GRAHAM WARWICK / WASHINGTON DC
Manufacturer is being forced to cut production of King Airs and Beechjets due to its growing stockpile of used aircraft
Raytheon is increasingly concerned by the growing number of unsold Beech 1900s in its used aircraft inventory. Operators, meanwhile, complain that high lease costs on the 19-seat regional turboprop could force them out of business.
Raytheon Aircraft (RAC) had 108 commuter aircraft in its used inventory at the end of June, an increase of 67 from a year earlier, and the company expects this to reach 125 by year-end. In addition, Raytheon expects the inventory of used general aviation and business aircraft taken in trade to reach 89 by year-end.
New RAC president Jim Schuster has launched an effort to cut $200 million from the company's manufacturing inventory to offset the growing stockpile of used aircraft. About half the cuts will be made by year-end, but will be "eaten up" by the growing used-aircraft inventory, which has increased by $381 million since the beginning of the year, Raytheon has told analysts.
The softening of the US economy that has slowed the sale of new general aviation and business aircraft has also increased the number of used aircraft on the market and pushed down prices, Raytheon says. RAC has cut planned production of King Airs and Beechjets this year by 24 and 16 aircraft, respectively, and will make further reductions "if necessary".
According to the Airclaims CASE database, 550 1900s are in service, of which around 100 are in storage. Of the total, 350 are 1900D versions (plus around 60 in storage). Raytheon is believed to have at least half the fleet on its books through lease/finance deals.
Struggling RAC has also cut production of the 1900D, and delivered just five in the first half of this year, compared with 29 in the first six months of last year. Production of the 1900D totalled 54 aircraft last year. The manufacturer booked 18 new orders in the first half and Raytheon has told analysts it is "comfortable" with that level of order intake.
Meanwhile, Jonathan Ornstein, chief executive of major 1900D operator Mesa Air Group, claims high lease costs of Beech 1900s have put operators such as Colgan Air, Commutair and Gulfstream International "on the verge" of failure. Mesa is trying to stave off mounting losses with its 19-seat Air Midwest turboprop operations by cutting costs and reducing overhaul and maintenance expenses.
A recent management reshuffle at RAC elevated the status of the commuter aircraft programme as the company tries to find a solution to its problems.
Additional reporting by Guy Norris
Source: Flight International
