Al Marsh

Will Textron cut Cessna funds for new products?

May 5, 2011 by Alton K. Marsh, Senior Editor, AOPA Pilot

Teal Group aerospace analyst Richard Aboulafia said he is “sort of concerned” that product development and engineering  projects may have been an issue in the sudden retirement of Cessna Aircraft Company Chairman, President and CEO Jack Pelton. The projects are aimed at preparing for an uptick in the jet market that Aboulafia said “all signs point to in 2012.” Cessna has 1,500 engineers working on research and development, down from 2,500 before the recession. Parent company chief Scott C. Donnelly, chairman and CEO of Textron,  is the interim CEO. Days prior to the departure of Pelton, Donnelly had expressed disappointment in the “operational performance” at Cessna and said he was taking necessary steps to restore profitability, “…even as we increase our investments in new products and service offerings.” Textron spokesmen later told the press that the operational performance issue had nothing to do with the departure. Aboulafia said he was “very much surprised” at Pelton’s departure. “He is not too old and very much respected.” Cessna has a new jet, a single-engine turboprop, and upgrades to other jet models in development.  Analysts will watch those projects in coming months to see if they remain fully supported. A group of analysts meeting in Wichita in early May said they expect Cessna will introduce more than one new product this fall. “It’s tough to go from a market leader with big ambitious plans to very little in the pipeline,” Aboulafia said.  He added that Embraer is “gunning directly at half [the Cessna] product line.” He said that competition from Embraer “will get worse” in the next couple of years. A Textron spokesman denied a report that the company is planning to create an aviation division that would include Cessna, and said conversations between Pelton and Donnelly regarding retirement had occurred for “some time.” The spokesman said the search “has begun” for a successor to Pelton.

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