share, above analysts’ average estimate of 98 cents per share, according to Refinitiv data.
Reporting by Divya R and Sanjana Shivdas in Bengaluru; Editing by Anil D'Silva