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.
Gents, this story is TWO PERISHING YEARS OLD.
Interesting timing to revive the old thread though -- Textron DOES state earnings in a conference call tomorrow. Analysts expect that Cessna has done well on jets and has a growing backlog of single engine planes, which are masked in Cessna's statistics cause they count them "sold" when they go to a dealer (even though Cessna's captive finance corporation is usually still carrying them at that point).
The single engine planes, though, are a profitable but small part of Cessna, which is the biggest part of Textron, having about 1.2 times the revenue of Bell Helicopter.
Sorry for my inadvertent reply on this Thread Of The Living Dead. I will now let it find eternal peace.
d.o.l.
Criminal Number 18F
While we are protecting gun manufacturers, it sure would be nice to protect aircraft and parts manufacturers. General Aviation has taken such a beating that in the 1980's most aircraft manufacturers quit producing. There are approximately 700,000 registered pilots total, but I doubt that many fly. One club at my airport has 2,800 people paying monthly dues but only 300 active flyers. I believe the FAA numbers from last year sugggested only 135,000 private pilots and 245,000 commercial ticket holders. That's only 380,000 non-airline pilots. If only 10% routinely fly, that's only 38,000 people, or 0.013% of the population of the US.
Yep. And if you go to meetings of such aviation groups as AOPA or (especially) EAA what you see is -- a lot of old men.
The demographics are not our friends.
d.o.l.
Criminal Number 18F
I took ground school, and passed my written, but could never afford to do the rest.
True. Flying is expensive. That $100 hamburger is now $200. I don't know the inside breakdown of why a new Cessna can cost $200K-$500K, but considering how lightweight and simple they are to build I can only imagine that the costs are related to insurance and legal costs, not to mention the costs of regulatory compliance.
"a lot of old men."
So true. It seems anyone under 30 years old who is learning to fly is doing so to be an ATP. I don't have a single friend under 45 who is a pilot. Not one, yet, I have several friends over 55 who are pilots. I am 40 and I can barely get my best friend who is 45 to even think of learning to fly.
Cessna may be seeing the result of new entrants into the small bussiness jet market like:
Sino Swearingen (SJ-31)
Eclipse Aviation (500)
Adam Aircraft (A700)
Safire Aircraft (Safire Jet)
and a new turboprop from Epic Aviation (Epic LT) that's as fast as a Citation II.
Add the new Hondajet to the list of competition also.
Fast doesn't count in the world of business aviation, range does (and aircraft manufacturers routinely post numbers on range that are, um, somewhat suspect).
Also, none of the other planes that you mentioned is certified. Cessna, on the other hand, has planes available today.
"Fast doesn't count in the world of business aviation, range does"
The Epic LT's range is is most impressive at 1300 nm fast cruise and 1800 nm economy cruise.
"Also, none of the other planes that you mentioned is certified"
Most are well on their way, at one time Cessna's jets were not certified either.
http://www.sport-jet.com/TheVLJUpdate.mgi
You mean SJ-30. Typo? Not a direct competitor with Cessna, except the CJ1; notably faster; not yet certified (1986 original design), no manufacturing plant in place. Not quite vaporware, but not quite real; about 150 orders in the book, I think. Well funded by Taiwanese investors (that's the "Sino") in the name.
Neither Vern Raburn nor Jack Pelton see direct competition. Cessna's smallest jet, the Mustang, is about 1.8x the cost of an Eclipse. And Raburn has defined his market as people who do not use general aviation now. Cessna's Citation Mustang market is the pilot/owner moving up from a piston twin or turboprop single.
I am losing a steak dinner bet on this one being certified by 12/31/05. Ain't gonna happen. In fact, the A500 is dragging. I believe that they will ultimately pull it off, at least as far as the 500 goes. As fuel prices rise the 700 looks worse and worse.
Well, that's what the sales literature says. Are you aware that it's supposed to be an amateur-built kit aircraft? FAA has said they will not be certifying it in the amateur built category, which makes it difficult to, like, use. (Not to mention, even amateur-built experimentals, the ones least restricted, can't be used for hire, like as air taxis, a huge market for this class of plane). Epic's reaction, which you can see on their website here, is to make a 4-seat version. (The FAA seems to be conjuring up new prohibitions on experimentals with more than four seats, and/or turbojet power).
FAA has advised Epic to get a type certificate; Epic does not have the half-billion dollars it costs these days to jump through the FAA's endlessly moving array of certification hoops, a process that takes a minimum of three years.
