Piper cuts production and jobs

By Brendan Sobie

Piper Aircraft has cut back production by more than 50% and slashed its workforce by about 40% in response to slow sales, in particular for its low-end models.

Vice-president sales Bob Kromer says Piper now plans to only produce 110 aircraft this year, down from the record 268 delivered in 2008. He says 100 of these will consist of its PA-46 luxury models, the Meridian, Mirage and Matrix, because "there's no demand for low-end aircraft".

Piper has stopped producing four models - the Archer, Arrow, Seneca and Saratoga - entirely. It plans to produce 10 Warriors and Seminoles only this year, although Kromer says this can be quickly adjusted upward if it secures more orders from flight schools.

Florida-based Piper was already planning to slow output slightly in 2009 and stop producing the Saratoga. But since November, when it projected 210 deliveries for 2009, it has had to have a major rethink and implement two waves of job cuts. The second wave came earlier this month and leaves Piper with only 650 employees on its payroll, compared with about 1,100 at the end of last year.

"We're now positioned to survive the downturn," says Kromer, adding that costs have been cut and Piper is now in cash preservation mode. "We've done what we can to weather the storm. We'll get through this."

Piper, however, continues to spend on the PiperJet programme and Kromer says flight testing will proceed as scheduled. Piper's first jet, which flew for the first time last July, will soon enter the critical phase of flight-testing, including confirmation of the projected 360kt (665km/h) cruise speed. "The jet is our future. We know that," Kromer says. "This plane won't be ready until 2011. Now is a good time to develop aircraft."

Despite the slowdown in piston and turbine sales over the past few months, Kromer says inventories remain low and the 110 aircraft produced this year should be absorbed fast. He says Piper's 27 dealers have survived worst slowdowns and there has only been a slight increase in the number of used aircraft coming back.

"We still have activity. The phones are still ringing at the dealers," Kromer says. "The activity is just slower. It hasn't come to a screeching halt."