Cessna's Columbus program suspended

Cessna Aircraft Company has suspended work on its largest jet ever, the Columbus, in light of the continuing slump in the worldwide business jet market. In addition, Cessna officials announced a layoff of 1,600 workers, with an additional 700 to be laid off by mid-June. These are in addition to the 4,600 layoffs previously announced. In addition, Cessna will close its facility at Bend, Ore., and move production of the Corvalis, formerly the Columbia 400, to the Cessna facility in Independence, Kan.

Columbus deliveries were to begin in 2013, but right now company executives can’t predict the strength of the market that far ahead.

“We need to know more about the market we will be selling into,” said one Textron executive. Cessna’s parent company, Textron, said it is laying off 8,200 at all of its divisions worldwide, or about 20 percent of the company.

In the first quarter, Cessna received 92 cancellations for aircraft on order. Half of those were slated for delivery this year, and many were close to delivery with all customer options determined. In many cases firms that had laid off workers didn’t feel it was right to fly into town in a new airplane, Textron officials said. Cessna now expects to make 295 deliveries this year, 120 to 130 of them Mustangs, despite projections last year that it would deliver 525 in 2009. Mustang orders have been “holding pretty well,” a Textron official said.

Cancellations are tapering off but will continue into the second quarter, especially given the announcement of the suspension of the Columbus program.

Cessna expects to make 500 single-engine piston deliveries in 2009. Of the new layoffs, 121 are at the piston-engine plant in Independence, Kan.

Cessna’s revenues decreased $477 million in the first quarter compared to the same period last year. This reflects the delivery of 69 business jets compared to 95 during the same quarter last year. Still, Cessna remains a strong cash generator, and the generation of cash is Textron’s top priority in combating the economic downturn.