Leaner Cessna looks for good news despite recession
10/15/2009 12:05 AM
08/08/2014 9:54 AM
After a tough year marked by severe employment and production cuts, Cessna Aircraft Co.' s top executive doesn't hesitate when asked what concerns him the most.
"I'm still worried about the economy," Jack Pelton, Cessna's chairman, CEO and president, said ahead of next week's National Business Aviation Association show in Orlando, Fla.
Although the assumption is that the battered economy won't deteriorate further, unemployment rates, consumer spending and other indicators are still troublesome, he said.
"There's still a lot out there that causes you to be concerned."
As the worst recession in a generation wracked the business jet market, Cessna has gone through layoffs, a plant shutdown, cancellation of the Citation Columbus program, furloughs and production cuts in the past year.
It's eliminated 8,200 jobs, more than half of the employees it had this time last year.
Just a year ago, Cessna was building up to deliver a record 535 jets in 2009. Now, it expects to deliver 275 jets in 2009 and fewer still in 2010.
"We're running some awfully low production rates," Pelton said.
Cessna is now correctly sized to meet next year's lower production, Pelton said.
"We put together a plan that recognized we're going to go through a real resizing and reshaping of production," he said. "I would say we're meeting our plan."
In times like this, you look for any good news you can find, Pelton said. "And that's our good news."
Order cancellations haven't stopped, but they've slowed and are getting to what he describes as a manageable number.
But "we're still in the bottom side of a long cycle," Pelton said.
In the meantime, Cessna isn't planning any fundamental changes in the way it operates, Pelton said.
But it's added incentives to help boost aircraft sales.
A new program promises that, for certain aircraft, Cessna will buy the planes back after three years if customers want to upgrade to a bigger model when the economy improves.
Cessna last week announced a "deposit amplifier" which adds $30,000 to the deposit for buyers of 182 Skylanes.
"We just trying to be as creative as we can," Pelton said.
Still, customers are deciding whether they want to allocate a significant amount of capital toward an aircraft, Pelton said.
Cessna's presence at the NBAA convention, the world's largest business jet show, will be much smaller than in previous years.
The company won't have its usual large exhibit inside the convention hall. It still will have its lineup of aircraft on static display, however.
"We're not going in with any expectation of coming home with lots of orders," Pelton said.
The company will try to sell airplanes, but more than that, the show will be a way to meet with customers.
"It's to keep those relationships built and strong," Pelton said.