Textron: Too soon to say if Beechcraft faces cuts
Friday, December 27, 2013
Textron Inc.'s CEO said Friday that his aviation company's $1.4 billion purchase of Beechcraft Corp. will require "restructuring and optimization of costs." But how the deal will affect thousands of employees at Beechcraft's home base in Kansas, and elsewhere, remains unclear.
Textron, Cessna Aircraft's parent company, announced late Thursday that it was purchasing Wichita, Kan.-based Beechcraft in a merger of big players in aviation. On Friday, a Textron spokesman said it was too early to speculate on workforce size or plant consolidations.
Civic leaders seemed optimistic in Wichita, where Beechraft is one of the linchpin businesses with about 3,300 employees. The company emerged from bankruptcy earlier this year.
Jeremy Hill, director of the Center for Economic Development and Business Research at Wichita State University, said the merger was good news. He noted that Textron already has ties to Wichita because Cessna Aircraft was founded in the central Kansas city more than 80 years ago.
Hill speculated that some upper management cuts could happen, but he doubted that the number of line workers would be reduced by much, if any.
"I will say both companies are fairly lean," Hill said. "I can't imagine there would be many more layoffs."
Wichita Mayor Dale Brewer and the City Council released a statement calling the acquisition "a development of great interest" to Wichita.
"Our city's reputation as the Air Capital of the World has been built on the solid business decisions of our aviation industry," the statement read. "We fully expect that the Textron/Beechcraft merger will result in a positive outcome for the individual businesses and the community as a whole."
Brewer was out of town Friday and unavailable for comment, his spokesman said.
Messages seeking comment from the International Association of Machinists & Aerospace Workers union in Wichita were not returned.
During a Friday teleconference with analysts, Textron chairman and CEO Scott C. Donnelly acknowledged that Beechcraft employees have been through a lot in recent years. Beechcraft emerged from bankruptcy 10 months ago — largely freed from debt and its unprofitable Hawker business jet operations.
"From an employee's perspective, obviously we are going to need to go through restructuring and optimization of costs, but it's going to strengthen those King Air and T-6 and Baron and Bonanza products going forward," Donnelly said, referring to Beechcraft's lines of airplanes.
Company spokesman Dave Sylvestre said the Providence, R.I.-based Textron was appointing a transition team, but until that team begins its work, "it would be too early for us to speculate on what it means in terms of workforce size or plant consolidations or anything like that."
But, he added: "Beechcraft now has a strong parent company, which means greater stability and investor capacity for Beechcraft."
Beechcraft was founded in Kansas in the 1930s, then purchased by the Canadian investment firm Onex Partners and Goldman Sachs Group Inc.'s private equity arm in 2007. It has more than 36,000 aircraft in service, but struggles in the sluggish business jet market during the economic downturn forced it to file for bankruptcy reorganization in May 2012.
Cessna was founded in Wichita in 1927, and has built and delivered nearly 200,000 airplanes worldwide since then, including 6,500 Citation business jets, according to Textron. It also makes Caravan single-engine utility turboprops and single-engine piston aircraft, and provides aftermarket services including include parts, maintenance, inspection and repairs.
Donnelly lauded Beechcraft's line of King Air turboprop planes as complements to Cessna's Caravan and Citation jet lineup.
Beechcraft CEO Bill Boisture had said in recent months that he expected the company would sell at least its idled business jet assets by the end of 2013.
"Textron's experience in the industry and its willingness to invest in and maintain the iconic Beechcraft brand make it an ideal parent company, one that will help us continue to satisfy our customers and meet our business objectives at a faster pace," Boisture said in a statement on Thursday.
Textron's stock was up 1.2 percent to $36.64 in afternoon trading on the New York Stock Exchange.
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