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Pelton's Long-Term View Cut Short

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On the Fiddlin' Around America tour in 2009 after we landed at Cessna headquarters in Wichita I asked for directions to a bathroom after the bumpy and coffee-fueled morning flight from South Dakota. I was directed to a recession-empty reception and administration building steps from the parking space of our DC-3. As I walked through the sparkling facility, I saw something that briefly dampened my enthusiasm for a day that had started so spectacularly. Carefully swaddled in protective tarps was the mock-up of the Cessna Columbus large-cabin business jet that I'd examined in detail in a video six months previously at NBAA in Orlando. At the time, the program had officially been delayed in response to the economic collapse but the care with which the mock-up had been tucked away suggested it might have a future. Every CEO has a pet project and I think it's fair to say that, as Jack Pelton liked to put it, the Columbus was his "game changer." When Cessna was creating the 500 series, the goal was to make jets as accessible as possible so they made business sense. That's as true today as it ever was. The thousands of Citations, Hawkers and others that soldier on each day must not only earn their keep, they must appear to earn their keep. I know Pelton believes that to his very core but he's also one of the most astute observers of the industry any of us in the aviation media have come across. He's also one of the best interviews. He's frank, honest and engaged. He likes taking questions and if he doesn't know something (rare) he'll tell you. From what we've heard, his staff felt the same way. The message we get is that Pelton is a straight shooter and he's interested in every aspect of the business and everyone involved. Anyway, as he watched his engineers shave pennies from the production costs of Bravos and Encores, as he huddled with his advisors to scrimp and save while at the same time innovate, he was also aware of a market sector that was all but oblivious to that kind of parsimony. In Bombardier's, Gulfstream's and, increasingly, Embraer's world, performance, luxury and prestige are the competitive factors. Most prospective buyers couldn't care less what other people or governments think of them (many of them are governments themselves). They don't have to prove the value of their airplane to anyone and they set high standards for those who want to supply them their preferred mode of travel. I think Pelton saw a place for Cessna in that mostly recession proof market with a product that met its performance and esthetic expectations but employed the efficiencies and innovations that would be obvious to those writing the checks. A perfect example is the company's decision to make the Columbus the launch customer for Pratt and Whitney Canada's geared turbofan engine, a game changer in the world of jet engine efficiency. Development costs for the Columbus were in the $700 million range and that's a big risk for companies of Textron's size. Had it not been cancelled, the Columbus would be in certification testing about now with first deliveries in 2014. Take a look at the schedule for Gulfstream, Bombardier and Embraer's newest airplanes and the comparatively solid performance of that sector of the industry in the last few years and you'd have to agree that there was a place for the Columbus in that mix. Textron brass obviously didn't What happened on Monday is anyone's guess, but what we've been hearing is that Textron CEO Scott Donnelly didn't go to Wichita to fire Pelton. The most repeated and reasonable explanation that I've heard about Pelton's sudden "retirement" (who retires "effective immediately" at age 52 on a Monday morning when the boss is in town?) was that Textron wanted even bigger axes wielded at Cessna after a first quarter loss of $38 million. Pelton countered that cutting any more would make the company unable to respond to the uptick that everyone seems to agree is coming by the end of this year and into next. From there it seems likely the meeting basically went to hell and Donnelly was as surprised as anyone. Textron and Cessna have one of the slickest PR machines in the industry and if this was pre-ordained then the supporting paperwork would have been flawless. Instead, the news came out in a hastily prepared release that amounted to a phone and email fanout. Both entities have been silent ever since. The table may have been kicked over on Monday morning but I think it had its roots in that tarp-wrapped mock-up I saw in Wichita. I doubt Pelton will be gone for long and that's a good thing for the industry. He will likely end up as Cessna's competitor, though, and that might not be the best thing, long term, for Cessna.

Comments (16)

Cessna's "industry" is no longer planes for people. That's why I don't particularly care what happens to a CEO's who's market is mostly other CEO's.

