After a months long free fall, it feels like the business jet market is starting to stabilize, said Jack Pelton, head of Cessna Aircraft.
As reported by Molly McMillan for CharterX
After a months long free fall, it feels like the business jet market is starting to stabilize, said Jack Pelton, head of Cessna Aircraft.
“At some point there, we’ll be able to call the bottom,” Pelton, the company’s chairman, president and CEO, said of the drop in the market. “The negatives, like (order) cancellations are slowing down; we’re starting to see orders start to rise again.”
Aircraft deliveries are expected to hit their low next year, which will be followed by a steady climb, he said.
“The slope of that rise will be dependent on what the economy does,” he said.
Pelton’s boss, meanwhile, said Cessna’s parent company is not interested in selling the Wichita company.
“I don’t know where all the rumors come from,” said Scott Donnelly, president and chief operating officer of Textron. “I think I can be clear that no one is interested in any way, shape or form in divesting Cessna out of Textron. It’s a central asset of what Textron is.”
Pelton spoke last week in a broad-ranging interview on the eve of the world’s largest gathering of general aviation airplanes and airplane buffs at AirVenture in Oshkosh, Wis.
Cessna has cut half of its work force — about 8,200 people — since November. The company has had to cut production, and employees, as order cancellations and deferrals have stacked up during the economic downturn.
The layoffs include last month’s announcement of 1,300 cuts, including 500 employees who will receive 60-day notices by mid-August. Those cuts, Pelton said, will put Cessna at the right employment level for 2010’s planned lower production rates.
Pelton said he also has heard the rumors about Textron looking for buyers for Cessna.
“I work closely with the Textron board of directors,” he said. “I’ve never felt better than knowing in this difficult time, they are really committed to Cessna.”
Donnelly said there is no question Cessna and the entire general aviation industry are going through a tough time.
“We’ll come out of this an even stronger company,” he said. “We have a great brand, a great franchise and one, I know, will drive a lot of value going forward.”
Even in a business that is as cyclical as general aviation, Pelton said watching the business jet market continue to deteriorate has been difficult.
“When we saw the indicators continue to deteriorate past what we saw in the last recessionary period ... it became very clear we were in uncharted territory with circumstances that we’ve never seen in the past,” Pelton said. “That was very startling.”
Pelton said downturn has been a personally distressing time, forcing the company to dismantle what employees have built over the past five years.
“Every time we have to reduce production and lay people off, it is a recurring nightmare,” he said. “I’ve had more of those days than I would ever like to relieve in my life again.”
Pelton also touched on a variety of other topics:
He said the biggest surprise of the downturn has been the amount of negativity and stigma surrounding the use of business jets.
Leaders of the Big Three automakers were criticized by members of Congress when they arrived on private jets to ask for a federal bailout. Early legislation, later changed, would have required companies receiving federal bailout funds to divest their corporate aircraft fleet or their jet leases.
It’s been a “constant haranguing — almost as if you’re involved in something that’s evil,’’ Pelton said. “It hasn’t stopped.”
Earlier this year, Cessna Aircraft unveiled an ad campaign to showcase the value of business aviation.
The company may have canceled the long-range, large Citation Columbus program, but long-term, the fundamentals for the aircraft remain.
Last year, the state, county and city approved more than $70 million in cash assistance and tax breaks to entice Cessna to develop the new jet in Wichita. The project was to have created 1,000 jobs with an annual payroll of $74 million. Cessna returned $10 million to the city and Sedgwick County earlier this month.
As reported by Molly McMillan for CharterX “We have an enormously faithful group of installed customers that are flying everything from 172s to Citation Xs,” Pelton said. “Long term, we’ll need to have products that will satisfy their needs as they grow and expand.”
Cessna continues to make significant investments in new product development in the light and medium planes, he said.
None will be announced, though, until the market improves, Pelton said.
“If we were to go out today and hold a major press conference… everybody would say, ‘That’s great! I’ll call you when things get better.”
