The significant drop in expected deliveries at Cessna Aircraft this year was bigger and sooner than predicted, says UBS analyst David Stauss in a research report. The company now expects to deliver 375 business jets, down significantly from previous estimates as the deteriorating economy has customers canceling and deferring orders.
There’s still risk in that number, however, Strauss said. Only 80 percent of those jets are sold, the company’s parent company, Textron, said yesterday on an earnings call with analysts and reporters. That implies deliveries could fall further, he said. “Cessna will likely have to aggressively push price to fill these slots.”
Cessna said Thursday it was cutting 4,600 jobs, including 4,000 in Wichita, as it brings production down.
While Cessna Aircraft announced deeper job cuts today, the waiting continues for Hawker Beechcraft employees. Hawker Beechcraft has warned employees to expect deep cuts that will affect all departments and levels. But it isn’t yet prepared to say how many jobs will be cut. The rumors are everywhere.
“The waiting is hard,” said a teary wife of a Hawker Beechcraft worker who called this morning. She is facing surgery in late February and hopes her husband will have a job.
At the same time, it’s a tough day at Cessna. Employees are receiving 60-day layoff notices. While the company says the majority will know today whether they are losing their job, the notices will be issued over the next few weeks. The economy is taking its toll on the general aviation market. These are surely tough times.
Reuters reports that EADS won’t bid on the contract to build the next Air Force One.
From the report:
EADS North America provided technical information about several Airbus wide-body commercial aircraft to the U.S. Air Force in 2007 when it was conducting an analysis of alternatives for the competition, said spokesman Guy Hicks.
But the company ultimately decided that participating in the competition would not advance its goal to invest in the United States and create high-technology jobs, Hicks said.
“After careful review, we’ve determined that participation in the AF-1 program will not help us meet these business objectives,” he said.
Hicks went on to say that EADS will continue to work with Northrop Grumman on a bid for refueling tankers, which are expected to be awarded early next year.
Several Cessna employees tell me they’re expecting more news about upcoming layoffs this week. Earlier this month, Cessna said it must cut 2,000 jobs systemwide as it revises its 2009 delivery schedule downward — the second round of cuts for the Wichita business jetmaker. The company plans to issue 60-day layoff notices, but so far has not said how many job cuts will be in Wichita, where 12,000 of the company’s 15,000 employees work. Nor has it handed out the notices. Stay tuned.
It appears Hawker Beechcraft may be slowing deliveries of its Hawker 4000 business jet.
Moog Inc., a supplier to the business jet and other markets, said yesterday in a earnings conference call that its business jet product line showed a decline in the last quarter of 2008. Sales were down 18 percent, it said, “mostly having to do with the reduced level of shipments on the Hawker 4000. Although the company of Hawker Beechcraft insists that they are maintain (sic) their delivery schedule of this airplane, we’ve already delivered more hardware than they were able to use. So our effort has slowed down.”
The remarks were in an earnings call transcript. Among its products, Moog supplies fly-by-wire systems, leading edge and trailing edge flap acuation systems and stabilizer trim systems to business jet manufacturers, its website said.
The Large Aircraft Security Program puts the general aviation industry — which employs 1.2 million people in the U.S. — at further economic risk, U.S.Rep. Todd Tiahrt and Sens. Sam Brownback and Pat Roberts said in a letter this week to the Department of Homeland Security.
“The last thing workers and aviation manufacturers need is more bureaucratic mandates that would cripple the industry,” Tiahrt said in a statement.
The industry and the TSA must work together to develop a plan that ensures every person is safe on board a plane, but also does not harm the general aviation industry, Brownback said.
In the letter, the three noted their concern that many of the proposed measures would create significant operational burdens on businesses that rely on general avition aircraft to conduct their business. “Without changes…, the TSA proposal could make it nearly impossible for some aircraft to operate at all,” the letter said. It suggests the Department reconsiders the program.
Citgroup, which has received $45 billion in bailout money from the U.S. government, said it no longer plans to take delivery of a $50 million corporate jet it planned to buy. The jet on order wasn’t even a U.S. built one. According to the New York Post on Monday, Citigroup had ordered a new Dassault Falcon 7X business jet two years ago. On Monday, the New York Post said it planned to take possession of the new corporate jet, even after receiving billions in support from the federal government.
With all the backlash and a concerns from politicians worried about how banks receiving federal funds are spending the money, Citigroup is changing its tune, the Associated Press said today. “Citi has no intent to take delivery of any new aircraft,” it said in a statement.
Want to learn more about Air Force One? National Geographic is airing a program Sunday, Jan. 25 on the presidential fleet called On Board Air Force One. The show airs at 7 p.m. on Channel 111.
Here’s what National Geographic says about the show: “Journey inside the most secure aircraft in the world, Air Force One, as it carries the President through the confusion and terror of 9/11, a secret mission into Baghdad and a whirlwind diplomatic mission through the Middle East. With unprecedented access, National Geographic introduces you to the presidential pilot and the crew charged with operating this global command center in the sky.”
Writing about Air Force One for today’s paper brings back vivid memories. Several years ago, I covered President Clinton’s trip to Wichita when he came to visit Cessna’s training center that helped bring welfare recipients into the workforce.
I was the only local print reporter chosen to be part of the national press pool. I’d gone through the security checks and was on the tarmac at McConnell Air Force Base when the massive blue and white plane came into sight, then landed. I watched as the door swung open and the stairs descended. On the door was the large presidential seal. It was a scene I’d watched many times on television, but never in person. It took my breath away, and I choked back a tear. No matter your party affiliation, that plane, modified by so many workers at Boeing Wichita here, is symbolic of United States and its freedoms. It was a moment and a feeling I will never forget.
My story today on the Air Force’s plan to replace the two Boeing-747s that make up the presidential air fleet is today’s top-read story. (The planes are called Air Force One whenever the president is on board. Technically, Air Force One is the radio call sign). So far, the story has generated more than five pages of comments on Kansas.com expressing a variety of opinion. Many express an outrage that the government could consider a bid from Airbus. I’ve also received an e-mail today from a recently-retired airline transport captain and flight instructor from Mississippi who brings an interesting perspective.
He thinks the Air Force should not replace the two 747-200s but continue to maintain them. The aircraft took years for Boeing and other contractors to build at a cost of hundreds of millions of dollars, he notes. Although they are over 25 years old, they are two “lowest time” 747-200s in the world, he said. Although the 747-200 is now out of production, parts on the shelf and parts that could be ordered now could keep the plane flying for another 50 years. “Why spend another billion or two simply to advertise we have borrowed (again) enough money to buy the most expensive?”
