Textron sees strong 2024 profit on US Army deal, higher plane deliveries

By Aishwarya Jain and Allison Lampert

(Reuters) - Cessna business jet maker Textron on Wednesday forecast higher private plane deliveries this year and 2024 profit above Wall Street estimates as the U.S. Army replaces Black Hawk helicopters with aircraft made by its Bell unit.

Textron shares rose 6.54% to about $84.4 in early trade, hitting a record high.

Business jet makers expect sustained customer appetite for private planes after a boom during the COVID-19 pandemic, but slowing 2024 global growth and the growing availability of preowned planes could weigh on demand.

Textron forecast 2024 adjusted profit from continuing operations between $6.20 and $6.40 per share, compared with analysts' estimates of $5.90, according to LSEG data.

Asked by analysts about 2024 private plane deliveries, Textron CEO Scott Donnelly said "we don't put a number out there, but it will be increased from 2023."

Textron expects aviation segment revenue of $6 billion in 2024, up from $5.37 billion in 2023.

Donnelly said he expects less hiring and sees production lines "flowing better" this year after Textron's aviation unit delivered 168 business jets in 2023, down from 178 in 2022, when labor shortages and supply chain snags weighed on manufacturing.

"The only headwind that I see would run through is just on availability, right? People would like to get aircraft sooner," Donnelly said.

In December 2022, the U.S. Army awarded the contract for its next-generation helicopter to Textron's Bell, as it looked to retire more than 2,000 medium-class Black Hawk helicopters built by Sikorsky.

Donnelly expects revenue close to $900 million in 2024 on the U.S. Army contract.

"We had assumed the margin would likely decline... but the Bell margin has been holding up relatively well," brokerage J.P. Morgan said in a note.

Earlier this month, Canada awarded a C$2.28 billion helicopter service and support contract to the Bell unit.

On an adjusted basis, Textron earned $1.60 per share in the fourth quarter, beating estimates of $1.54.

The company posted total quarterly revenue of $3.89 billion, compared with estimates of $3.95 billion.

(Reporting by Mehr Bedi and Aishwarya Jain in Bengaluru; Editing by Shounak Dasgupta and Chizu Nomiyama)