Air Capital Insider

Textron Aviation looks to trim costs with early retirement, service center closings

The Wichita Eagle

Textron Aviation is offering early retirement to some employees and closing two service centers in a bid to be more efficient.

The Wichita-based manufacturer of Cessna and Beechcraft aircraft will close its airplane service centers in Atlanta and New Castle, Del.

The company said in a statement Thursday that the retirement program and service closings are part of “an effort to improve the company’s cost competitiveness.”

“We are taking a number of proactive steps to streamline our business and best position ourselves for the future,” the statement said.

The company wouldn’t say how many employees are being offered voluntary retirement. It will be offered to employees company-wide, not just in Wichita.

Textron Aviation would not provide information on how many people it employs as a whole or in Wichita. In 2015, the company had more than 9,000 employees in Kansas.

It also operates a plant in Independence where it manufactures the single-piston engine Skyhawk, Skylane and Stationair as well as the Citation Mustang and M2 business jets, and the TTx high-performance single.

The company said the two service centers it is closing will be replaced by mobile support stations. The action, Textron Aviation said in the statement, better aligns its customer service locations with market demand.

Textron Aviation has 21 factory service centers worldwide, including 13 in the U.S., according to its website.

The Delaware and Atlanta service centers were included as part of Textron’s 2014 acquisition of Beechcraft.

Business jet forecaster Rolland Vincent said it’s likely that those service centers weren’t up to Cessna Service Center standards, and their closings will not have much impact on Textron Aviation’s ability to service customers, especially with nearby Cessna Service Centers in New York and Orlando, Fla.

“I think we’re just looking at part of a strategy that is going to play out,” Vincent said. “I wouldn’t be surprised if there are a few more of these (former Beechcraft service center closings) going forward.

“I wouldn’t be at all concerned. This is normal … when you have mergers.”

The reasons behind voluntary retirements aren’t as clear. In Textron Aviation’s second quarter of 2016, it reported a 6 percent increase in revenue on 8 percent lower profit from a year ago. It delivered 45 Cessna Citation jets and 23 Beechcraft King Air turboprops in the second quarter of 2016, compared with 36 Citations and 30 King Airs in the same quarter last year.

But last week, parent company Textron Inc. unveiled a plan in a regulatory filing to eliminate jobs and close some operations in its Textron Systems and Textron Industrial businesses.

The company said in the Securities and Exchange Commission filing that it was undertaking the actions “in order to improve overall operating efficiency across Textron.”

Jerry Siebenmark: 316-268-6576, @jsiebenmark