Cessna releases 2,000 more employees as Textron cuts jet production 20%

By John Croft

Textron chairman and CEO Louis Campbell today said Cessna will cut its 2009 production target by 20%, down from a record high 467 Citation jet deliveries in 2008 to 375 this year.

The adjustment, spurred by what Campbell called the “especially egregious impact” that the economy is having on business jets, will require the company to layoff an additional 2,000 employees.

Cessna had already cut 20% of its workforce in the downtown that started last fall, most recently laying off 2,200 employees on 12 January.

Campbell says Cessna gained only 30 new orders in the fourth quarter of 2008, while receiving 23 cancellations and an “unprecedented” number of deferrals. Backlog at the end of the fourth quarter was $14.5 billion, down 7% from the $15.6 billion at the end of the third quarter.

The quickness with which the orders were withdrawn has caused the company to cut its forecasted first quarter deliveries to just 80. Cessna expects second quarter performance to improve as approximately 30 customers move their orders forward into 2009 and new orders are potentially gained. Campbell says more than 80% of the planned 375 deliveries are firm at this point.

Officials say there is no “single pocket” of aircraft type that has been more prone to cancellations. Especially robust however have been the orders for Mustang very light jets. Officials say the company will deliver 130 of the twin-jets this year (35% of the total jet aircraft deliveries), up 30% from last year’s Mustang totals.

Despite the gloomy start to the year, Textron continues to predict double-digit growth for 2009 with revenue increasing to $4.6 billion, up 10-12% from last year.