Cessna Suspends Columbus Program

 - June 2, 2009, 6:43 AM

With “revenues…down significantly in the last year,” Cessna chairman, CEO and president Jack Pelton announced on April 29 that, “To ensure our focus is on our strong products in existing markets, we are suspending our development of the Citation Columbus.” He also revealed a decision to reduce production rates for this year and next in response to “a continued decline in global demand for our aircraft.”

Those reduced production rates, in turn, have forced an additional reduction in the work force. On April 29, the company began issuing layoff notices to approximately 1,600 workers at every level of the company.

Some 700 more workers will be laid off by the middle of this month. “This sizes our work force for our currently planned production in 2010,” said Pelton.

Cessna also intends to extend a planned companywide employee furlough to four weeks, from June 22 through July 19. The furloughs will coincide with various assembly-line furloughs already instituted to match production demand. “This action is required to remove the aircraft and the associated costs from this year’s production schedule,” said Pelton.

There has been speculation that if parent company Textron fails in its effort to increase liquidity by mid-year, it might sell one of its major assets, among them Bell Helicopter and Cessna Aircraft. A late April report in Kuwait’s Al-Wattan newspaper, which speculated that a Middle East consortium was seeking to acquire Textron, sent the company’s share price temporarily soaring 47 percent. Textron has declined to comment on the scuttlebutt. The company also expects to see an increase in order cancellations following its decision to suspend development of the Columbus.

More recently, Cessna parent company Textron offered little encouragement at an investor conference in Florida in mid-May. According to CEO Lewis Campbell, jet aircraft deliveries are likely to continue to decline in 2010. “Don’t read me as bullish on the return of business jets,” he added. “I’m not bullish on it. We haven't reached the bottom yet.”