Business aircraft manufacturers are cutting production and slashing workforces as the deepening global financial crisis hits orderbooks and knocks sales.
Hawker Beechcraft has slashed its workforce by 5% as its third quarter earnings take a nosedive. The company says: "In response to the weakness in the global economy and overall economic outlook, reductions in the workforce would be required as adjustments are made to aircraft production rates."
Sales for the past three months amounted to $783.3 million, an $87.7 million decline from the same period a year ago. In addition to broad economic challenges, Hawker's third quarter earnings also took a financial hit from a four-week strike in August by the International Association of Machinists and Aerospace Workers.
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"Aircraft deliveries were significantly impacted by the strike," says Hawker Beechcraft. "During the quarter, the company delivered 86 business and general aviation aircraft consisting of 34 jets, 33 turboprops and 19 piston aircraft, compared with the 106 aircraft during the same period in 2007."
Hawker also paid a $25 million charge to modify early production Hawker 4000 business jets to the final type design and standardise the production system.
"We are also closely monitoring global economic conditions to assess the impact on our industry," says Hawker Beechcraft chief executive Jim Schuster. "Going forward, we will be proactive in responding to the evolving economic realities."
Fellow Wichita-based airframer Cessna is revising its Citation jet production schedule for 2009 and beyond "due to continued softening in the global economic environment". The company had previously targeted about 535 Citations for delivery in 2009, up from about 475 planned for 2008. "While detailed planning is still under way, the company expects deliveries will next year be up slightly over 2008, reflecting continued ramp-up of the new Mustang programme," says Cessna's parent company Textron.
However, looking to the next two to three years "it is prudent for us to evaluate the proper level of jet production and deliveries to avoid significant variations and inefficiencies in annual production," says Textron chief executive Lewis Campbell. New order intake has slowed, he says and "we now believe that planning for more consistent levels of production during the next several years will best serve our shareholders, customers and employees".
Brazilian airframer Embraer concedes the market is facing a downturn: "The general outlook for next year is not that positive," says Embraer chief executive Fred Curado, "The last few weeks we've seen an important reduction in activity. I think this is now a time for us to hold on to a solid backlog as I think [the industry] will have a dry season for some time."
Late last month Gulfstream acknowledged that while orders for its large-cabin business jets remain buoyant, it is now delivering midsize types - notably the G150 - at a faster rate than it is selling them and could cut production this quarter as a consequence.
Source: Flight International