Posted by: Mark Fraser | May 5, 2011 9:32 AM    Report this comment

Mark, I think that's sort of unfair. Cessna just introduced the 162, after all, which is certainly a "plane for people," even if most of the people who purchase them own flight schools. The firms that don't have any corporate offerings in their lineup, like Mooney or Lake Air, have ceased production or have slowed it to the merest of a trickle. Like it of not, the CEOs that successfully market aircraft to corporations are the same CEOs bringing out planes for the rest of us to fly.

Posted by: Jonathan Harger | May 5, 2011 9:55 AM    Report this comment

Jonathan, It's unfair to call the "industry" surrounding the C162 as being filled with Cessna employees or even contributing to Cessna's bottom line.

Posted by: Mark Fraser | May 5, 2011 11:04 AM    Report this comment

To condemn a CEO for the act of being a CEO is to condemn water from a particular stream for being wet, but still drinking it. The world as we know it relies on people who are able to analyze markets and make decisions that will me most effective for their organizations. This goes for companies that manufacture soft drinks as well as those that make business jets, those that collect garbage to those that provide electricity. There are those in these positions that do show a lack of character from time to time, and they do not get a pass, but without these people and their minds, we would know a much lower standard of living. Jack Pelton should be commended for his leadership at Cessna and his advocacy for GA.

Posted by: Ryan Lunde | May 5, 2011 4:56 PM    Report this comment

Cessna is one of the very few manufacturers that has taken a real interest in piston GA aircraft because they believe if they start you in a Skyhawk, you might end up with a Citation someday. I truly hope that the folks at Textron continue to support Cessna and can find a CEO with the same vision as Jack Pelton.

FWIW, I just got off the phone with Cessna tech support today concerning a 32 year old aircraft with a problem. Additionally, I can buy just about any part for any Cessna ever made. Those who own or have worked on orphaned aircraft will understand how valuable the support of the manufacturer is.

Posted by: Josh Johnson | May 5, 2011 7:06 PM    Report this comment

In the last quarter for Textron, Bell (helicopters with lots of government buys), Systems (drones and armor with lots of government buys) Industrial (lawnmowers, tools and golf carts benefitting from the improved, a bit, economy) all made money while Cessna and the finance business lost money. Like many others before, I think the company will decide that "defense" where once you are on the gravy train you stay on, is far more reliable than civil aviation and will be looking to sell. After all the end of the mad mullah will not immediately stop all those helicopters and armored vehicles from wearing out in yet another Afghan summer of heat and dust. And who will buy? Have you taken any Chinese language lessons lately?

Posted by: Brian McCulloch | May 9, 2011 8:11 AM    Report this comment

I would not be surprised to see China buy Cessna. Cessna has a good reputation and a good line up of the business jets needed in China as they move to a more liberal air transport system. Cessna would be a perfect compliment to China's recent purchase of Continential and Cirrus. It would make sense from a strategic buyer's point of view and China would pay top $ as a Strategic buyer

Posted by: william Lawson | May 9, 2011 8:36 AM    Report this comment

Pelton is a great airplane-guy and it's hard to imagine that Texron will find anybody near as good to replace him at Cessna.

Posted by: David Bunin | May 9, 2011 11:13 AM    Report this comment

From what I understand from the current situation is that TEXTRON is not conserned about making airplanes for the GA market, but that the whole manufacturing is set up to make money and not losses. If J.Pelton had no recovery plan to turn this loss into benefits again on the short term, (by delaying some projects f.i.), this is the logic outcome of big companies. May be Cessna, or at least a part (prop part), will be split off from Textron and put also for sale (to the Chinese) But I am not sure this is the right way to do, as most of Textron's current benefits (Bell and Systems)are comming only from Governmental buys, which are now severely under the budget cutting edge and spendings of that kind will never will be so big as before to avoid the bankrupcy of the american government or state.

