SEATTLE – Textron Inc. said CEO Scott Donnelly will run the company’s Cessna Aircraft unit until a replacement is found for Jack Pelton, who is retiring as the planemaker’s president.
Pelton, 52, joined Cessna in November 2000 and was named its president and CEO in 2003, the parent company said Monday in a statement. Donnelly, 49, took over at the unit as of Monday and Pelton will officially retire June 1, said David Sylvestre, a spokesman for Providence-based Textron.
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When aircraft orders collapsed amid the recession, Pelton cut production and slashed the workforce in half while moving some work to Mexico. Cessna, the world’s biggest builder of business jets and general-aviation aircraft, is facing more competition from companies such as Brazil’s Embraer SA.
The leadership change “might be what’s required, depending on what comes next,” said Rob Stallard, an analyst at RBC Capital Markets in New York with an “outperform” rating on Textron. “The world has changed, and Cessna is facing issues that they weren’t five years ago, so it’d probably be good to get someone with a fresh look at this.”
Cessna, based in Wichita, Kan., reported a $38 million operating loss for the first three months of the year, widening from $24 million a year earlier, and said its backlog had declined during the quarter.
The planemaker “can do better in terms of driving productivity,” Donnelly said on an April 20 conference call. “We have taken a number of actions over the past couple years at Cessna, but clearly have more to do.”
‘Breakeven Area’
The market is coming back more slowly than expected, and the backlog probably won’t grow until the end of this year, Donnelly said. Cessna will be “somewhere in that breakeven area” in the current quarter and is still expected to post a profit for the full year, he said on the call.
“A lot of stuff is in the transitioning process” as Cessna moves toward lower production costs, including a cheaper seven-year contract signed with assembly workers and mechanics in September, Donnelly said then.
The company is hosting an analysts’ day at Cessna next week, Stallard said.
Donnelly led General Electric Co.’s aviation unit and its corporate research during more than two decades at that company before joining Textron in 2008. Textron, founded as a textile producer in 1923, also builds Bell helicopters, E-Z-GO golf carts, Greenlee tools and Kautex plastic fuel systems.
