PAUL LEWIS / WASHINGTON DC
Troubled manufacturer rings changes at Bell in bid to restore helicopter business to health after V-22 mishaps
Faced by a deteriorating financial outlook, Textron has moved to assert tighter management control over its Bell Helicopter business, in the process replacing chief executive Terry Stinson.
This follows on-going V-22 Osprey and AH-1Z/UH-1Y programme delays and costs overruns, compounded by a slowdown in commercial activity in the wake of the 11 September attacks.
The company now expects to make a loss of around $35 million in the third quarter, write off $275 million in goodwill related to other business and spend $125 million - in addition to $200 million already committed - restructuring Textron.
The company plans to shed another 2,500 jobs, increasing total redundancies to 7,300 or 12% of the workforce and the number of plant closures announced to 50 in the last 12 months.
Textron is making two major executive changes in order to "move more forceably to put in place more extensive cost controls and operational improvements", says chief executive and chairman Lewis Campbell. The most visible upset has been to replace Stinson with John Murphey, formerly Bell president, and remove Textron chief operating officer John Janitz. Campbell, who occupied the position of COO for six years, resumes operational responsibility for all of Textron's business activities.
Bell, even before 11 September, had been hit by the V-22 tiltrotor mishaps, the resulting need for design changes and postponement by up to three years in the start of full rate production.
Its problems had been further exacerbated by cost escalation and delays to the AH-1Z/UH-1Y helicopter remanufacturing and upgrade programme for the US Marine Corps, while any hopes of offsetting this with civil delivery and sales were hit by the financial fallout from the terrorist attacks.
"We had to go back and look at all the estimates to completion by Bell and when we did this we concluded they were being too optimistic about what could be done and we're not comfortable with the status of the programmes. We decided we needed to clear the decks," explains Ted French, Textron chief financial officer.
Civil sales are down 20 helicopters on last year as a number of pending fleet and emergency medical service sales evaporated in the wake of 11 September.
Textron has also been hit in its other major aerospace area, Cessna, where single engine aircraft sales have dropped off and a 15-17% fall in aircraft residual prices has forced the company to write down the value of its used equipment inventory.
Source: Flight International