Posted by: ludo huybrechts | May 9, 2011 1:08 PM    Report this comment

My guess is that, coming from GE's aviation division, Donnelly would rather keep Cessna than sell it. Too bad, Textron has been a drag on Cessna for 19 years, sucking up tens of millions in revenues from Cessna every year while Cessna held up Bell and the industrial segment for much of that time. Cessna even sent its VP of engineering down to Bell for a year or so to get some of their processes straightened out. Meanwhile, Textron messed around in the mortgage market, and got burned badly. That's why its stock dumkped from $100 to under $4 per share. Thank you, Mr. Campbell. Having contributed more than its share to the aviation recession, Textron now expects Cessna to still be its cash cow. What a menace. Cessna might be much better off if China bought the company.

Posted by: S. Lanchester | May 9, 2011 2:39 PM    Report this comment

Jack Pelton understands the entire spectrum of aviation. Textron leadership, on the other hand, has what I call a “drinking straw mentallity” – looking thru a drinking straw and seeing only the bottom line without understanding what creates that bottom line. Apparently this is a phenomenon in corporations that are run by bean counters. Not knowing the particulars of Jack Pelton’s and Textron’s parting of the way, I am sure Textron will be sorry that Cessna lost its great leader.

Posted by: Alex Von Bosse | May 9, 2011 5:34 PM    Report this comment

In my opinion the Cessna/Textron marriage reminds me of the Beechcraft/Raytheon marriage. Until the marital issues sort themselves out, everything else is off the table.

Jack was just collateral damage, like the housekeeper who's fired after catching the husband and wife arguing prior to the divorce.

Like Raytheon; Textron needs to take inventory of what business it's in, and what business it wants to be in, and move accordingly.

Posted by: Greg Andrews | May 10, 2011 11:22 AM    Report this comment

I recently had a conversation with a sales rep from Lycoming (a division of Textron) that highlighted part of what is wrong with our industry. I remarked to this sales rep that he needed his own personal airplane to use for his business travels. I was shocked to learn that Textron has a policy AGAINST the use of personal aircraft for business travel. I could not believe it. That a company, that in so many ways is tied to the use of General Aviation for business purposes, would have a policy against that very use was incredible! That is a sad state of affairs for General Aviation.

Posted by: Lindy Kirkland | May 11, 2011 6:09 AM    Report this comment

Blogger(s) S. Lanchester & Alex Von Bosse have it right! Textron operates more like a holding company than an aircraft manufacturer. Greed at the top! Jack has the focus, Cessna just needs an owner with aviation focus and the fortitude to act for the long haul! Embraer? Pilatus?

Posted by: Lester Shobe | May 11, 2011 8:50 AM    Report this comment

Lindy Kirkland has Hit the Nail on the HEAD!! Can anyone Imagine the ludicrucy of A Company Policy like Textron!! That's like Coca Cola banning their Employees from Drinking Cokes. These Harvard MBA's that Run most American companies Have RUN THEM Squarely into the Ground!! Sure the Answer is Sell Corporate America to the Chinese!! Short term Thrill for Long Term AGONY!! The Real Problem is the US Education System has Been Led astray, with the No kid left behind Mentality!! Yeah Dumb down the system and give all the kids A's So everyone "Can FEEL GOOD"!! Get rid of the Draft so The Nation can be defended by less than 1% of the population and No Elite Kids Have to Go!!! Kiss GA goodbye Folks along with the Generation who conceived of a GA system, the WW2 Veterans! The Younger generation has been poisoned to only think in terms of Liability!!! Get some Courage America!!

Posted by: Buz Allen | May 11, 2011 3:27 PM    Report this comment

Donnelly came from GE, Textron stock went from $100 to $4. Sounds a lot like the performance of other Jack Welch era GE alumni, Nardelli, who almost sunk Home Depot and then took Chrysler into bankruptcy.

Posted by: Jim Lo Bue | May 12, 2011 12:29 PM    Report this comment

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