Record 15-Year NetJets, Textron Deal Sends Important Signal
WICHITA—Textron Aviation’s record-breaking deal with NetJets for an option to buy up to 1,500 Citation jets over 15 years sends important signals about the manufacturer's health and the future of the business jet industry, experts say.
“We’re excited. It’s a big deal for us,” Ron Draper, Textron Aviation president and CEO, said during a break in his office following the announcement Sept. 20. “It is confirmation of the success of our products .... NetJets is a big, demanding customer, as they should be, and they’re selecting us. We’re proud of that. Now to have 15 years of them buying our products—up to 1,500 airplanes. That’s great news for our employees. That is work, stable work—jobs.”
In the meantime, Textron will “get to work” increasing production. The two parties have been working on the details for some time. “So, this is already contemplated in our production plans,” he says.
During the pandemic, demand for NetJets’ services hit record levels, Patrick Gallagher, NetJets president of sales, marketing and service, told The Weekly of Business Aviation. “[It] continues to remain higher than pre-pandemic days .... This new agreement was not only based upon increased interest in the market but also customer feedback, with Citations being many of our customers’ aircraft of choice.”
The options give NetJets the flexibility to turn the options into firm orders based on future customer demand, Gallagher says. It also provides NetJets with long-term continuity in product offerings, product type and in the cockpit configuration.
Its Citation Latitude fleet, for example, totals nearly 200 aircraft.
"That's a lot of airplanes," Gallagher says. "To be able to ensure that we can continue to deliver that same aircraft in that same configuration so we can crew it the right way and maintain it the right way and offer that consistency to our customers—it's really important to have agreements like this in place."
At Textron Aviation, production will leap with the potential of 100 aircraft per year to NetJets, although the company notes deliveries will ramp up over time. In the past five years, NetJets has taken delivery of 33, 36, 18, 36 and 42 Citation jets, respectively. As of Sept. 22, it has taken delivery of 27 in 2023, according to the Aviation Week Network Fleet Discovery database.
Textron Aviation is not releasing the expected value of the agreement, although Jefferies analysts estimate a value of $30 billion over the 15 years. The company’s current backlog at the end of the second quarter in 2023 totaled $6.8 billion.
The transaction extends fractional provider NetJets’ current fleet agreement for Citation Latitude midsize jets and Citation Longitude super midsize jets. Textron Aviation continues to deliver the two models on firm orders to NetJets. The new agreement, which does not include firm orders, includes options for an increasing number of jets each year.
With the arrangement, NetJets also asked to become the launch customer for the nine-passenger Cessna Citation Ascend, now under development, Draper says. (Ascend aircraft to NetJets will be configured for seven passengers with a refreshment center and large baggage compartment.) Deliveries are projected to begin in 2025 following certification and entry into service.
The Citation Ascend, announced at the European Business Aviation Conference & Exhibition (EBACE) in May, replaces the Citation XLS Gen2 with an all-new cockpit, improved performance and upgraded cabin.
Rolland Vincent, president of Rolland Vincent Associates, a consulting firm, calls the transaction a “massive bit of news.”
“It is huge with a capital H-U-G-E,” Vincent says.
Besides a 10-to-30-year endorsement of Textron Aviation’s product line, the deal is an important signal for the business jet industry and those who might think the market will slow. “A change is underway,” he says.
Vincent predicts NetJets will turn all its options into firm orders over the next 15 years, as it has done in past agreements.
Textron and NetJets have a long history. Of the nearly 700 jets in NetJets current global fleet, 356 are Cessna Citation jets.
“Textron has been their [NetJets] core since Adam and Eve shared an apple,” Vincent says.
Over its 40-year relationship, NetJets has taken delivery of more than 800 of the company’s aircraft. In the past eight years, it has exercised options for more than 300 Citation Latitudes and Longitudes, according to Textron Aviation.
In fact, 55% of all Latitudes and 50% of all Longitudes in service are operated by NetJets or NetJets Europe, according to Aviation Week data.
Timing is key.
NetJets “can come to the table at any time,” Vincent says. Given manufacturers’ two-year order backlogs, “the fact that they came now, I think is a signal they want to reserve capacity in the OEM production lines. They see a very clear and strong future for the industry.”
NetJets currently has more than 100 aircraft on firm order with three business aircraft manufacturers, says Gallagher with NetJets. The company also operates Embraer, Dassault Falcon and Bombardier business jets.
In May, NetJets signed a deal with Embraer for options to buy up to 250 Praetor 500 midsize jets with deliveries to begin in 2025. At the time, the order for Praetor jets seemed to suggest the aircraft would replace the Citation Latitude, Jefferies notes. “Clearly not the case,” it says.
“Our most recent deal with Textron as well as with Embraer for the Praetor ensures that we are able to meet expected demand for the next decade and beyond,” Gallagher says.
Editor's Note: This story was updated Sept. 22 with the latest Citation deliveries.