Skip to comments.Textron to Lay Off 1,200 Cessna Workers (March 20, 2003)
Posted on 03/20/2003 11:27:31 AM PST by Willie Green
For education and discussion only. Not for commercial use.
PROVIDENCE, R.I. (AP)--Textron Inc. will lay off 1,200 employees in its Cessna Aircraft unit, citing a reduction in the order placed by one of its two major business jet customers and worldwide economic concerns.
The company also announced Thursday that it will be reducing its earnings projections for the year, but gave no specific dollar figure.
Textron said the layoffs will be concentrated at Cessna's Wichita, Kan., headquarters, where 9,200 are employed.
The layoffs also will affect a Cessna facility in Columbus, Ohio, that employs 400 workers; a Cessna facility in Independence, Kan., that employs 400; and 11 aircraft service centers around the world. Both salaried and hourly positions will be eliminated, said Textron spokeswoman Susan Bishop.
``The current economic and geopolitical situation has worsened and is affecting business jet demand much more severely than expected,'' said Lewis Campbell, Textron chairman, president and chief executive officer.
Sixty-day notices will be given to the affected workers, beginning March 31, the company said.
Textron shares fell more than 10 percent in midday trading, down $3.54 to $29.86 each on the New York Stock Exchange.
The latest layoffs come on top of earlier announcements that Cessna would lay off about 1,625 employees this year. The company said the earlier layoffs were because the aerospace industry failed to rebound following the Sept. 11, 2001 terrorist attacks.
The company also cut 800 jobs in October--400 through layoffs and 400 through incentives offered to employees who voluntarily quit or retired.
Lower overall demand for business jets was compounded by a reduction in an order placed with Cessna by NetJets Inc., Bishop said. NetJets is one of Cessna's two major business jet customers, and business jet sales account for 80 percent of Cessna's revenues, Bishop said.
Textron is now projecting Cessna will deliver between 180 and 195 jets this year, down from about 220, Bishop said.
Cessna and NetJets are still negotiating the specific changes to the jet order, according to Textron.
NetJets is a fractional ownership company, which allows corporations and individuals to buy shares in aircraft. The customers may then use the planes for a specific number of hours per year.
Bishop said Textron expects some of the loss in revenue from Cessna will be offset by a better than expected performance by Textron Systems, another Textron unit.
Textron, an $11 billion multi-industry company with 49,000 employees in 40 countries, said other factors including lower than budgeted insurance costs, interest expenses and corporate expenses will help its financial outlook.
BOSTON, March 20 (Reuters) - Textron Inc. on Thursday said Cessna Aircraft would cut 1,200 jobs - more than 10 percent of the unit's work force - and place another 6,000 workers on furlough for seven weeks as demand for business jets slumps on weak corporate profits.
Wichita, Kansas-based Cessna, the largest unit at Textron, employs about 11,000 people. Textron said it expects to deliver 180 to 195 jets this year, down from its previous estimate of 220 planes.
Textron said it will cut its profit forecast for this year, but an exact number won't be available until it completes negotiations with a key customer. Textron shares fell 11 percent in late-morning trade on the New York Stock Exchange.
As a 'general aviation brat,' having grown up around pilots and planes just like this one my entire life, I say AMEN!
The lawsuits that previously affected the GA sector were about older aircraft. A law limiting manufacturer liability for aircraft older than 18 years was passed in 1996.
Just what I was going to say. When you can be held liable for the life of your product it doesn't bode well for company longevity.
That other $12,800 is for the lawyers. It just sits in escrow until the lawyers come claim it.
Thanks a lot, all you lawyers out there.
True, but the damage was done before that. Take a look at the training fleet. Take a look at the price of a new 172. Over 1/2 the price of a new a/c is liability premiums. (Check AOPA.org).
If I have a 20 year old plane(pretty new as planes go) and put in a new part, engine, propeller, tire, upholstry, injector, brake, etc.....That 18 years starts fresh on that part.
New engine? Whoever sold it to you has bought a liability tail for another 18 years.
Underpowered and not much weight hauling ability.
Now if you want to get from point A to point B in a hurry, a Lear 25 is the pocket rocket. A Falcon 20 is pretty good. One of the newer vintage Hawkers is a pretty fine ride too.
The biz jet industry is just falling prey to what has always given it it's ups and downs. When a corporation's stock price is only half of what it was three years ago, the planes gotta go. They thought fractional ownership would rescue them from that trap, but it won't.
And what of the total liability picture? Well, I'll tell you: it's been transferred to the owners, since going after the manufacturers is now harder (but, of course, not impossible). Liability premiums for owners are much higher, and many companies will no longer write the coverage.
Since I write those checks, I think the reality is painfully clear to me.
When a corporation's stock price is only half of what it was three years ago, the planes gotta go
Yup. I think that's the main point. And the point of the guy who posted the article. Which is: Umm, the economy still continues...down.
Cessna just recently braged about their 6,000th airplane built recently. Oh, well, so much for company milestones to be proud of. They always seem to have a dark cloud over them. "Thanks, we're rich!"
Actually, the lawyers have been gunning for the parts makers and vendors, and also for repairmen (A&Ps and IAs) and repair stations.
For instance, when Mel Carnahan was killed by his son's inability to fly partial-panel, they went after the maker of the vacuum pump that powers the vacuum instruments (in this case, Parker Hannifin Inc.).
Even though the vacuum pump never failed until Roger Carnahan slammed it into terra firma (along with the rest of the plane) at 260+ knots.
They selected an all-mongoloid jury, and then pled a weepy, emotional case, in front of a fully-tortster-owned judge.
That's a typical aviation tort case.
Another one was a lawyer in Florida who missed three straight approaches to minimums and then lost control in IMC, killing himself and his clients.
The family, well represented by another Mr No-Shoulders of the Forked Tongue Bar, sued the FAA (!) on the theory that his loss of control was caused by them not passing a .02 millibar change in the barometer setting to him.
The family won big (after all, the Government has the deepest pockets of all), and has since been outraged by the suggestion that it was all about the money. So I'm waiting to hear they donated their winnings at Lawsuit Lotto to a registered charity.
(Hark! Methinks I hear crickets!)
Criminal Number 18F