And the underlying premise of the main article, which might have been true in 2003 doesn't seem so. Textron had their conference call today. Cessna forecasts 245 bizjet deliveries in CY 05 and 290 in FY 06. Fifty of the new planes will be the new Citation Mustang (some of which probably would have been CJ1 orders if there was no Mustang).
d.o.l.
Criminal Number 18F
And Amish with an attitude proved his point with "The Epic LT's range is is most impressive at 1300 nm fast cruise and 1800 nm economy cruise."
In point of fact, that's what Epic says it's going to be. Actually, it isn't, it's what they used to say. They're now climbing down to 1600 nm economy. But I would bet my flight bag and all it contains that they have done very limited testing. They're flying but they haven't got 1000 hours on the one plane flying. In fact, I don't think they have 500 hours on it.
Most are well on their way [to type certification[
Eclipse 500, Citation Mustang, and SJ-30 are. You may be able to buy a fully certified one of these by the end of 2006, but until then, even these are just FUD. Adam is miles away, Safire is dead in the water, and the HondaJet is a proof of concept, period. Honda wants to sell engines, not airplanes.
People don't understand the staggering and ever growing cost of type certification. It cost one company a million dollars to certify their pilot seat for a light GA plane. And the other burden is the arbitrariness of it. What one MIDO permits, even prefers, a MIDO in a neighbouring state may forbid. The FAA is truly a government of men, not of laws -- the very sort of institution our nation was founded in opposition to.
d.o.l.
Criminal Number 18F
"Sino Swearingen (SJ-31)
You mean SJ-30. Typo? Not a direct competitor with Cessna, except the CJ1; notably faster; not yet certified (1986 original design), no manufacturing plant in place. Not quite vaporware, but not quite real; about 150 orders in the book, I think. Well funded by Taiwanese investors (that's the "Sino") in the name."
Yes, typo. Go to their website, there is indeed a manufacturing plant.
"Eclipse Aviation (500)
Neither Vern Raburn nor Jack Pelton see direct competition. Cessna's smallest jet, the Mustang, is about 1.8x the cost of an Eclipse. And Raburn has defined his market as people who do not use general aviation now. Cessna's Citation Mustang market is the pilot/owner moving up from a piston twin or turboprop single."
Like myself, many potential LJ owners have put off purchases while waiting for other options to present themselves. The eclipse is a potential option for some.
"Adam Aircraft (A700)
I am losing a steak dinner bet on this one being certified by 12/31/05. Ain't gonna happen. In fact, the A500 is dragging. I believe that they will ultimately pull it off, at least as far as the 500 goes. As fuel prices rise the 700 looks worse and worse."
There is always 2006 or 2007. Point is, these new entants are going to get market share.
"Safire Aircraft (Safire Jet) Moribund. See here: http://www.safireaircraft.com/pressrel_status.html"
Safire has been at the back of the pack for awhile, not as viable as others.
"and a new turboprop from Epic Aviation (Epic LT) that's as fast as a Citation II.
Well, that's what the sales literature says. Are you aware that it's supposed to be an amateur-built kit aircraft?"
Experimental version is in production now, buyers spend time at the plant involved with the manufacture to satisfy the 51% rule. I have personally seen this aircraft.
" FAA has said they will not be certifying it in the amateur built category, which makes it difficult to, like, use. (Not to mention, even amateur-built experimentals, the ones least restricted, can't be used for hire, like as air taxis, a huge market for this class of plane). Epic's reaction, which you can see on their website here, is to make a 4-seat version. (The FAA seems to be conjuring up new prohibitions on experimentals with more than four seats, and/or turbojet power)."
Epic plans to produce a 7 seat FAA type certificated version for sale in 2008.
Bottom line is that there's no shortage of new entrants into the LJ market, no doubt Cessna is taking notice. This same thing happened back in the early 70's with the light helicopter market when Robinson Helicopter came on the scene.
http://www.robinsonheli.com/
Robinson now produces more light helicopters than any other manufacturer.
How ready is that WV plant for a production certificate? They're looking at building jets by hand in a great big hangar.
;[Epic] Experimental version is in production now, buyers spend time at the plant involved with the manufacture to satisfy the 51% rule.
Per the FAA, it doesn't, and Rick Schrameck (who, by the way, has a background in model airplanes; he's the Hardy Kruger character from the original Flight of the Phoenix) hasn't responded to the press on the issue. At all.
I'm not just making this up. Sources?
