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Backlog insulates Cessna from ups, downs

Backlog insulates Cessna from ups, downs

Cessna Aircraft wants to boost its production of Citation business jets to 700 in the next five years, an increase of 49 percent from the 470 Cessna plans to deliver this year.

Whether jet deliveries hit the 700 mark will depend on the state of the world´s economies, how long the U.S. economic slowdown lasts and the pace of future orders, say officials at Cessna and its parent company, Textron.

During a conference call with analysts last week, Lewis Campbell, Textron chief executive and president, called the goal "very realistic."

But Cessna will be careful of how it increases production, said Jack Pelton, its chairman, chief executive and president.

"We would never get to 700 a year unless that was sustainable," he said.

He said the company doesn´t want to increase production only to cut jobs when demand falls.

"We´re trying to balance steady employment, a good supply chain, (and) making sure we don´t have these massive peaks and valleys," Pelton said.

Current plans to expand Wichita facilities would allow Cessna to take on the production increase, Pelton said.

"We would have the capacity," Pelton said.

Cessna plans to build a new plant at its west Wichita campus for its new jet, the Citation Columbus, which is under development.

The plant also will be large enough for another production line and more office space, Pelton said. Citation X production can be moved there, which will free other floor space, Pelton said.

Cessna may have to make some additional investments, including paint capacity, Pelton said.

In Independence, Cessna has been expanding and reconfiguring lines to take on rising Citation Mustang production rates. Cessna plans to build 100 Mustangs this year and 150 in 2009.

Cessna took orders for 437 jets in the first half of this year and is predicting 570 total in 2008. That´s down from a record 770 last year.

Pelton called last year´s market "overheated."

"The orders were insane," he said.

Cessna has a backlog of 1,638 jet orders valued at a record $ 16 billion, making it confident the company has the flexibility to weather a downturn --"even if the economy would slow down and you have order cancellations," Pelton said.

Cessna has studied a number of economic scenarios and said it is in better shape than it was during the last downturn, after the technology bubble collapsed and the Sept 11 attacks.

Cessna also was more dependent on fractional ownership programs and fleet orders than it is today, he said.

And international sales make up a higher percentage of the order book. About half of Cessna´s orders are from outside the U.S.

"We didn´t have the capability to live off our backlog that we do today," Pelton said.

/ Новости