Providence-based Textron Inc. said Monday that Warren Buffett’s NetJets Inc. may cancel orders for business jets as the recession hurts corporate profits and executives reduce travel. Textron’s Cessna aircraft division will see “well over” 150 orders dropped in the second quarter, chief executive officer Lewis Campbell said at the Electrical Products Group conference in Longboat Key, Fla. The cancellations may include purchase agreements from “big customers like NetJets and others” and 70 to 80 orders for the new Columbus model, on which the plane maker suspended work last month, Campbell said. “We have encouraged big customers, if they want to make a cut, let’s get it out of the way and get it behind us,” he said in comments broadcast on the Internet. The global recession, credit crunch and negative publicity about corporate jet use during the slump all have contributed to a drop in demand that has prompted Cessna to cut production by more than a third. The jet market historically lags behind the corporate profit cycle by about eight quarters, Campbell said. Textron rose 52 cents, or 4.6 percent, to $11.93 in New York Stock Exchange composite trading. The shares have fallen 14 percent this year. NetJets sells time-shares in private planes to corporate customers. The Berkshire Hathaway Inc. unit’s European head said in February that the economic crisis would boost business as executives favored fractional ownership to buying their own jets. Still, Dublin-based drug maker Elan Corp., whose stock has lost 70 percent in 12 months, switched to commercial transportation this year rather than renewing its NetJets contract amid an investor-led campaign to save money. Maryann Aarseth, a NetJets spokeswoman, said she wasn’t immediately able to comment on whether the company has dropped orders. Wichita, Kan.-based Cessna expects to deliver “slightly” fewer business jets in 2010 than this year yet won’t lose market share to rivals that have also been hurt by the recession and may not survive, Campbell said. Cessna expects to deliver 290 to 300 aircraft this year, trailing last year’s 476 deliveries and an original 2009 target of 535. The company is cutting 6,900 jobs, or 45 percent of its workforce. “Cessna is going through a rough patch right now,” Campbell said. “But Cessna is not losing ground. Cessna is probably gaining ground relative to our competitors. “When the economy does come back, we’ll be ready to take advantage of it,” he said. Textron, which also makes Bell helicopters and industrial products, is slashing 8,300 jobs, or 20 percent of its employees, selling assets, winding down its finance arm and cutting the dividend to conserve cash and stem losses. The job cuts and output reductions will save $200 million this year, Campbell said. The company’s defense unit is well-positioned in the Pentagon’s new budget plan as the Obama administration seeks to curtail military spending, Campbell said. “Our products are particularly well-placed with almost no threat of severe cancellations or downtake in any volumes,” he said. Campbell said he expects the finance unit’s liquidation to be almost complete by the end of 2011, and the company will end this year with more than $2 billion in cash and next year with $1.5 billion, more than planned. Textron ended the first quarter with $1.7 billion in cash. “We have to achieve our liquidity objectives without selling any of our core assets,” Campbell said, repeating earlier statements. Textron generated about $615 million after taxes by selling its Fluid & Power business to Clyde Blowers Capital Fund in November and its HR Textron unit to Woodward Governor Co. in March. Recommended Amazon Reading01:00 AM EDT on Wednesday, May 20, 2009
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