"Abuse of the 51% rule has recently come under scrutiny again with the revelation that the FAA has finally drawn a line in the sand with the recent refusal of an FAA inspector to allow the certification of an Epic LT turboprop under Amateur-Built Experimental guidelines. This appears to be the much feared "shot across the bow" that a number of SportPlane companies have been waiting for as some of their number continue to push the definition of what is, and isn't, truly 51% amateur-built.In the words of one industry observer, "If Epic isn't pushing the FAA to enforce 51%, no one is."
Epic seemed to be almost begging for the FAA's critical attention through heavy promotion of the aircraft's custom-built nature, it's high-performance feature-set, and the company's self-set, highly public profile. To many, the company seemed to be "thumbing its nose" at the FAA."
I also note that now Epic is saying no certification, no problem, they'll get certification in Brazil and apply for reciprocal cert in the USA, based on both parties' adherence to ICAO. Their counsel has not been reading the case law. And they still have to go through the FAA, whose reps Epic has thoroughly antagonized, to get that to happen.
The guy I feel sorry for is the dentist in the story, who bought the Epic in good faith and now can't fly it. Boy's screwed. He will probably wind up suing both Epic and the FAA -- rotsa ruck.
I have personally seen this aircraft.
Yeah, the one flying example. It's been going to Oshkosh since, I believe, 2004, and isn't getting 100 hours a year. (It flew to Oshkosh in 04 without the time flown off, which says something about Epic's attitude towards regulations, and initially got the FAA annoyed).
Epic plans to produce a 7 seat FAA type certificated version for sale in 2008.
Ain't gonna happen. Epic isn't as well funded as Adam, let alone Eclipse, and the LT as it stands does not meet literally hundreds of Part 23 (14 CFR Part 23, the rules that govern certification of light GA aircraft) requirements. It has no hope of achieving Part 25 certification.
Epic has also shown no sign of building a company rather than building an airplane. Where will the service centers be? How will they train mechanics? How will they fulfill warranty expectations? These are all problems that new entries in aviation (like Cirrus and Eclipse) have to overcome.
Bottom line is that there's no shortage of new entrants into the LJ market
No, actually there is a surplus. Especially a surplus of pie-in-the-sky ideas. There's also no shortage of established players failing and withdrawing and getting absorbed or bought out.
no doubt Cessna is taking notice.
Cessna's next big project is an all-new piston single. This will consume considerable resources, and probably nothing drastic will be done with the jets for 5-10 years now.
This same thing happened back in the early 70's with the light helicopter market when Robinson Helicopter came on the scene.
Robinson essentially took 90+% of the training helicopter market and a similar percentage of the small owner-flown market by making a new piston helicopter (two of them, over the years). His only competition is Schweizer, which now that it is a fiefdom of Sikorsky is uninterested in competing in the open market. Enstrom and Brantly ship a couple helicopters each, and several makers that are out of the market (Hiller) do a couple of rebuilds.
It's a completely different thing. As far as the seriousness of their approach is concerned, Epic is better compared with Revolution Helicopter and the Mini-500 (except, the Mini is extremely hazardous, and I have no reason to believe the Epic LT is not safe).
(and aircraft manufacturers routinely post numbers on range that are, um, somewhat suspect)
Your information comes straight from their web site.
Sounds like you have convinced yourself, time will tell how accurate your predictions are.
Sounds like you have convinced yourself, time will tell how accurate your predictions are.
Perhaps the market for those that can afford fractional ownership has peaked....
"Your information comes straight from their web site"
Using this same logic one may not want to believe the information on the Cessna website regarding the Mustang either.
How many buyers do you think would write a check exlusively based upon website information anyway?
Maufacturers begin with target performance specifications that are adjusted a result of product testing. Too great a downgrade will send buyers to a competitor, one of the risks manufacturers take when setting the bar too high initially.
Who said I endorse Cessna's figures either?
How many buyers do you think would write a check exlusively based upon website information anyway?
Too many that I know. That's where a General Aviation Aircraft Analysis comes into play (and it has to be done by an independent contractor, not by someone employed by the manufacturer).
Maufacturers begin with target performance specifications that are adjusted a result of product testing. Too great a downgrade will send buyers to a competitor, one of the risks manufacturers take when setting the bar too high initially.
Traditionally, manufacturers put the best face on their products (otherwise known as lies). Real results, or performance, are almost always different and almost always well below their published specifications.
One final note, buying used (as opposed to new and untested) is almost always the safer bet. There is, in my estimation, a five to ten year shakeout period on any new airframe that will reveal design flaws that may not be observed during certification. A used aircraft (one that has gone through a few annuals or a TMO schedule) is a better money maker than a brand-new, sexy, little thing that spends more time in the maintenance bay than producing revenue or value.
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